The U.S. Economy-I Growth and Vitality
WOYTINSKY, W. S.
The U.S. Economy — I Economics is often called "the dismal science." Yet, ironically, since the day that simple bartering: first began it has perhaps been the most potent single factor in shaping...
...Only a dynamic, rapidly expanding economic system will permit this country to respond to the challenge in the hour of decision...
...The impact of seven years of Republican Administration on the distribution of national income has been relatively mild...
...Growth and Vitality By W. S. Woytinsky The United States is a big country with a highly complex and diversified economy...
...Conversely, the new requirements could be met if the national economy grew more rapidly than the population...
...And in the long run the prosperous nations will be able to support such a plan only from the current product of their rapidly growing economies...
...It may find expression in the glorification of a very slow growth which roughly keeps pace with population growth, and in the contention that any forced acceleration of economic progress is contrary to our way of life and would lead to disaster...
...Consequently, as the visible wealth of the nation increased, its natural riches diminished...
...Then the Government could divert part of this "extra-high" increment to the conservation, development and improvement of natural resources without recourse to new taxes that would cut into current individual consumption...
...The individual's desire to improve his economic status is natural and in line with American tradition...
...he dedicated himself to making positive contributions to free society...
...3. Educational, Recreational and Medical Serv-ices...
...He was director of the German Federation of Labor from 1928 to 1933, and served with the International Labor Organization prior to coming to the United States in 1935...
...As in conservation, with an annual per capita income of $2.000 the United States can afford to do more than it is now doing to provide adequate educational, recreational and medical services for low-income families in congested areas...
...it looks for investments that promise the highest profit...
...The difference was in the rate of growth...
...After the collapse, the Government tried to persuade the public that the economic failure was just a ripple on the ocean of eternal prosperity...
...If it rises a fraction of a point above the pre-recession peak of, say, a year and a half earlier, that point may appear to be an all-time record...
...By the time the nation realizes it may be pushed to the wall, the bill for making up lost time will reach staggering proportions...
...1. Growing Population and Progressing Urbanization...
...This country could have matched and perhaps even surpassed Soviet rocket and space achievements if its leaders had inspired the people with a feeling of emergency and provided the money needed for research and development...
...the workers' share increased by 42 per cent at current prices, or 28.5 per cent in constant dollars...
...Taking account of the increased population, the advance was 5 per cent annually in 1933-53 and 4 per cent in 1947-53, and there has been no appreciable progress since 1953...
...Washington's preoccupation with the budget led to assurances that there was no cause for alarm...
...The drive of these nations toward economic independence and higher living standards, and their determination to share in the achievements of modern science and technology are part of the worldwide revolution of the 20th century...
...In addition to supplying foreign aid of the conventional type, the United States must take the lead in the still more difficult task of helping underdeveloped countries overcome their backwardness and poverty...
...Born in St...
...7. Relieving World Misery...
...The rate of growth of industrial production has changed similarly...
...Asked whether you feel you are in the midst of prosperity, you would, in all honesty, say yes...
...If growth of the national product could be accelerated from what Secretary of the Treasury Robert B. Anderson refers to as the "sustainable" rate of 2.5 per cent annually to 4.5 or 5 per cent, a surplus of $10-$12.5 billion would be obtained in the first year of operation, $20-$25 billion in the second year, $30-$37.5 billion in the third year, and so forth...
...Yet, ironically, since the day that simple bartering: first began it has perhaps been the most potent single factor in shaping the lives of individuals and determining the paths of nations...
...To be sure, the U.S...
...4. Economic Improvement...
...The failure may be manifested by mass unemployment, by the slow pace of progress, or by an increasing difficulty in meeting the needs of the people that can be satisfied only by the public sector...
...A negative attitude on these questions does not necessarily mean that one feels the United States does not need to grow economically...
...But it is likewise true that there was a deep difference in the economic climate in this country before and after 1953...
...But to them the crucial question is which system holds more promise for their underdeveloped regions...
...Even granting Galbraith's criticism of how the nation is using its economic resources and technological capabilities, one may expect that sound growth of the national product will be accompanied by better distribution and utilization of it...
...But the overdue education, recreation and health projects could easily be financed out of an increasing GNP...
...Conservative economists, however, reject any economic growth which could cause a shift toward greater equality in the distribution of incomes and expansion of the public sector of the economy...
...For while the conservatives are eager to preserve the prevailing pattern of social and economic affairs, the progressives demand continuous improvement of our socio-economic system...
...Woytinsky wrote shortly before his death on June 11...
...This shift is unsound and contrary to the trends in the two preceding decades, but has developed very slowly and is partly compensated by the development of the Social Security System...
...5. National Defense...
...Petersburg in 1896, he suffered at the hands of the Tsarists as well as the Bolsheviks...
...So the U.S...
...was allowed to fall behind the Soviet Union in these vital areas, and when the public was aroused by Sputnik...
...This seems contrary to my recommendation that changes in the welfare of people be measured by changes in the GNP growth rate, at constant prices, per capita of the population...
...Indeed, as the leader of the free world since World War II, its position is similar to that of a large concern which has led in the welfare and civic affairs of a community for many years and is expected to continue its voluntarily assumed role...
...and Latin America's Economy...
...Under our political system such an assumption is defensible: Even an Administration more responsive to the demands of big business than to the needs of the people cannot greatly change the distribution of national income in this country...
...Democracy...
...began to economize in its welfare contributions, its new policy— and I do not mean to suggest that such has been the policy of the present Administration—would provoke resentment among less privileged friendly and uncommitted nations...
...Here is the GNP record in 1954 dollars: 1933—$126.6 billion...
...The lion's share of the added national income may go to groups whose current income is so high that they cannot use it all sensibly...
...Meanwhile, the population was growing at an average annual rate of 1.2 per cent in 1933-53 and 1.7 per cent in 1953-59...
...Indeed, when seen in this light, the acceleration of economic growth is one of the most important issues facing the United States today...
...This does not necessarily mean that the United States must show the same annual rate of growth as the USSR, since it has satisfied the basic needs of the people...
...The Federal Government assumed the leadership in this new policy and found loyal support among state and local authorities...
...Similarly, surplus government receipts may be used for operations of doubtful value for the people...
...The outcome depends largely on the ability of the prosperous nations to help the underdeveloped areas realize the aspirations of their peoples...
...Has not this nation reached a level of opulence on which it should direct its attention to targets other than new economic records...
...During these years, the business share of the national income increased by more than 50 per cent at current prices, or 36.5 per cent at constant prices...
...The contradiction, however, is more apparent than real...
...At the same time the growing population, the big cities and new industries each year demanded more water, coal, iron and other metals and minerals...
...But by accelerating the growth of its national product it could make its commitments less burdensome...
...The Tennessee Valley Authority, which is regarded in the free world as a symbol of the technical genius and noble aspirations of the United States, is a memorial of that era...
...This comparison leaves little of the myth of record prosperity in recent years...
...Thus the failure to encourage progress leads to a deterioration in industrial relations and protracted labor disputes that are detrimental to the whole economy...
...But even a country half as prosperous as the United States could do much more than is now being done to conserve and develop its natural resources...
...Its index shows erratic fluctuations during World War II, but the annual rate of growth averaged 6.2 per cent in 1933-53, 5.6 per cent in 1947-53, and less than 1.7 per cent in 1953-59...
...These figures show an average annual advance of 5.4 per cent in 1933-53 and 2.4 per cent in 1953-59...
...It has become increasingly difficult, however, for this country to meet its international obligations out of its current national product, which is lagging behind steadily mounting domestic requirements...
...The Administration has tried unsuccessfully to shift part of its foreign aid commitments to other countries which have a much lower per capita income but a higher rate of economic growth...
...During the 19th century the natural resources of the United States were badly squandered...
...Thus if the national product is fluctuating at the pre-recession level, the real per capita product is some 5 per cent below the pre-recession peak...
...It may take a year for the national product to regain the ground lost in the early phase of the setback...
...The problem is that it is difficult to persuade people to forfeit some of their gadgets in order to improve public services...
...2. Conservation and Development of Natural Resources...
...If you are not a farmer or one of the four million unemployed, do not live in a depressed area or work in a depressed industry, there is a good chance that you are well off...
...Suppose then that the recovery continues and is followed by a further expansion of economic activities, raising the national product another 6 per cent in the following year, while prices advance 1.5 per cent...
...Communism and Democracy are on trial, especially in the uncommitted countries...
...But during the same period the population may have increased 2.5 per cent and prices may have advanced as much or more...
...Taking this increase into account, the per capita GNP at constant prices was advancing at an average rate of 4.2 per cent in 1933-53 and .74 per cent in 1953-59...
...This ability marks the difference between a dynamic and a stagnant economy...
...6. Moral International Commitments...
...In this situation there can be no question of the danger of "growth for its own sake...
...There is considerable difference between this and the Government's clumsy measurement of prosperity in terms of total national product at current prices...
...He was never duped by the Leninists or even by Lenin himself, with whom he debated in 1917, and joined instead the social democratic forces led by Iracli Tseretelli...
...Veteran New Leader readers will recall his four-part series of articles, "India: Awakening Giant" (later published under the same title as a book by Harper's), which he wrote after this trip...
...In addition, it has offered generous military, economic and technical assistance to individual countries...
...It can play some role in developing mineral resources and establishing new industries, but it may do more harm than good to economic progress if the host country fails to integrate foreign investment into a general development plan supported by public funds...
...Like all his writings, they reflect his preoccupation with the welfare of human beings...
...The strength of an economy lies not in its ability to return to its old volume after temporary contraction, but in its ability to grow appreciably more rapidly than the population grows...
...The situation is not as bad now, of course, but the Eisenhower Administration's attitude toward adverse economic developments is reminiscent of the Hoover era...
...1953—$369 billion...
...Nevertheless, when a country recovers from an economic setback, as the U.S...
...Then the acceleration of economic growth should become a goal of a government aware of its responsibilities...
...On the other hand, economic expansion does not by itself necessarily mean improvement in the material or spiritual conditions of the people...
...But, unlike many emigres, Woytinsky did not pine for the old days...
...When the real per capita product is advancing very slowly or not at all, however, rising wages may be as inflationary as rising profits...
...economy...
...From that year until 1941, when he became a naturalized citizen, he was a member of the Social Security Research Council, and during the next six years he was principal consulting economist to the Social Security Board...
...1959—$427 billion...
...As the world's richest nation, the United States has underwritten a large share of the cost of the international economic and technical aid programs of the United Nations and the World Bank...
...All in all, it seems that a comparison of the annual growth rates in per capita Gross National Product (GNP) in various periods is the best method of appraising how much each period has contributed to the well-being of the nation...
...Woytinsky, together with his wife, E. S. Woytinsky, lectured for the State Department throughout Asia...
...The per capita real product would gain some 2.7 per cent but would still be some 2 per cent below the pre-recession mark...
...A similar tour of Latin America resulted in the special New Leader supplement, "The U.S...
...Some arguments developed by John Kenneth Galbraith in his book, The Affluent Society, might be understood as directed against the further growth of national income in the United States...
...It has also suggested that underdeveloped countries—especially in Latin America—rely more on foreign (i.e., American) private capital...
...How can growth be accelerated...
...It may end with the world bitterly divided between the have and have-not nations, with clashes between races and continents...
...will require the assistance of a score of advanced nations in its efforts to put across any kind of super Marshall Plan for mankind, which even in its early phases will require funds comparable to those now spent on the arms race...
...If the U.S...
...economy, which Dr...
...did in the winter of 1957-58, the rise of its industrial production and national income is a symptom of the return to normalcy rather than of economic progress...
...But it is also possible that a better integrated world will emerge from the convulsions...
...These countries are aware of Soviet acts of aggression and violence...
...8. Communism vs...
...Intoxicated by the orgy of speculation, the nation headed for catastrophe while the Government issued assurances that the country had entered the golden age of eternal prosperity...
...Woytinsky's major works include World Commerce and Government: Trends and Outlook (1955), World Population and Production (1953), Earnings and Social Security in the United States (1943) and Three Aspects of Labor Dynamics (1942...
...This list of arguments in favor of rapid economic growth is not complete, but I think it is sufficient to demonstrate that such growth is an appropriate national goal if it is considered with all its implications—that is, the possibilities which it opens to a people and their socially minded and farsighted government...
...Berlin and Geneva...
...Accordingly, they will judge both systems by their vitality, dynamism and ability to grow...
...Social Security System...
...At current prices, the national product increased by 31 per cent in the 1953-59 period...
...This brings us to a vital issue: the speed of growth of the national product in constant dollars and in relation to population...
...role in this struggle has been recognized by many statesmen, including President Eisenhower, who has repeatedly suggested using part of the funds that would be set free as a result of universal or partial disarmament to promote economic development in underdeveloped countries...
...In 1947, he was named research director of the Twentieth Century Fund and professor of economics at Johns Hopkins University...
...In 1919 he went into exile, living in Rome, Paris...
...The New Leader is proud and privileged to publish this first of a four-part series of articles on the U.S...
...The problem of rapid economic growth arises when a free-choice market economy controlled by the decisions of millions of individuals fails to keep pace with the needs and demands of the people...
...This last represents the most futile advice the United States could give to its sister republics: Private capital will not support the projects in which these countries are most vitally interested...
...For example, the Government not only refused to take steps against the 1957-58 recession but tried to divert public attention from the nation's lagging economic growth by issuing an array of confusing statistical releases which were buttressed with such terms as "unprecedented prosperity" and "all-time record...
...Since public opinion is rather confused about this, perhaps the best way to clarify the issue is to survey the national needs which might be satisfied if the annual increment of the GNP were substantially larger than it has been in recent years...
...It is on the issue of economic growth, I think, that the conservative philosophy of government clashes head-on with the progressive philosophy of government...
...at constant prices and in relation to the population, it rose only 4 per cent in those six years...
...Rapid growth—whatever the term "rapid" means—should be considered a means of achieving vital and urgent national needs...
...After retiring from both posts in 1955, Dr...
...But it could hardly command the respect of the world if it should prove incapable of growing in response to the people's future needs...
...It is not surprising, therefore, that W. S. Woy-tinsky, a gentle, soft-spoken man whose most distinguishing characteristic was his concern for and love of humanity, devoted his life to its study...
...Moreover, it has a high standard of living and institutions which protect individual incomes in times of economic setback, even if not always sufficiently...
...Explanations that it is no longer as well off as in the past would arouse suspicion...
...A satisfactory rate of economic growth would contribute to closer cooperation between labor and management, which in turn would contribute to a more rapid increase in productivity...
...This is also the focal point of the argument between those who advocate the supremacy of private enterprise over the state and those who urge the sovereignty of the nation over private enterprise...
...Reference to the growth of the national product, therefore, makes sense only if a nation's social structure has not deteriorated in the period under observation...
...The need for conservation was first realized around the turn of the century, but not until the Great Depression did the nation awake to the full seriousness of the situation and begin work to conserve and develop natural resources on a large scale...
...Another year of advance at the same rate would put the per capita national product (at constant prices) about one half of 1 per cent above the pre-recession peak —a rather meager cumulative gain in three and a half years...
...It is difficult, however, to squeeze the millions of dollars required for this purpose out of a slowly expanding national income...
...Of course, economic growth has many aspects and covers numerous questions ranging from the general to the specific: Does this country need further production growth...
...On the other hand, certain patterns of economic growth may appear purposeless from the progressive, dynamic viewpoint...
...What rate of growth is desirable and possible...
...With the shift of population from rural to industrial areas and the development of cities and vast metropolitan areas, a GNP increase that merely keeps pace with the population growth cannot maintain the present standard of living...
...The latter rate, however, must be deflated by taking into account a population growth of over 10 per cent in six years and a steadily increasing proportion of white-collar workers and highly paid specialists in the labor force...
...can neither withdraw from its foreign aid activities nor reduce their cost without harming both the countries receiving the assistance and its own position...
...True, the United States has remained a land of plenty, indeed the most affluent nation in the world...
...Instead the U.S...
...His work in this field earned him a reputation as one of the chief architects of the U.S...
...But the records show that in the late 1920s very few people were aware of the dangerous condition of the U.S...
Vol. 43 • July 1960 • No. 29
