Editorials
Editorials DR. REAGAN'S DUBIOUS MEDICINE THE FAVORITE metaphor these days is medical. The American economy is critically ill, and Dr. Reagan is prescribing strong medicine. Or, for the surgically...
...indeed, American policy over a long period has assured that this would be the case, as American policy today, reversing the Carter human-rights campaign, is assuring that any number of future Latin American governments will be hostile to us...
...Handal would like to put the guerrillas and the Democratic Liberation Front in his debt and, should the insurrection succeed, thereby gain a major voice in the future revolutionary government...
...Liberals should take advantage of this moment to review and revise social programs that are misconceived, mismanaged, or otherwise wasteful...
...Reagan may present himself as internist or surgeon, but it is as a psychologist that he may succeed...
...The number of federal employees, both as a percentage of the population and as an absolute figure, has been dropping over the last decades...
...But these facts do not contradict what former Ambassador White, among many others, has said so often: the Salvadoran insurrection is homegrown, not imported...
...as quickly as it was formed after the murders of American nuns and the six opposition leaders, it was properly named by San Salvador's bishop Arturo Rivera y Damas as a front for official terror...
...A resolute insistence that the burdens of "a new beginning" ought to be shared fairly will be the incentive that produces a better alternative than the administration's budget...
...he is shaping the economy...
...What the white paper demonstrates, finally, is that while commander-in-chief of NATO and chief executive of United Technologies, Gen...
...Haig's white paper tries to force us into a narrow dualism, an either/or choice between anti-democratic leftist terrorists and reform-minded military leaders who have promised elections in 1982...
...Specifically, the untested segment is the supply-side Lafferism which hypothesizes that a broad tax cut will push up productivity through incentives faster than it can create inflation through increased consumer demand...
...Even the administration's optimistic four-year timetable for reducing inflation is too drawn out unless the approach has more going for it than psychological impact...
...We have reckoned the costs of this course wrongly...
...Those who answer "yes" should do so in full awareness that there may be no second chance for the lives that are blighted or the regions degraded by a wrongheaded program...
...It is at the state and local level that the growth of government has really taken place...
...In economics, as in health, there is a major psychological component...
...the paper speaks of "Dr...
...and yet again, between 1968 and 1980 all levels of government together increased their tax receipts by less than one-and-a-half percent of GNP...
...A lot of government programs may need trimming or recasting altogether, but it is not the bigness of government, especially federal government, that is at the heart of America's economic troubles...
...It must not be used to regulate the economy or bring about social change...
...he is favoring some sections of the nation over others...
...Medicaid, food stamps, CETA, and mass transit reductions are hardly balanced by cuts in middle-and upper-middle-class programs like college loans, scientific research, and support for the arts and humanities...
...Or, for the surgically minded, he is proposing a drastic operation...
...Haig was not paying much attention to Central American realities, nor let us add, to the way in which, among his coreligionists, a theology of liberation and resistance to oppression was emerging from Christian base communities at the grass roots level...
...The economic diagnosticians who admit all this into their bedside counsel are going to suffer the disadvantages that preachers who accept the higher criticism have when compared with fundamentalists: what they gain in complex truth, they may seem to lose in total certainty...
...Despite talk of evenhandedness, the burden of budget cuts clearly falls on the poor, the near-poor, modest-income wage earners, and the disabled...
...INTO EL QUAGMIRE So it's to be a military solution for El.Salvador - and we fear, more of the same soon enough in neighboring Guatemala where Amnesty International has just accused President Romeo Lucas Garcia of directly supervising a concerted policy of political assassination...
...As any honest medicine man will tell you, faith healing has its role in university hospitals as well as in revival tents...
...So the approach could work, especially because those on whose psyches it must have its greatest impact are the holders of economic power, who look with a modicum of trust upon this president as they did not upon Jimmy Carter...
...The Duarte junta is neither centrist nor credibly reformist...
...Both Democrats and a significant (although quiet) faction of Republicans are highly skeptical about this proposition, and with good reason: Lafferism is to economics what est is to serious psychotherapy...
...He is redistributing wealth and power to the rich...
...It will be scrutinized and challenged...
...Edwin Meese, from the White House, described the president's program as "maybe eighty percent psychological...
...Telling these citizens that Big Government is also the cause of stagflation and low productivity is like telling the average teenager that skin problems are due to too much homework...
...Reagan's couch" and "psychonomics" (February 28...
...The very fact that so many Americans have been convinced that Big Government is the problem, and that now the Reagan team is going to do something about Big Government, could possibly set in motion a pattern of expectations and behavior that would be...
...But of course the portraits are misleading, in part downright false...
...In 1932, when Salvador's military leaders massacred 30,000 peasants, the U.S...
...It would be nice were it that simple, or were the characterization of opposing forces, either of them, true...
...And the certainty of the Reagan administration is surely wondrous...
...Yes, transfer payments have grown - without them, the last decade would have seen a marked increase in inequality - but for all that, between 1968 and 1980 the portion of Gross National Product accounted for by all federal outlays increased by only six-tenths of one percent...
...But the shot-in-the-dark character of the administration's program doesn't end there...
...And government in the U.S...
...the achievement of a degree of affluence, government safeguards, and labor power that affords resistance to periodically "shaking down" the economy by reducing wages or ruthlessly exploiting the environment...
...The slide from therapy to human experimentation is all too easy...
...These efforts, whatever their limited relevance to today's economic problems, have certainly antagonized many citizens...
...spends less, owes less, taxes less, regulates less, and pushes for less equality than do the governments in most of the other advanced industrial nations - whose economies are outperforming ours...
...If the tax cut half of the administration's budget is highly risky, both the tax cuts and the spending cuts are unfair...
...More, it is obnoxious nonsense: from Hamilton on, the government has acted to regulate the economy or bring about social change...
...and above all a dramatically altered prospect for America in the international economy, with the loss of our post-1945 dominance over Europe and Japan, with the emergence of multinationals, and with the sudden and apparently irreversible jump in the cost of energy...
...Most of those so open-minded about this experiment are not the ones upon whom it will be primarily worked...
...The problem, quite simply, is that the good doctor is proceeding on the basis of a misdiagnosis...
...Failing that, he has laid over Central American realities - the need for higher and stable commodity prices and a redistribution of political power in the whole region - the iron curtain of big power politics...
...Investment, in any case, has been increasing in recent years while productivity declined...
...The skeptics are talking the same language...
...What is worse, this unfairness comes wrapped in a philosophy...
...Should he, despite the patent weaknesses of his diagnosis and prescription, be "given a chance...
...The New York Times may consider the Reagan economics ''murky'' but "the psychological strategy is worthy" (February 19...
...And just as the administration, amidst great uncertainties, has shown itself remarkably committed to the market principle, the opposition, even more conscious of the uncertainties, ought to lay tight hold of the principle of fairness...
...This, in fact, is the strongest argument for Dr...
...loose ends will unravel...
...The evidence of arms shipments in fact does nothing to substantiate Haig's inference that the guerrillas and their supporters are no more than tools of an international Communist conspiracy...
...When doubts like these arise, editorialists turn to talk of "experiments" which must be "given a chance...
...that foreign Communist governments would like to have such influence...
...This is not to say that Marxist-Leninist principles do not guide the revolutionaries - along with about equal amounts of Christian liberation theology...
...Is the U.S., like the Soviet Union in Poland, really determined to do permanent sentry duty for oppression in Central America...
...It is generally, and indeed rather cavalierly, conceded that the Reagan remedies are "untested...
...Reagan's remedy...
...In actuality, it documents a rather successful arms-raising tour by Salvadoran Communist party chief Shafif Handal...
...Bad planning and bad management in government are surely part of the difficulty, but so are bad planning and bad management in key industries like autos and steel...
...It indicates - surprise...
...And contrary to Gen...
...And it is hard to believe that Ronald Reagan is unaware that he, too, is doing exactly the same...
...The further problem is that there is no alternative diagnosis for the present ills with comparable simplicity and force...
...Not only is it uncertain that the wealthy recipients of tax windfalls will invest in capital goods rather than collectibles, it is not even certain what the relationship of investment is to productivity in an economy dominated, as ours is, by the service sector...
...salutary...
...This time, they'll be doing it with our weapons and with our advisors.and with our advisors...
...So has the percentage of GNP devoted to federal purchases of goods and services...
...Federal debt, as a percentage of GNP, is falling, not increasing...
...Even more basic are a series of structural changes in economic life: the increasing concentration of industrial and financial power in large corporations...
...Mostly the old nostrum of fighting inflation through fiscal and monetary restraint, economic slack, and unemployment...
...Reagan's approach, an argument that not a few editorial commentators have emphasized...
...it strikes a responsive chord...
...They are worried about the side effects...
...But it is shortsighted as well as cowardly not to stand by the strong reasons for doubting the Reagan plan's efficacy and equity...
...As for tax cuts, given the 1981 Social Security boost, a family of four with $10,000 in wage income will be paying out $5 more in 1982 (and may be losing food stamps besides), while a $50,000 family will save $840...
...The suggestion that regulating the economy and bringing about social change are not legitimate government activities is obnoxious...
...technology possesses the subtlety of a General George Patton...
...Many of the Reagan team's targets are indeed ready for overhauling, though not for keelhauling...
...government looked the other way...
...The supply-siders should understand...
...Corporate taxes have steadily shrunk...
...Big Government is, of course, a popular villain, partly because Americans have always been suspicious of government and especially of the "feds," partly because since the late fifties Washington has indeed expanded into new areas of American life, sometimes wisely, sometimes clumsily, primarily in order to reduce racial injustice and to protect the environment...
...Nor is there no danger at all of a change in power resulting in a Salvadoran government that is hostile to the U. S...
...The Communist party in El Salvador is miniscule and weak...
...Haig's assertion, the Democratic Liberation Front (not necessarily the guerrillas) is not supported by a measly 700 individuals, but includes the collective memberships of just about every union, peasant group, slum group, and professional organization in the country - as well as much of the minor clergy and nuns...
...Most of the other doctors admit to considerable uncertainty about the ultimate causes of stagflation and declining productivity...
...Yet take away the ebullient but untested Lafferism and the uncertain hopes for greater capital investment, and what is left of Dr...
...Another price shock from OPEC or a foreign crisis or a prolonged national labor dispute or a summer flare-up of racial tension will reveal how much more is involved in a "new beginning" than cutting back the federal government...
...They ask whether the administration's new budget isn't economic laetrile or unnecessary surgery...
...This is no "Hundred Days" scheme...
...What did the "white paper" show...
...Much less than was claimed for it...
...It could work, but frankly we don't think it will...
...it is understandable that Mr...
...Secretary Haig's sales job for improving the quality of official terror in El Salvador with the latest U.S...
...The taxing power of government must be used to provide revenues for legitimate government purposes," the president declared...
Vol. 108 • March 1981 • No. 5
