But tariffs, while the main problem, are by no means the only problem of world trade. Yet it is also important to remember that this pattern can be modiSed by deKbera^e soctal ac^on. Increased consumption standards, on the other hand, are more or less irreversible. We have every reason to expect a national income of around $120 to $125 billion, in terms of 1942 prices. These wartime developments forecast what is likely to be the future of social security. Consumer products direct prestige wwc solutions. To individual and family savings we must add the savings of business and corporate enterprise. Our judgment about these is a matter of personal or groupwise preference that depends on interests and ideals largely determined by our personal or groupwise location in the social organism.
But the organ charged with this responsibility almost automatically inherits responsibility for exchange rates (their stabilization and occasional adjustment), for * Young, op. A number of things will be necessary. Rivalry in Retail Financial Services. Even a moderate rise in prices would permit an accumulation of surplus savings of $20 billion. The "Corporacion para Promocion del Intercambio, " organized by American exporting interests in Buenos Aires to promote the sale of Argentine products in the United States, was apparently achieving considerable success in 1941, until shipping difRcuIties curtailed its operations. It would still be theoretically conceivable—and, of course, economi cally desirable—to operate all these controls in such a manner as to utilize as fuliy as possible opportunities of increasing output through international trade and division of labor.
FbM., p. 166. p. 170. ' But if Dr. Minot were drawing his chart to represent some of the Latin Americans, say our own Puerto Ricans, his clinical line would rise to take in half or more of the diagram. Prestige products and prices. This reli ance arises largely from the inadequate yield of other state taxes. Analyze your entire AR Portfolio with one free credit MORE. E., controls of the prices of goods and services (including the services of labor).
But it would be unfortunate if we were to build up an attitude of complacency which might inhibit constructive policy formation designed to promote effective demand and combat unemployment should it develop; unless, of course, facts have become available which show conclusively that a lasting postwar boom is indeed inevitable. In conjunction, the two programs hold the economic promise of the future: the encourage ment of saving, investment, and free enterprise, and the establish ment of international economic order. It is still soluble, however. Since real co% ro% is unimaginable% without an international sovereign power, it would be anomalous if the monetary authority were not a part of this power. Using a somewhat philosophical—or should we say flowery? Up to now unions have been very private affairs, free to admit or expel men as they saw and to run their own affairs as they (or their leaders) desired. NUTRITION AND THE POSTWAR WORLD The present war is unquestionably going to produce much new experimentation in the Reid of nutrition. Not only are "mushroom communi ties" growing up around isolated war plants; workers by the tens of thousands are being drawn to centers of the heavy fabricating industries. The maintenance of trade equilibrium in a world where these conditions obtain is a difficult task.
Nents (President^ Com mittee on Administrative Management, Washington, D C., 1937), TAe (? Organized labor, however, has not yet had occasion to probe carefully into these matters and is dis posed to support the simple view that the remedy for every deBadiscourage not only the shift from war savings bonds into capital goods, securities, or housing but also the shift from war savings bonds into consumer goods of all sorts. If the United Nations achieve but partial victory, it will be necessary for this country to live as in an armed camp. Toward improved aw Locaf d iS rn ^ s. M c iire In addition to ensuring greater equalization in burdens and resources, the foregoing proposals, if adopted, would undoubtedly place the nonfederal units as a group in a better Snancial position than at present. As Prof. Robbins has stressed (see his "Economic Aspects of Federation, " foe. The collection of international assets in the fund could be made available to countries with tem porary balance-of-payments difficulties for a suBicient period of time to enable disequilibria of an ephemeral character to be cor rected. We need boldly and fearlessly to imple ment the government as an instrument of economic expansion, as was done in the early part of our history. The same conclusions hold if we are thinking, not of reducing a movement below its "natural" potential magni tude, but of forcing it above that level. 204 POSTWAR ECONOMIC PROBLEMS be called upon to meet. The potential victim thinks that he is better off under a lending than under a tax pro gram. In other words, they revert to the theme that a high rate of private investment, however desirable, is not The process of investment, if it increases productivity, has the effect of enlarging the capacity of the economy to produce goods and serv ices. N U T R I T I O N, FOOD A T T I T U D E S 289 ees, industrial and business organizations must henceforth regard nutrition as an important social force which holds equal rank with health, sanitation, recreation, and the cultural, spiritual, and moral progress of the nation. W e need a public-health program, including expan- THE POSTWAR ECONOMY 15 sion of hospital facilities.
One reason is that prediction is quite impossi ble when the course of human events depends so largely upon mili tary and political developments. The frontier in the United States disappeared in the 1890's, and, as a result, exploitation of other "frontiers, " Canada, Latin America, Africa, and Asia, was greatly intensified. No one claims to have complete knowledge in this Reid yet. Capitalist management would hence have to solve the problems of reconstruc tion at home and abroad in the face of public antagonism, under burdens which eliminate capitalist motivation and make it impossi ble to accumulate venture capital, with risks of borrowing greatly increased/ without authority in the plant, and under the close control of a hostile bureaucracy. RE M OV AL OF R E S T R I C T I O N S ON T R A D E 349 as "wholly inadequate. " Dr. Cummings goes into many factors, such as urbanization, technological change, and food habits brought to this country from many parts of the world, all of which have had a dccidcd influence on American food standards of living. Likewise, experimentation in such areas as plastics and synthetic rubber may change altogether the prewar competitive structure in these and related industries. — FEDERAL, STATE, AND LOCAL FISCAL POLICY INDICES, 1928-1939* (In millions of dollars) Fiscal year ending Net income-increas- Expenditures for new ing expenditures* public construction* Federal 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 - 77 -232 388 2, 419 1, 797 1, 809 3, 460 3, 568 4, 374 1, 114 2, 225 3, 581 Taxes on sales m ti State and State and Federal! Possibly labor will not discover its interest in taxes on profits in time to get its interests effectively represented when tax reductions and changes in tax laws are made within a few years after the war. But malnutrition wreaks greatest havoc among the children. Until the defense program, all these gains plus the whole of our population increase were dissipated in unemployment or shared underemploy ment. Techniques of production have been constantly changing, territory expanding, population growing, new products appearing, location of industry and population shifting. Upload your study docs or become a.
Higgins and Musgrave, op. It is impossible for the outsider to attest their accuracy. Acreage restriction, bought by Federal subsidies latterly reinforced by miscalled "marketing quota" penalties, has worked only within the limits that Congress has permitted, and to call the result "pro duction control" is absurd. PERTINENT ASSUMPTIONS First, I assume that there mil be a postwar world; that this war will truly end, sooner or later; and that, contrary to the prophets * This study is essentially a revision of a paper presented before the Ameri can Economic Association in December, 1941, and published in the American Rfconomic Revteu?, Vol.
The war will leave behind it a heritage of new materials, new methods, and new products. We have a small fraction of them almost anywhere in the United States, a fairly sizable one in a few spots. M e% m an/ argue that what is required is only a change in incomes and prices as between the two countries, and that this can be brought about more smoothly and speedily by adjusting the relative value of the two currencies than by reducing prices in one and raising them in the other country. Insofar as the stagnation of the thirties was due to policy or to temporary factors, it cannot be blamed upon irresistible and irreversible changes in the economic environment. Certainly, it is much easier and more satisfactory for a union leader to present views on policy to administrative of&cials than to committees of Congress. How well do these groups feed themselves, for example?
Some attention has been paid above to the first issue, and further comments will be made later. Whether this war is thought of as a phase of the revolutionary process leading toward the dawn of the "century of the common man, " or thought of as a gigantic and specialized economic effort—a cataclysmic interlude—the essential continuum of events includes both the transition from peace to war and the transition from war to peace. A "sh elf" of such projects would appear to provide a high degree of flexibility. The important point is the proportion of them, relative to the total population. Business organizations cannot take hold unless they have financial resources with which to work. A large and sudden attempt to shift from cash to goods would produce a boom and a collapse. What are the possibilities along these lines, and what do they mean for 294 P O S T W A R E C O N O M IC P R O B LE M S agriculture in the United States? They may change the, distribution of political power in unpredictable ways. An expansionist program would permit private enterprise to operate at high output levels.
With one outcome, a strong movement toward extensiRcation of agriculture, larger acreages per farm, and more use of power machinery will arise. The branches of service and trade likely to lag are those dependent upon the production and sale of automobiles and other consumers' durable goods, which again are the industries revolutionized by war and which will have to go through a reverse revolution of production processes during the early months of the postwar period. The maintenance of adequate monetary demand could be reconciled with fixed exchange rates if the domestic prices were indefinitely flexible. In such cases, wage cuts would help employment. History will show little return on our prodigious investment in this war. It would therefore be necessary to have some sort of quota for such immigrants into the less crowded parts of the earth, though these quotas could be far more liberal than they have been in recent times. In the interior of the urban community there must be elbow room—plenty of it—both for the purpose of present living and work ing and for the necessary space to adapt the physical layout to the changes required or desired in the future.
By M. Chaning-Pearce, London, 1940, pp. Better for employment than either competitive wage cutting or complete rigidity is selective wage cutting. Finally, there may be danger of international political implications and complications arising from the investment, from the manage ment of the newly developed projects, or possibly from default or delays in meeting the terms of the contract.
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