How Affluent Is Our Society?

...We've just been through a fight on the billboard issue in Congress, and only by the narrow margin of one vote did we succeed in giving a slight bonus to states which would regulate the showing of billboards along the $41 billion national system of highways we are building...

...So I would say that before we embark on a sales tax, I would like to see these and other loopholes plugged and some system of Federal aid developed whereby the receipts from these hitherto exempt fields can be used for the support of the necessary public services...

...that our machines are so efficient that they can and do turn out material goods in such abundant profusion that they are almost literally running out of our ears...

...I cannot believe that the causes of their poverty are purely personal or purely an accident of geography: they should not be discarded because their numbers are less than they were...

...I don't want to give too detailed a review of Galbraith's affluent book on the affluent society, lest it lessen the author's affluence and that of his publishers...

...I think I would still have been here if Paul had been on the selection committee, and so on balance I'm more than grateful...

...and two lesser lights midway between them, the somber but moving John Stuart Mill and the relatively unappreciated Stanley Jevons...

...This may be the reason Galbraith advocates the sales tax, and I certainly do not wish to criticize his motives...

...We are now embarking on another very difficult struggle to extend this dollar-an-hour minimum wage to large groups of employes, mostly in the retail and service trades, who in many cases, particularly in the limited-price variety stores, are getting less than a dollar an hour...

...Senator Paul H. Douglas: I SUSPECT that the real reason the Tamiment Book Award is being given to John Kenneth Galbraith is the delighted surprise we all felt in finding an economist who can write wittily and well...

...it is a regressive tax, I happen to be one who in an old-fashioned way believes in progressive taxation: namely, that rates should increase as income increases...

...Only one other economist has ever matched him in style...

...James MacGregor Burns for Roosevelt: The Lion and the Fox...

...The fact is that the sales tax is not even a proportional tax...

...Now, I think these people—roughly 15 per cent of the families and probably more than 15 per cent of the population—could certainly be said to be in poverty...

...In years past it has been given to, among others, Merlo J. Pusey for his biography, Charles Evans Hughes...

...Witness the mad pursuit for artificial aids to good health...

...I should like to make it clear that I have not proposed it as the NAM (my "friends" of the NAM, as they are now called) would have it, as a substitute for the progressive income tax...

...I am very glad that Kenneth mentions the necessity for cleaner streets and a better collection of trash...

...A sales tax by definition is almost never levied on capital investments, nor on services...

...Selman A. Waksman for My Life With the Microbs...

...I don't think he can be spared from the Senate, so I hope this never happens...

...I might note, parenthetically, that Chicago is the center of the outdoor advertising industry...

...My chief contribution to the city of Chicago was that instead of having the garbage dumped in open pits, which was the practice before I became a member of the City Council, we have reclaimed a lot of land on the south lakeside by the "fill and cover" method...

...There is no political mileage in defending them...

...Better health is certainly desirable...

...So I don't like to see this regressive note injected into methods of financing social progress...

...Cart Sandburg for his autobiography, Always the Young Strangers...

...The Award Luncheon was chaired by Hunter College President George N. Shuster, and the presentation was made by United States Senator Paul H. Douglas...

...they reminded me that when I ran for re-election I had my face stuck up all over the State of Illinois on billboards and that if billboards are unaesthetic now they were unaesthetic then...

...It too can only be obtained in large part through public action...

...Someone once defined the art of taxation as the ability to pluck a goose, feather by feather, without the goose objecting too much...

...Now I am afraid, as is the custom of Senators, I have talked too long and I hope that Kenneth will not think I am ending on a sour note...

...The result is that the big oil companies pay only about one-third of the rate of taxation into the Federal Treasury that normal corporations have to pay...

...Though it is very rare for an economist to like the work of any other economist...

...that under these conditions poverty is an anachronism and life is a cornucopia of plenty: and finally, that we have emerged from an economy of hardship and pain into one of pleasure and should govern ourselves accordingly...

...The most notorious of these is, of course, the 27.5 per cent depletion allowance on gas and oil, which is in addition to the justifiable allowance of deductions for explorations and operating expenses...

...I had positive pleasure and enjoyment in reading The Affluent Society, and I heartily recommend it...

...The Tamiment Book Award is regularly given to the author of a non-fiction work considered to be of unusual social significance...

...My rather modest suggestion was that, in addition to the taxes we levy locally in the states and cities for the financing of education and police and cleaner streets and all the other things we need, we should perhaps have another look at this pariah of taxes...

...We have allowed loophole after loophole to be driven into our tax laws, so that there is great inequality at present between people with the same income who get their incomes from different sources...

...During the Congressional floor fight, the representatives of that industry came down to lobby me...

...And yet how could you have an automobile industry if you do not have roads on which the automobiles run...

...I suspect he probably feels that the sales tax is the only way to get the public to provide such services: If they know they are paying for schools and for health and for parks, they won't want to do it...

...and perhaps in a better day, a more courageous economist would have insisted that his publisher call the book The Quasi-Affluent Society...

...According to the census, there were roughly 3.8 million families with incomes over $10,000 a year in 1957...

...This, however, in a day when Madison Avenue has triumphed, is no longer possible...

...My friends who are policemen in Chicago say there's a special detail which is assigned to follow visiting ministers to Chicago, to guard them from the dangers in which they sometimes involve themselves...

...I commend that to the citizens of New York...

...I quite agree that economists, including liberal economists, have very much neglected the field of taxation and that this is one of the great areas where there needs to be a rebirth of interest...

...How Affluent Is Our Society...

...they formed about 8.5 per cent of the total number of families...

...Now these public services, as Galbraith points out, do not have the high-priced public relations advertising men whooping up a demand for them that detergents, laxatives, bubble gum, soaps and so forth are able to muster...

...Galbraith makes the very correct point that the satisfaction of public wants has lagged behind the satisfaction of private wants, and that the next advance in our society should be in the field of more adequate provision of these public wants...

...So I think it's very good to have an economist who can write urging more and more expenditures for these purposes...

...Galbraith's book properly draws attention to it, but 1 would like to remind you that we still have 25 per cent of the country's families with incomes under $3,000...

...There still is a lot of work to be done for the poor...

...In 1957, the Award was presented to Milovan Djilas, in absentia, for The New Class...

...It certainly is wrong to say that the production of automobiles is in the public interest— but that the furnishing of roads upon which the automobiles must run is not in the public interest...

...Henry George, and he was commonly regarded as a heretic...

...Another 3.7 million families had incomes between $1,000 and 82,000...

...These able men, the finest flower of our educational institutions, the joy of the Ivy League, are trained by these institutions and by modern science in the arts of producing irrational belief...

...Galbraith's book, in this respect, may not make him the favorite professor at the Harvard Business School, but it should win him the plaudits of the vast majority of the American people, who in their hearts, like Emerson, do not want things to be in the saddle and to ride mankind...

...But should it happen, sir, and in a state like Illinois where the state income tax happens to be unavailable, it would give me comfort if I were able to support you in the continuation of that sales tax...

...We're losing our recreational areas all over the country...

...I SHOULD like to express my particular thanks to Paul Douglas for his thoughtful, wise and, on the whole, sympathetic comments on the book...

...but then, as is the custom of so many authors, he more or less disregards that chapter in the conclusions he draws in the remainder of his book...

...I have to take issue with him on the way to finance these measures...

...What with the needs of modern life, with people living in cities or close to cities, I doubt if those with incomes under $10,000 can be regarded as affluent...

...I am going to buy several copies of this book and I am going to give one of them to my dear friend and colleague, Harry Byrd of Virginia...

...Out in the Midwest, for example, we're making desperate efforts to try to save the last remnants of the Indiana Dunes, and it is not at all certain that we will be successful...

...it is levied on food, clothing, furniture, tangible commodities which pass over retail counters...

...And I would like to be able to support you further, sir, in increasing it so as to bring the level of Illinois schools up to, what shall I say, the level of Massachusetts...

...Identification with the National Association of Manufacturers I regard, sir, as a really damaging thing, and particularly unkind coming from one Democrat to another...

...its later meteor, John Maynard Keynes...

...This may be my own fate, too...

...But I do want to say that, contrary to the title of Galbraith's book, not everybody is affluent in the United States...

...and if they have to pay all at once in the form of an income tax, they will groan and complain about the government...

...Galbraith recognizes this in a chapter of his book, a very excellent chapter...

...I found that one of the most penetrating and amusing portions of Galbraith's book was his account of the practices of the workmen who hang out on Madison Avenue—they and their associates all over the country— in getting people to buy more goods so as to keep the machines busy and running...

...But in this country Galbraith is virtually unique in being an economist who can write well...

...When I served on the Chicago City Council, I found that I was spending most of my time in arranging for better collection and disposal of garbage...

...The Affluent Society is indeed a fine accomplishment, but I'm sure, Kenneth, that you are one of the first people in the country to believe that one should not uncritically accept all of your theories...

...Then there were another 4.2 million families with incomes from 82,000 to 83,000, making a total of just short of 25 per cent with incomes under $3,000 a year, Now conditions have certainly improved during the last 30 years...

...At present, the progressive nature of our Federal tax system roughly only offsets the regressive nature of our state and local systems, so that the combined effect is more or less proportional...

...It's not the third of a nation ill-housed, ill-fed, and ill-clothed to which Franklin Roosevelt referred in his Second Inaugural (and which was really much closer to three-eights or 40 per cent at the time), but it is somewhere between one-quarter and one-fifth of the population...

...Economics was once defined as the science of dubious conclusions couched in incomprehensible language...

...But, now, I regret I must mix, I will not say a little acid with this honey, but a few qualifications...

...we are all very happy that it has occurred and we hope it will continue...

...Just as ministers on vacation sometimes get into trouble and just as men who walk in the stars sometimes stumble upon earth, so I am afraid our good friend Kenneth Galbraith with all his great virtues, has stumbled...

...There was one independent oil operator who over a period of eight years made a net income of $13 million, and yet during that time he paid only $80,000 in taxes...

...But if you can take it away from them a few pennies at a time, then its palatable...

...For as I look back over a somewhat misspent life, this, I think, is the most constructive thing to which I can point...

...While these people may not be the most important group numerically in the nation, they are still extremely important...

...And where can you go with your automobile...

...In one chapter, he is singing beautiful chords of music in heaven with angels...

...My real purpose is to express my thanks...

...But probably you have to get up to 815,000 and over to be really in the affluent group, and there were only 812,000 of those families in 1957—slightly less than 2 per cent of the entire population...

...But this is enough of technical details...

...Some of Galbraith's conclusions may be dubious, as I shall try to indicate, hut there can be no doubt about the wit and the pungent clarity of his style...

...I replied that this was true, but that on the whole I thought nature was better even than my face and I would reform in the future...

...So I want to throw out a word of caution on this brilliant book of Kenneth Galbraith: Read it, but sprinkle with salt, and accompany it with figures such as these...

...The following articles are adapted from the exchange of comments between Senator Douglas and Professor Galbraith...

...Might I just say one word on my own behalf on the subject of the sales tax...

...In fact, it has now become the great justification for roads that they provide a medium for the automobiles...

...Kenneth Galbraith is enough of a sardonic iconoclast to give us all a great feeling of vicarious pleasure when we see certain institutions kicked in the behind, hut in a genteel needling style...

...Every student of family budgets knows that the percentage of income which you spend on these purposes diminishes as income increases...

...Being a somewhat literal-minded fellow, I thought I would get the figures on poverty in this country, so I asked the Bureau of the Census for its just-published figures on family income in 1957...

...This means that others have to bear the tax burden...

...Shouldn't we try, therefore, to bail out the liberal conscience and make the liberal's life in office slightly more happy in this regard...

...Be that as it may, I should like to point out that we liberals have neglected the question of taxation too long...

...I used to hear former Secretary of the Treasury George M. Humphrey expound that belief, and President Eisenhower has now taken it up...

...To enhance these efforts, the universities train psychologists and comparative anthropologists who roam the world and provide further insight into the desires of mankind, who point out the deep-seated insecurities of men and women, man's desire for status and how he can become an upper-upper, a middle-upper, a lower-upper, an upper-middle or even a middle-middle, by getting a more elaborate automobile...

...Every once in awhile, I hear some of my colleagues on the Senate Finance Committee advance the doctrine that all public expenditures are unproductive...

...Now, I didn't have in mind the possibility that Paul Douglas would one day become Governor of Illinois...

...and when I am turned out to grass by the constituents, I am ready to offer my services to New York's Mayor Bob Wagner on the proper handling of garbage...

...Let me say one other thing to you, sir...

...We have allowed the Senate Finance Committee to be stacked with representatives of the point of view of the Chamber of Commerce of the United States...

...in the next chapter, he's carrying on an antiphonal chorus with the National Association of Manufacturers and urging the adoption of the sales tax...

...Kenneth lays great stress upon education...

...there is still a lot of poverty in this country...

...And I would say that most of these families can be regarded as being in a state of poverty...

...And how can you enjoy riding in automobiles if you travel in a canyon bounded by billboards on either side...

...Some of us in Washington remember the struggle we had to get a dollar-an-hour minimum wage for certain categories of workers...

...Elmer Davis for But We Were Born Free...

...And we might ask ourselves whether, in a society where we have many rich and lavish supplies of private goods, we shouldn't also tax them in favor of more poverty-stricken public services...

...It inevitably happens that when liberals like LaGuardia attain public office they find themselves revising their past attitudes toward this particular tax...

...Out of over 43 million families irt the country, 2.8 million—6.4 per cent of the total—had annual incomes under 31,000...

...I have just been reminded that when Mayor LaGuardia was in Congress he opposed a sales tax too, but when he became Mayor of New York and had to deal with relieving the unemployed he advocated a city sales tax and put it into effect...

...Therefore, a proportional sales tax of a given percentage will fall more heavily on the lower-income groups in the population...

...I know of only four British economists: in the long line of our profession,, who wrote even reasonably well...

...How many people are really affluent...

...We have now something like 600 acres of land that has been built up as a by-product from the garbage and which otherwise would have gone I don't quite know where...

...we hope we won't have them always with us, but they are not yet affluent and should not be lost sight of...

...And while I know that this is not a very exciting question, I must say that one of our great needs is to reform our system of taxation and to plug some of these loopholes...

...But this 27.5 per cent depletion allowance on gross income up to one-half of net income goes on in perpetuity as long as the oil and gas continue to flow...

...Not merely our school buildings, but the pay of our teachers, the quality of our instruction, the size of classes generally are not what they should be...

...And let me accept one or two of your strictures, sir...

...There has been a further increase in the last 20 years...

...Perhaps those with incomes over $10,000 might be...

...they are very hard to help—because they move about so rapidly...

...They are the lowest paid, the most insecure, the most poorly housed, the most socially declassed and the most ignored...

...Whether or not this is because he is a professor I do not know, but since I was once a professor and have yearning inclinations to become one again, I would agree with him...

...The lowest group on the totem pole, of course, are the migratory workers...

...Now all this bears on the question of the sales tax...

...I couldn't agree more with Senator Douglas on the importance of closing up the egregious loopholes in the progressive income tax...

...They include, of course, the founder of our science, Adam Smith...

...I would only point out to you what trouble a person gets into when he tries to pioneer on this particular subject, and I would present myself as an example of the difficulty which wise and rational thinking in this field encounters...

...they are ignored by the American labor movement, ignored by the politicians, but badly in need of defence...

...And I imagine that we get something of the same pleasure from reading Galbraith that the young men of my generation obtained from reading Thorstein Veblen, and those of two centuries ago from reading Voltaire...

...But the main thesis of his hook is that we have solved the problem of production...

...I would certainly be a hit sorry if it were concluded from the book that all Americans are rich, that we have no poor people left...

...I am hoping that it will some day be named Douglas Fields in my honor...

...They harness their great talents to the agencies of mass communication—the press, the slick journals, radio, television, billboards, and even sky-writing—in order to create hitherto non-existent demands for goods of highly conjectural benefit, such as detergents, lipstick, laxatives, and larger, more glaring and even more finny automobiles...

...I spent five years of my life, from 1925-1930, trying to measure the increase in real wages which had occurred from 1890 to 1928, and the increase was around 30 per cent during that time...

...A long life to you, and may you continue to stir the dovecotes, including even the liberal dovecotes...

...I suppose that the title of this book itself reflects the values and mores of Madison Avenue...

...These high priests of our age who dwell on Madison Avenue, armed with depth psychology, create and manipulate the mass motivations which have permitted the automobile industry to go into one of the greatest nose-dives of economic history...