Charting America's Future: 12. A Global Strategy
TYLER, GUS
This is the latest article in a year-long exchange on CHARTING AMERICA'S FUTURE 12. A GLOBAL STRATEGY No man is an island, entire of itself; every man is a piece of the continent, a part of the...
...In a previous section of this series, "The Deindustrialization of America," I traced the successive stages of debilitation . First the rotting away of labor-intensive manufacture, as in textile, apparel, boots, shoes, radio, TV...
...Freeman concludes that "the main thrust in the developing countries should be to reach out to the small landholder, the 1-5 hectare fanner...
...build storage facilities for feed and fertilizer...
...The inpouring of francs, marks, lire, and pounds in pursuit of dollars boosts the value of the dollar in relation to other currencies...
...The Third World isn't faced with inevitable famine because it cannot produce more foodstuffs but because it does not...
...By its very nature the market is myopic...
...In the period 1934-38, Asia, Africa and Latin America were all net exporters of grain, shipping out more than 12 million tons, mainly to Western Europe...
...In this fanciful flight, we broke our wing-crippled American manufacture...
...If we allow steel and autos to "set," we will destroy our industrial base...
...We could allow these injured industries to fade away in the sunset...
...We can produce steel with methods more modern than those currently used in Japan...
...In that event, the world might well find itself wallowing in food while hundreds of millions of people wallow in hunger...
...It is dubious that we have held down prices...
...To get out of the box in which we have entrapped ourselves, however, it would have to mesh gears with a larger department that oversees the total economy: monetary and fiscal policy, industry and incomes, growth and inflation...
...We can do all this and more, but only if (a) we make a decision to do it and (b) the government intervenes actively to get it done...
...In the absence of equitable land redistribution, income redistribution could become worse even if agricultural output did increase...
...People in other lands could now afford to buy goods priced in dollars, and holders of dollars were not that eager to buy things outside the U.S...
...Once our eagle is made whole again, he could once more become a bird of prey, driven to devour developed friends in Europe and Japan and underdeveloped dependents in Asia, Africa and South America...
...As was pointed out in the discussion of "deindustrialization" in America, the poor lands have neglected their agricultural resources...
...These small holders, and the landless peasants they would employ if their productivity increased, make up the majority of hungry people around the world...
...NL, October 18...
...We might build a couple of ports big and modern enough to handle our coal exports, too, so that we don't have to go to Canada to get adequate facilities...
...A department to coordinate our foreign economic policy-trade, investment, exchange rates-is a necessary next step...
...The double irony here is that such overseas money actually hurts America in the world market...
...We can be bigger without "beggaring our neighbor...
...it tolls for thee...
...Just about every nation could engage more actively and profitably in world trade even as we regulate the flow of goods, services and capital...
...So the poorest lands lack food and lack the money to buy food...
...The central fault with this policy is that what is best for the market is not necessarily best for America, because the market is always mindless and often manipulable...
...Their hope was that rapid industrialization would gain them the "foreign exchange" to buy food in the world market...
...We will be finished as a military power...
...Because equity as well as efficiency is so important, Orville Freeman's insistence on small farming has special significance...
...an increase of the farmers' income averaging in excess of 500 per cent...
...With the Global Product (GP) advancing at a proper pace there will be more for everyone...
...called for an about face in American "development" policy...
...They can swell the world's supply of goods, especially food...
...Even if some of them have managed to bite off an ever bigger piece of the American market during the baleful '70s and early '80s, they must in the long run go into decline as the U.S...
...Today over a hundred countries rely on North American grain," observed Lester Brown in 1982...
...By using the taxing power, Washington could guide the flow of capital to best serve the nation...
...We have all the instruments at hand...
...Perhaps one of those women was the "starving mother with her child holding out its hand" in a photo caught by the icy eye of Claire Booth Luce...
...every man is a piece of the continent, a part of the main...
...Right or wrong, high interest rates were originally instituted to deal with a domestic problem, inflation...
...Our capacity to compete internationally will be impaired by our reduced ability to move raw materials, foodstuffs and manufactured goods from the interior to the coast for transshipment...
...To compete, others are compelled to raise their interest rates as well...
...The government acting directly, or as a major partner, dates from our first canals and turnpikes to the Tennessee Valley Authority to space exploration...
...But since no economy is "an island, entire of itself," they have had profound international effects...
...Without manufacture, the first rung on the occupational ladder for individuals at the bottom, we would soon be without "domestic tranquility...
...If we also allow labor-intensive manufacture to set, we will multiply the unemployed without hope of their being absorbed by steel and autos, the onetime saviors...
...and a major infusion of cash paid as wages to skilled and unskilled labor that was needed for community facilities constructed as part of the project...
...Projects with high social priority could be encouraged through selective credit controls, too...
...What the poor nations need, said Peterson, is development of their agricultural potential...
...A nation that lacks the mentality, and hence the instrumentality, to impose an internally compatible, consistent policy on trade, investment, and exchange rates is virtually doomed to move in contrary directions simultaneously...
...I have discussed such a program in earlier sections...
...Peterson added one other admonition: He called on the beneficiaries of our information and investments to "distribute income and social services much more effectively to the poor...
...The advantages enjoyed by the monolithic negotiating tactics of Communist bloc countries are obvious, but a growing number of democratic governments also leave fewer of their decisions solely to the private sector...
...For all of these procedures there is much precedent...
...They also constitute the greatest potential for increasing productivity...
...Italics mine...
...Rising income in small towns like Bainan would mean more than a better life down on the farm...
...Ironically, the money from foreign lands has done very little to boost the American economy...
...By narrowing our markets and cutting into theirs, we could do much damage to other peoples...
...Indeed, we are at present doing that...
...As the dollar theoretically floated back to its truer value, our trade position improved...
...But that would be the likely result only if the world economy were static or stagnant, if we found ourselves playing a zero-sum game in which our winning meant someone else had to lose...
...The advice was given to satisfy the corporate need for short-term profits, not society's need for long-term survival...
...We will become dependent on some future osec (Organization of Steel Exporting Countries), or oaec (Organization of Auto Exporting Countries), as we have been dependent on opec-ever fearful about how much we will get and what it will cost and who will decide...
...Despite the diversity and complexity of the problems resulting from the world trade explosion," declared a staff report to the Joint Economic Committee of Congress in December 1980, "the United States, the world's largest trader, has been the only major power without a department or ministry with primary responsibility for foreign trade...
...Unless others, particularly the South, begin to develop their own agriculture, in the long run they will be stricken with famine as North American capacity falls behind world need...
...The area of unused and underused land in the low-income countries that can be safely cultivated or otherwise used more productively is larger than previously thought," note Sterling Wort-man and Ralph W. Cummings Jr...
...the service economy would provide jobs to those displaced from heavy manufacture...
...As the planetary capitalist begins to pinch his pennies, economies everywhere feel the pinch...
...Less than half of the world's potentially arable land is currently being cropped...
...Next, the decline of capital-intensive manufacture, as in steel and autos...
...By itself, the vehicle we use to stimulate our growth would stimulate world growth...
...They do an estimated 78 per cent of the farming in most developing countries, and their willingness and capacity to make necessary changes have been demonstrated time and again...
...Avignette on the potential of the South is offered by Orville Freeman, Secretary of Agriculture under John F. Kennedy and Lyndon B. Johnson, in his description of what happened in the village of Bainan, 30 miles outside Calcutta...
...Tariffs are as old as the nation...
...To steel it said, make mergers not steel...
...It is a bourse, not a brain...
...With a more productive economy, government revenue would go up and there would be less need for foreign capital...
...Fiscal policy has always been an instrument to shape the economy: witness the many "loopholes" in the present law to benefit one business or another...
...America has a major part to play in turning around development policies worldwide...
...to autos it said, plan obsolescence for tinseled cars...
...if we reduce our buying power, other nations lose their best customer...
...And perhaps one such woman, counseled by constructive compassion, will someday create the economic ambience needed on our planet to help heal the injured bird in our "own house...
...where the money goes for mergers that yield huge capital gains, those parasitic profits could be taxed at something close to 100 per cent...
...Nor could it be otherwise...
...New and enlarged markets could absorb new and enlarged output...
...Then the frailties of a service-based economy, especially where the main "service" was the lending of money to other countries who have repeatedly defaulted on their debts...
...the rentier economy would enrich America with the returns on our foreign investments...
...Meanwhile, people with foreign currencies find it difficult to buy American-made goods, so the strong dollar weakens our balance of trade...
...economy fades into the sunset...
...Indeed, they have served to reverse a very deliberate decision in 1971 to devalue the American dollar...
...Foreign countries are also dependent on American capital...
...In so doing, the poor nations (the South) can liberate themselves f rom dependence on the rich countries (the North...
...Farmers "whose landholdings range from one-sixth of an acre to one acre" were assisted by a private foundation to "introduce drainage and irrigation...
...To avoid being hypocritical and impractical, let us begin with the condition of the American economy as a sol-ipsistic prelude to our consideration of "the main," the economic "continent" known as the planet...
...Luckily, we can undo the damage already done...
...without doubt we have held down output, deliberately and repeatedly...
...Deindustrializing America would not require any revolution in our political system????not even a constitutional amendment...
...employing high yield varieties of seed would double the harvest...
...Philosophically, we concur that "any man's death diminishes me because I am involved in mankind...
...Its message has broken many limbs...
...Once interest rates began to rise in the '70s, though, the value of the dollar rose too...
...If we allow our railroads to set, we will lose our most efficient means of land transport for cargo and passengers...
...The private sector will not act on its own because, as we have repeatedly shown in these pages, it is inhibited by the imperatives of short-run returns, by the bad habits of the fast buck...
...In the past, Washington has responded to special interests or specific problems . In the future, it could use the same instruments that have been sanctioned by custom and law to help meet national needs in an integrated fashion, with high priority for industrialization...
...Without renewed roadbeds, the trains will run slower and slower (they now average about 12 miles an hour) at great cost in fuel and time to the detriment of the total economy...
...Finally, through tariffs, quotas and instrumentalities such as the General Agreement on Tariffs and Trade and its subagencies, like the Multinational Multifiber Arrangement, we could regulate trade in ways that would allow other nations to move into our markets without causing dangerous dislocation in our industries...
...Consider four big losers: steel, autos, light manufacture, railroads...
...It is altogether conceivable that a few landowners in possession of gigantic latifundia in the Third World could update their farms by replacing people with machines in order to produce for export to the rich countries...
...We don't lack the intelligence...
...But are we acting in the best interests of the nation...
...While we are at it, we can renew other failing pieces of our infrastructure that are vital for a vibrant economy?-highways, bridges, harbors, piers, urban transit, water and sewage systems...
...The capability is there...
...And both are right...
...In a recent article for Scientific American, Harvard's Roger Ravell, a distinguished scientist and student of world agriculture, concluded that if the world employed the available technology and resources the way they are used on an Iowa corn farm, enough food could be turned out to sustain 38-48 billion people-About 10-times the present planetary population...
...This might affect the rest of the world adversely...
...Small holdings guarantee a fairer sharing of rural output...
...The government would merely use public money to reinforce what the market decides...
...In 1977, Peter G. Peterson, Secretary of Commerce under President Nixon and currently Chairman of Lehman Brothers, Inc...
...was blessed by geography, nature or God to enjoy an edge over its rivals...
...We will have added several million to the jobless rolls without any prospect for employment in the foreseeable future...
...I guess it would be hypocritical if I didn't say I would feel a little more compassion if one of my pet birds had broken a leg in its cage in my own house...
...Otherwise, our effort will amount to little more than relief in what can become an eternal emergency...
...Greater rural income would provide the market for domestic manufacture-As it did in the-United States in the century following the Civil War-making the South less dependent on the North...
...Rosier prospects in rural areas would slow down, perhaps even reverse, the manpower flow from villages into cities, thus relieving the oversupply of urban labor in pursuit of factory work...
...Where investments go toward productive purposes, tax benefits could be generous...
...No less serious for other nations than the ultimate shrinking of American markets and money is the damage done to them by the high interest rates the U.S...
...These hopes were based on the ancient faith of "comparative advantage," that somehow the U.S...
...Consequently, if there were two successive bad growing seasons in the United States and Canada, millions would die of hunger...
...The international aid undertakings of the last decade have, by any reckoning, failed: More than 25 per cent of the world's people still lead desperate, hopeless and deteriorating lives...
...More and more nations, both industrial and developing, are importing more food than they produce...
...Although some of the most passionate advocates of this schema are liberals who profoundly distrust the "invisible hand," their strategy would make the market the monarch: It would pick the winners and losers to be favored or forgotten by Washington...
...As we have shown in previous installments, American policy since 1970-And it is a policy, not an accident or a by-product-has been to restrain growth to check inflation...
...to manufacturers and retailers of labor-intensive commodities it said, get your work done overseas...
...Claire Booth Luce The contrary attitudes of John Donne and Claire Booth Luce are statements of sentiment...
...We are the world's big buyer...
...it is a cash register, not a conscience...
...So we formally abrogated the Bretton Woods agreement and let the dollar "float" to a natural level...
...The results within two years were: a production increase of 1,000 per cent...
...John Donne I repeatedly see pictures in the paper of a starving mother with her child holding out its hand...
...With the big potent dollar in their hands, American consumers are irresistibly tempted to get a bargain by purchasing imports made in countries with weak currencies...
...For reasons we have noted, that hope was hollow...
...What is vital, then, is expanding the GP...
...Our pet bird, the great bald eagle who once flew so proudly above all others in the industrial heavens, has been hurt...
...At each point we had expectations that all would be well in the natural course of events, thanks to the magic of the market: Heavy manufacture would absorb those disemployed in light manufacture...
...improvement of the village's food grain requirements from a deficit of 226 tons per year to a surplus of 35 tons...
...By the end of the 1960s, we concluded that the dollar was "overvalued" and, therefore, was threatening our balance of trade...
...We could establish a real central bank, along the lines of a Reconstruction Finance Corporation, that would finance desirable ventures at low interest rates...
...More programs, more poverty...
...to railroads it said, exploit your government-given real estate and forget about renewing roadbeds...
...and therefore never send to know for whom the bell tolls...
...Donne understood this human dilemma when, at the funeral of Sir William Cokayne (1626) he sermonized: "I throw myself down in my chamber, and I call in and invite God and his angels thither, and when they are there I neglect God and his angels, for the noise of a fly, for the rattling of a coach, for the whining of a door...
...Yet the need for a unified U.S...
...ratherlike most American money-it has been devoted to the speculative game of buying and selling stocks, playing with money markets, cashing in on short-term certificates...
...There are large amounts of underutilized land?9 per cent of potentially arable land in Latin America and 78 per cent in Africa...
...and the place to start is in our own house...
...Still, as the late, always moderate Barbara Ward suggested in the winter 1980-81 Foreign Affairs: "If a Korea or a Taiwan can reach a rice yield of four to five or more tons per hectare, an Indonesia less than three, and an India less than two, the possibilities for a local boosting of supplies are vast...
...Credit allocation, having Washington act as financier, was Herbert Hoover's method of shoring up the economy in the early 1930's...
...dig a tube well and establish a small maintenance and repair shop...
...Up to that time, currencies had been fixed under the Bretton Woods agreement negotiated at the end of World War II, when America was riding high and the value of the dollar was set high...
...With such a fair trade policy-neither protectionist nor free trade-we can live and let others live...
...Those rates hurt by drawing capital to these shores...
...after all, if Japan can pick the brains of our engineers and scientists at the Massachusetts Institute of Technology, so can we...
...Those dispossessed from light manufacture will be a serious social threat, for they are drawn from the most deprived and desperate sectors of our society: migrants, immigrants, minorities, inhabitants of depressed areas...
...According to one study by four researchers, entitled World Food Prospects and Agricultural Potential (1979), putting available land to work would multiply output two and a half times: Intelligent use of fertilizer and irrigation would triple the crop...
...That hurts them again as the high rates curb their production and consumption, thus affecting them as negatively as it has us for a dozen years...
...Now, apparently undeterred by the trauma, we continue to repeat our suicidal behavior with a new notion whose buzz words are "sunrise and sunset," a poetic gloss for a prosaic proposal to back the "winners" and bury the "losers...
...our ending up with one policy negating another is hardly surprising...
...By multiplying one factor with the other, the researchers arrived at their sanguine conclusion...
...Moreover, besides injuring us, this suppression has hurt the global economy...
...Yet when the great U.S...
...Perhaps the expectation is too high...
...In discussing the nature of small farming in the poor lands, Freeman notes: "Women are particularly important...
...If the world economy grows, it will be possible for other nations to increase their output and sales as we raise ours...
...Finally, if the traditional relationship between prosperity and population held, family size would decline, thereby relieving demographic pressures on resources...
...foreign economic policy has become increasingly apparent in the postwar world as overseas competitors have out performed the United States in the increasingly complex area of commercial management...
...We can rebuild roadbeds so that our trains can double and triple present speeds, run faster and use less fuel, matching foreign countries...
...A winner in the market may cause the nation great grief...
...Our immediate goal should focus on helping the underdeveloped countries generate sufficient internal productive capacity so they can lift their poorest people to subsistence levels of food, shelter and health," Peterson declared...
...has been using as its chief device for restraining growth...
...by 1980, they were net importers of grain to the sum of 100 million tons...
...Up to now, the standard American nostrum has been naturopathic: Let the market do it...
...All received evil signals from the market...
...But "these poorest countries invest only three per cent of their national product in agriculture...
...The preceding pieces in this series were: "The Great Debate"(NL, November 30, 1981), "Those New Deal Years (1933?1938)"(NL, December28,1981), "Undoing the New Deal (1939-1981) " (NL, January 25), "Responses-1" (NL, February 8), "The Roots of Stagflation" (NL, February 22), "Responses-2" (NL, March 8), "The Politics of Productivity" (NL, March 22), "Responses-3 "(NL, AprilS), "Supply-Side Trickle-Up" (NL, April 19), "The Budget Balancing Act" (NL, May 31), "Farewell to Fairness" (NL, June 28), "The Deindustrialization of America" (NL, A ugust 9-23), "Responses-4 " (NL, September6), "Left A bout-Face" (NL, September 20) and "Growth Without Inflation...
...And, vice versa, a loser in the market may bring the nation great joy-if we do what should be done to make that loser a winner...
...For beyond a few well-publicized exceptions, it has not been directed toward building new plants or enlarging existing facilities...
...We can regulate the flow of labor-intensive imports so that both foreign and American-made goods may increase in the United States in an expanding market...
...Not only are more countries joining the legions of importers, but the degree of reliance on outside supplies is growing...
...where the capital goes for certain specified purposes????A modern steel plant, a redesigned auto, rail modernization????tax benefits could be doubly generous...
...corporations and banks begin to feel the squeeze of a narrowing economy here and abroad, they are unable or unwilling to invest elsewhere...
...The overall department-many forms can be invented-would have to reverse America's restrictive policies of the last decade...
...We can produce autos that run instead of fall apart, and that function with minimum fuel...
...in their thorough study, To Feed The World...
...Where business interests are either not ready or not willing to proceed, the government could do so on its own...
...employ power tillers and pesticide sprayers...
...Any man's death diminishes me because lam involved in mankind...
...In any strategy to end the zero-sum game, the Third World countries have a major role to play...
...After a furi generation of such quack treatment, the bird is weaker than ever...
...The question is posed by other nations as well as our own, because they depend heavily upon us for our markets, money and military prowess...
...Practically, we are preoccupied with the bird in the cage in our own house...
...What shall be done to make it whole again...
...It broke its manufacturing wing...
...Something is clearly wrong when there are more desperate people after our efforts than before...
Vol. 65 • November 1982 • No. 21
