||sources have crops rotting in the
fields, half the factory capacity idle and a third of the whole working
population out of work? Against strong opposition and charges of socialism,
Franklin Roosevelt reinvigorated and revived the system. His reforms included
regulation of the stock market, bank deposit insurance, a social security
system that put a floor under the incomes of older people, collective bargaining
to bring strong labor unions, unemployment compensation -- all of them
rebuilding on our basic social and economic principles, and by the 1940's
our economy had started to take off. Until that time, our country had been
racked with periodic recessions, but we haven't had a depression since.
If we are going to have the same kind of revival
in our economy, we've got to look to the basics, for there is no "quick
FOR ECONOMIC REVIVAL
One of the first fundamentals we must restore
is the principle of competition. If we believe in competition, let's get
it for everyone. We ought to break up the conglomerates and monopolies
of all kind and fight as hard as we can against the creation of anymore.
This country's economy is filled with monopolies and semi-monopolies and
we have new mergers reported almost daily. They add nothing to the economy.
So, many industries just add any increase they want in profit margins to
your cost and then charge that amount without fear of being undersold by
any competition. This is where much of the real inflation is coming from.
Congress and the administration, rather than looking out for ways to protect
companies like ITT, ought to be taking a hard look at the mergers and anti-competitive
practices across the board.
We need to encourage a return to and renewed pride
in the journeyman fields. Part of our American dream has been a better
life for our children and since the 1950's, our symbol has been a college
diploma. But part of that dream has been bad, and its effects have come
home to roost. Too often it is believed that a young person enters a trade
only because he or she is not college caliber. Trade education has become
a symbol of failure, and resentment of that image has grown. The reduced
proportion of youths entering the trades has meant a strain on economic
services, less competition, higher costs and a decline in quality workmanship.
In the meantime, the market for college graduates is glutted, portending
an angry, disillusioned, overtrained generation.
Our next act should be to turn American farmers
loose. For three decades we've had farm surpluses and programs to depress
farm production. And yet last year, farmers exported $12 billion abroad
and our balance-of-payments situation would have been even more disastrous
without their production. The time has come to set our farmers free and
let them produce the wheat, beans, corn and feed grains the world needs.
Agriculture was long the sick man of our economy, now it can
|be a key element in saving us.
Another vital step in our economic housecleaning
is a reordering of our priorities. If we can't have all the space programs
and all the military programs and still provide adequate education and
health at home, we must decide which comes first. We have to stop the kind
of mixed-up economic policies that have given us $100 billion worth of
federal deficits in four years, adding immeasurably to the pressures on
As part of our updating of priorities, for example,
we should note that dollar devaluations have actually increased our costs
for keeping the same number of troops abroad by at least 20%. In Germany
alone, we have 300,000 troops and almost 200,000 dependents. And tax dollars
are spent each year on their schools, homes, medical care, moving costs,
and similar items. It is truly ironic that the United States, with its
ailing economy, is spending so much money on Germany, one of the strongest
economic systems in the world.
In addition to these policy changes, we should
give the federal government some new economic tools. We have learned to
our sorrow that fine tuning the economy is a tricky business and some of
the economic laws we accepted in the 1960's do not work the way they are
supposed to. I'm not advocating permanent controls and price freezes. Temporary
controls work fairly well in times of moderate prosperity and recession
when there is little competition involved. But in times of boom, like we
saw during the meat price freeze, they do not work well at all. There are
limits to what they can do and in a complicated economic system like ours
they are easy to evade.
But while the government cannot effectively control
all wages and prices (and indeed, it shouldn't have to where true competition
exists) we can zero in on the big industries and conglomerates where there
is little competition and administered prices and where big wage settlements
come out of your pocket.
In this kind of a situation, the government should
establish a fairminded, bipartisan incomes policy board. This board could
review price increases and wage settlements, jawbone, point the finger
and, if it is economically wise, delay implementation dates of price and
wage hikes until the overall economy is ready for them.
Another possibility is flexible tax rates, a proposal
I raised in one of these newsletters
four years ago. Taxes have an obvious effect on our economy and the timing
of their implementation can be crucial. Often, a small surtax, say 5%,
put into use for as little as six months can act as a barrier against inflation
and can prevent future major increases in income taxes. My proposal would
work something like this:
Congress would pre-package to its specification