Liberals and the U.S. Economy

...Now Galbraith is not against growth per se any more than Keyserling is opposed to a better social balance between the public and the private spheres of economic activity...

...Though they do not control the levers of power in Congress, these new Northern progressives approach the strength to fight for the control of these levers with the Texas leadership which now manipulates them...

...Like any other skillful controversialist, Galbraith on occasion overstates his case...

...If it does, the Galbraithian liberal will find himself under the painful necessity of gritting his teeth and seeking to reallocate demand from private to public purposes via higher taxes...

...Moreover, Galbraith is sufficiently attached to the maintenance of price stability to contemplate price and wage controls in strategic industries, a measure which in the current climate of economic opinion must rank as radical...

...In economics, the occasional complement of the second attitude is the proposition that men of good heart will also soon be rich...

...It would follow that the liberal emphasis should be on expenditure policy, on the array of programs and policies which will engage the full energies of the unemployed and the underemployed, which will restore resources of other kinds to full use...

...If this inference is justified...

...more than a quarter of multiple-person families earned less than $4,000 a year...

...rural electrification — must yield, the more appropriately since all of them imply more governmental intervention than is desirable in the competitive economy of which the President dreams...

...On the one side, a new vigorous group of Senators and Representatives have won office, mostly on the basis of outlooks more generous and records more liberal than those (if their defeated opponents...

...In his highly controversial proposal to use sales taxes to finance schools and other local services, Galbraith has accepted this consequence for cities...

...But this budget gives liberals a chance to ask in whose name they advance, and under whose intellectual banner they fight their battles...

...The Affluent Society may act as a catalyst of discontent and an accelerator of a tendency...

...Budget balance will result from the enlarged tax receipts which will be one of the consequences of the energies released and the incomes created by new housing, schools, roads, dams, soil conservation projects and foreign aid programs...

...Of greater moment to this discussion, however, was Keyserling's critique of Galbraith's book...

...and, however much we grow, we never seem to have enough left over for the public services and foreign aid...

...It is just here that President Eisenhower, on the other side of the fence in several senses, has suddenly offered liberals the chance for a real argument...

...Poverty, Keyserling asserted, even in the United States is not yet a minor problem...

...These objectives are the same as Galbraith's...

...At $40 billion, defense spending would be only a trifle larger than the preceding year...

...No one doubts that a Congress blessed with more liberals than in any year since 1936...

...They concern tax as well as expenditure policy and they demand a reallocation of existing resources in the direction of social expenditure rather than a simple channeling of the proceeds of growth to these purposes...

...As both the contestants recognize, the difference between them is a matter of emphasis...

...Our manner of growth makes us always too poor to afford what we must do to make our lives in our iowns and cities pleasant, appealing and enlightened...

...Almost, then, the point of difference amounts to the revival of an old, old debate between those who want to improve the world by making it richer so that men can afford to live largely, morally and esthetically, and those who wish to alter men's hearts so that they will value the right and spurn the wrong, in consumers' goods as in moral choices...

...Growth rather than redistribution of existing income is the solution to their difficulties...

...For Keyserling, growth is the preliminary condition which permits a host of desirable objectives the more easily to be attained...

...Since it is always easier to change men's incomes than their tastes, let alone their hearts, Keyserling's line of analysis has a considerable attraction...

...If we accept Galbraith's statement of the case, we are snugly caught in a trap of our own construction...

...Keyserling argues even that price inflation is less prone to occur when employment is full and progress is rapid than during periods of slack demand...

...To say the least of it, the budget is founded on optimistic assumptions about both receipts and outlays...

...If it is necessary, in order to return to higher growth rates, to lower interest rates, stimulate the farm economy and increase Federal spending on desirable social objectives, then this paramount objective merits the measures which are needed to achieve it...

...The consequences of Galbraith's concepts imply more disturbance of existing arrangements...

...It is only necessary to put the dispute in this way to suggest that in terms of immediate political practicalities Keyserling's position is a good deal more ingratiating than Galbraith's...

...Recent statements of the Democratic Advisory Council, of which Keyserling is a member, display the marks of his views...

...Even more interesting than these, however, is the structure of assumptions which can be derived from the President's proposals...

...In the end, a better social balance between public and private spending will promote healthier growth, diminish the swings of the business cycle, and encourage healthier tastes...

...In a respected American tradition, it trusts the good sense of Americans to make sensible judgments about their expenditures...

...If we follow Keyserling, the most pressing task before liberals is the resumption of a high rate of economic growth...

...The key differences in the two positions are to be found in budgetary policy...

...Above all, therefore, we must spend more on the public sector, even if we raise the funds by that most obnoxious of all taxes, the sales tax...

...However, I find it hard to avoid the conclusion that unless there is some alteration in American preferences, even more of our growth will in the future be wasted than is now thrown away on the traditional array of shiny contrivances, meretricious wrappings and denatured contents...

...Thus, in the end, it is growth which balances budgets, diminishes poverty, controls inflation, improves the social services, and aids other peoples...

...I believe Galbraith to have been eternally right in his call to liberals not to reiterate the customary items in their litany of social needs, but to lead Americans to a saner appreciation of the relative position of the items on their scale of preferences...

...No sensitive person can rejoice at the image we present to others and the image we present to ourselves...

...However, he does not believe that further growth of the kind we have recently encountered will automatically solve our remaining social and economic problems...

...The signs that Americans themselves are ready to be led in this direction should encourage liberals to adopt the more, rather than the less fundamental diagnosis of the necessities of their time...

...Because, maintains Galbraith, social attitudes label whatever the private enterpriser produces as valuable and denigrate the fruits of public endeavor, the conventional wisdom can only plead for more and more output...

...We starve the public sector of the economy, we waste our energies on producing and consuming what we barely want (otherwise why must advertisers cajole their customers so frantically...

...The attack was in the name of growth...

...growth and economic stability are both best served...

...The Affluent Society...

...To this dispiriting rule, the coming session of Congress promises to be an exception...

...Before this lofty objective, lesser objectives—housing, urban redevelopment, aid to depressed areas, schools, social security lienefits, hydroelectric projects...

...This is true even when the uneasy feeling will not down that something is wrong with what is produced and, in particular, with what is not produced — decent housing, attractive cities, and well-designed schools staffed by professionally-paid teachers...

...In achieving this goal, the Government plays its most effective part by balancing the budget...

...would balance at $77 billion for the fiscal year beginning July 1, 1959 and ending June 30, 1960...

...This is not quite to say that all of Keyserling's strictures are unjustified...

...On the expenditure side, the budget contemplated savings on housing, rural electrification, farm programs, and unemployment compensation...

...In 1957...

...For the liberal, therefore, the ideal posture of response to the President's penny-pinching budget is almost that of the revivalist who seeks a response from the heart...

...The difference in emphasis, therefore, implies the difference between centering our attention on the quantity of goods, in the implicit faith that their quality will in time improve, and concentrating on an alteration of public attitudes toward the public and the private sphere...

...True, growth does not make it certain that we will spend more abroad, but it will make the correct decision easier...

...Between 1947 and 1953, annual growth averaged 5 per cent after full allowance for changes in the value of the dollar...

...and J. K. Galbraith...

...He has written for Commentary...

...In this context, it is worth examining one of the instructive polemical clashes of recent months, in which two rival banners were brandished...

...For Keyserling, as for the British Labor party in its recent manifesto, growth is the universal remedy...

...Only the rich can be generous...

...What immediate meaning does the debate between Keyserling and Galbraith have for liberals in and out of Congress...

...These simple facts of political life are probably clear even to the Administration...

...Galbraith is also a member of the Democratic Advisory Council, which makes the argument all the more fun for an outsider to watch...

...The President based his expectation on higher yields from existing taxes as recovery continued, higher postal rates, and increased gasoline taxes...

...New Republic and other magazines...

...will not hold still while the President and his apprehensive advisers cut the heart out of liberal programs already in operation and veto those which so far are only conceptions...

...Leon Keyserling started the argument with a simultaneous attack upon both Arthur Schlesinger Jr...

...Since Galbraith hopes for less from growth in the near future than does Keyserling, since the range of programs he supports is costly, and since inflation remains dangerous, his position implies heavier taxes parallel to increased public expenditures...

...Growth alone can provide the funds out of which expenditures on schools, hospitals, rural rehabilitation, housing and river basin development can be increased painlessly and without damage to fiscal stability...

...This he did by his declaration that the budget he planned to submit to Congress ROBERT LEKACHMAN, who teaches economics at Barnard College, will soon publish a book on economic history...

...Keyserling rose to the defense of the practical politicians, both present and past...

...And, asks Keyserling, even if Galbraith's assumptions were granted, how could we relax our efforts to grow while so much of the world lives in the direst of poverty...

...Finally, growth alone will enable us to deal more generously with the underdeveloped nations of the world...

...Nevertheless, he can be judged at worst premature, for even if there is more poverty than he grants and growth will have some impact on it, what he describes is still the direction in which our society has been moving...

...It carries forward the traditional programs and some of the traditional assumptions of the New Deal and the Fair Deal...

...As the President sees life, the control of inflation is the most important of all domestic objectives...

...Economy By Robert Lekachman ONLY RARELY do our infuriating political arrangements permit a real clash of ideas in Congress...

...By itself, this cheerful political prospect would not insure an intelligent dispute, much less a principled clash between conceptions of the public interest...

...Few intellectual confrontations survive the blockade of rotten rural boroughs, division of power between ffouse and Senate and Congress and President, the seniority system, and the coalitions of diverse interests which paralyze both major parties...

...The concrete difference between his position and Keyserling's in the next year or two, assuming continued recovery, centers on tax policy...

...In logic, the proposition extends to the taxes by which the Federal Government supports its activities...

...For much of our growth has been dissipated in the creation and apparent satisfaction of more and more trivial tastes...

...For Galbraith, better social balance is essential both on its own grounds, for the immediate benefits which will flow from spending money on things we really need instead of on purposes we can scarcely identify, and because, in the long run...

...From 1954 on, that rate dropped to 1.3 per cent...

...Nobody really knows why elections turn out as they do, but one more speculation on the November landslide might suggest that in addition to recession, general Administration fumbling, vicuna coats, and an extraordinary run of moribund Republican candidates, there was an uneasiness about what we produce and consume—in short, an atmosphere ripe for the changes of attitude which Galbraith seeks...

...It does not propose to raise or alter established taxes, save to eliminate some of the inequities in favor of business interests which have crept into the tax code, especially since 1953...

...Keyserling's assault upon Schlesinger centered around the latter's criticism of the Democrats' nomination of Thomas Dodd rather than Chester Bowles for Senator in Connecticut, and Frank Hogan rather than Thomas Finletter for Senator in New York...