A Strictly Controlled Compassion

...it is quite another to administer a great agency of economic policy...

...But somehow it was always credited by the business and banking fraternity with the moral virtues preached, if not practiced, by these hard-headed men of affairs-abhorrence of inflation and hostility to public spending...

...Burns, a formidable figure in his own right, is the first professional economist to attain the summit of the mysterious realm of central banking...

...As generally advertised, Burns is a conservative...

...The quadriad (Secretary of the Treasury, Director of the Budget, Chairman of the Council of Economic Advisers, and Chairman of the Federal Reserve) which emerged during the 1960s seemingly fills Burns' prescription...

...Martin himself became something of an oracle, a figure to be mentioned in the same breath with J. Edgar Hoover and General Hershey, at least in conservative circles...

...Still, it is fortunate for Americans that competition is so pervasive, for "A nation's prosperity rests fundamentally on the enterprise of individuals seeking to better themselves, their families and their communities...

...Written in lucid if not exciting prose, these essays were composed for various occasions between 1957 (shortly after Burns resigned as Chairman of the Eisenhower Council of Economic Advisers) and 1969 (just before he returned to Washington as Nixon's Counselor...

...But two years later Burns was convinced of the desirability of "coordination of government policies . . . through an economic policy board under the Chairmanship of the President...

...Reviewed by ROBERT LEKCHMAN Arthur F. Burns is capping a distinguished career of research, teaching and public service as Chairman of the Board of Governors of the Federal Reserve System, a job having great actual and still larger symbolic consequence...

...In any event, no omelets without broken eggs...

...Far more concerned about inflation than they are, he is willing to accept higher unemployment rates than Democratic economists had thought permissible...

...Each is now led by a fiscal conservative, partisan of free enterprise, enemy of inflation, and opponent of social spending...

...New Economics or no, the business cycle has not yet disappeared from the modern world, though its swings may have become less violent...

...Thus, while freely conceding that unemployment during the 1950s was too high, he refuses to criticize Eisenhower economic policy on this ground, perhaps because he was so intimately involved in its formulation...

...Regarding prices, money and employment, the center of Federal Reserve responsibility, Burns' views (as usual) strenuously contrast with those of his Keynesian opponents...

...And when he assured international bankers that the United States was resolute in its war against balance-of-payment deficits, even the currency speculators paused briefly before resuming their assault upon the dollar...

...If Burns the official keeps faith with Burns the essayist, the country will have a chance to experience the consequences of an unusual unity of policy among the Treasury, the Council of Economic Advisers, the Budget Bureau, and the Federal Reserve...

...Now before us is the opportunity to enter his frame of thought...

...When Martin warned of deadly parallels between economic conditions of the 1960s and those preceding the 1929 crash, the stock market obediently tumbled...

...And, adds Burns, "The Federal Reserve authorities, being members of the government, are bound by this statutory declaration of policy...

...Burns believes everybody has an interest in controlling inflation, presumably even the unemployed...

...Burns does not care for wage-price guide-posts...

...The dignity of honest labor," he mourns, "whether skilled or unskilled, is no longer stressed by parents or teachers as it once was...

...Under William McChesney Martin's leadership, Federal Reserve policy was often erratic and occasionally quite misguided, as in the premature easing of credit last year...

...Where Walter Heller and his New Frontier teammates identified a need to control the market power of large trade unions and industrial giants, Bums somberly fears "general observance of the guideposts would throttle the forces of competition no less effectively than those of monopoly...

...It is one thing for an academic economist out of office to instruct his countrymen...

...A good deal more fervently than many businessmen, Burns also celebrates the presence and the virtue of competition: "By and large," he asserts, "it is competition-not monopoly-that has vast sweep and power in our everyday life...

...Galbraithians favor social spending as a weapon against recession on both ideological and stabilization premises...

...We shall soon see how we fare in the hands of these men of strictly controlled compassion...

...New Yorkers who commute on the Long Island Railroad and deal with Consolidated Edison and the New York Telephone Company may or may not be persuaded...

...The times, they may be a-changin', as Bob Dylan alleges, but not, if Burns is right, all that rapidly...

...Strange as it may seem, on this ancient, vexed issue of the Federal Reserve's independence of action, Burns is closer to such persistent critics as former Illinois Senator Paul Douglas and Congressman Wright Patman of Texas than he is to his immediate predecessor...

...Nevertheless, there are some interesting hints of Burns' attitude in this volume, particularly his conception of the proper relationship between the Federal Reserve and the President...

...Indeed, if Burns has any worries about the health of the American economy it arises from the erosion of traditional values...

...Such a statement, of course, can mean anything or nothing...

...Burns opposes countercyclical spending, partly because Congress acts too slowly to make it effective but largely because expanding the scope of government activity is never a good idea...

...Writing in 1957, Burns notes: "The Employment Act of 1946 pledges the Federal government to 'utilize all its plans, functions, and resources' to foster economic expansions and to help prevent depressions...

...All this naturally translates into some notably restrained recipes for Federal action or inaction...

...Taken literally, and he is a literal man, Burns appears committed to acceptance of the President's supreme position in the definition of objectives and policies...