THE FORCES BEHIND THE GROWTH DEBATE
Chase, Edward T.
THE FORCES BEHIND THE GROWTH DEBATE by EDWARD T. CHASE Why did the recent election debate center, as never before in our history, on the economic growth rate and "public poverty versus private...
...Growth" in the private sector, through the free enterpirse system Richard Nixon boasted about, won't solve this conundrum...
...The pervasive influence of these two basic pressures of technology and population can be illustrated in half a dozen areas in the American scene that have taken on a new and critical importance: medical care, transportation, urban rehabilitation, television broadcasting, education, and land use...
...publicly, which is hardly an inordinate percentage in the light of other Western countries' experience...
...the group of sixteen million people over sixty-five is now the largest, most rapidly growing segment of the population...
...But the elderly have largely been retired from the productive labor force (again largely a technological consequence...
...Hardly...
...In this modern day it is asking the impossible of the price-market system to have it tend to all our private needs and ensure security and social justice as well...
...Oddly, the two pressures have not been discussed in the context of this growth debate...
...The lesson the American public must learn from the growth debate and the polemics over social imbalance is that for directive intelligence to reassert itself in our national growth we must accept a new, augmented degree of bold Federal leadership and commensurate public spending...
...and that there is evidence (there is evidence on both sides of this question) that the share of G.N.P...
...In the case of urban rehabilitation, the ingenuity of the Title I approach, enlisting forces from the private sector, should not obscure the point that only such government intervention has been capable of achieving results...
...What new conditions in the America of 1960 brought it to the forefront...
...The prime reason is the revolution in medical technology: expensive new equipment, fantastically complex new techniques such as open heart surgery, newly required technical personnel, and wonder drugs...
...The only question is the mechanics, not the principle, of funneling tax monies into teacher salaries...
...Take medical care...
...Apart from the appalling peripheral consequences this development has had upon our environment (congestion, air and land pollution, shattering of neighborhoods, ugliness), the deficiencies of mass transportation pose a grave threat to the economy, since transportation is a critical factor in a nation's economic health...
...Hands off...
...What the "new conservatives" and traditionalists who equate a larger Federal role with totalitarianism or creeping, socialism forget are the restraints and deprivations imposed in the earlier days of unregulated capitalism when excessive concentrations of wealth and power created unbearable hardships for the masses of industrial workers...
...Otherwise it remains a battle of slogans, which is what happened during the campaign...
...The statistics are irrelevant: there is evident need that the percentage is insufficient given the social inadequacies so apparent in even a cursory examination of the environment around us...
...Neither can the insurance industry, operating in the price-market system, afford to insure them at premium rates on which the companies can break even, let alone make any profit...
...This technological advance in turn has decisively modified the death rate...
...This is an important reason...
...the remainder, none...
...Adolf A. Berle, Jr., perhaps our most thoughtful analyst of the corporation, has suggested re^ cently, in Power Without Property, that an evolution is occurring in which the boards of directors and the management of corporations are now being increasingly guided by the "public consensus"—what's good for everybody, not just what's profitable —with the inference that somehow this will compensate for the previous deficiencies of the market system in meeting public needs...
...America's prodigious technological accomplishment in proliferating paved highways and private automobiles has all but throttled public passenger transportation, at least as a profit venture...
...The public squalor argument is, in fact, simply this decade's battle cry of socialism, which—intellectually bankrupt after more than a century of seeing one after another of its arguments for socializing the means of production demolished— now seeks to socialize the results of production...
...Two close students of the matter, Francis Bator in his The Question of Government Spending and David Demarest Lloyd in his Spend and Survive, demonstrate that we have in recent years spent a small, indeed too small, share of the gross national product on public outlays...
...The issue could never have so dominated the political scene if it were a purely ideological matter or an editorial fad...
...that it has certainly not inhibited growth in the private sector of the economy...
...Meanwhile, only forty to fifty per cent have even partial health insurance coverage...
...This is significant because it suggests the pervasive reluctance of minds even as flexible as Riesman's to admitting the necessity for "big" government, for a new federalism...
...In his recent book, The Future as History, Robert L. Heilbronner has clarified all this with an unmatched brilliance and originality...
...What is more pertinent is that the pure price-market system by itself is seen to be capable of imposing subtle, indirect, but far greater curbs on man's freedom...
...To that sacred cause television must be dedicated...
...Thus this great new stimulus to growth is limited in its stimulus to exacerbating the very imbalance of private goods over community services that is bedeviling our culture...
...As Francis Bator, professor of economics at Massachusetts Institute of Technology, reminds us in his book, The Question of Government Spending, from Adam Smith, Ricardo, and Mill, to Pareto, Wicksell and, latterly, Oscar Lange, Lerner (A.P., not Max), and Samuelson, the problem of reconciling freedom and security (or social justice) has been a persistent, overshadowing factor, even in economic discourse...
...For another, we know the unregulated and undirected market system creates monopoly, with the public the victim of the resultant effects of higher-than-competitive prices and reduced production...
...Important, too, in dramatizing the issue have been the repeated assaults on American "mass culture" by our very best viewers-with-alarm...
...There is a mechanical impasse...
...Why did it suddenly move from scholarly treatises to the daily headlines...
...This is the view advanced here...
...But in the examples of public problems noted earlier we find that this is wishful thinking and practically a mechanical impossibility, given the conditions of the price-market system...
...Or take the transportation problem...
...Alone, the price-market system would remain inert when challenged to renew our cities...
...And the logic of the system, accordingly, is that truth and reality rank second to the mission of salesmanship, of selling to the widest possible mass audience...
...Hence, eighty per cent have incomes under $2,000...
...Berle has developed support among other theorists for this position and has called down the wrath of the purists who see the uninhibited profit motive as the keystone of our culture...
...It is his premise that we can cope with these dangers only if we have the courage and candor to understand and face them...
...This may still become a popular movement...
...It requires legislative and executive intercession...
...The underlying issue of the efficacy of the price-market system as the supreme arbiter of man's destiny—this is what the issue boils down to—has been the grand question of political economy for a century and a half...
...the second is demographic change, specifically population growth and the shift in both the age complexion of the American population EDWARD T. CHASE has written on social and economic themes for Harper's, The Commonweal, Commentary, and The Reporter...
...Yet, it is necessary that they be discussed if we are to make full sense of the debate...
...Television presents another interesting challenge because it demonstrates in a unique way a kind of dilemma the price-market system creates when its dynamic—profit—directly contradicts the justification of the institution it is supposed to maintain...
...As a practical matter, the inadequacy of the price-market system to rectify the scandalously low levels of teacher pay and school construction is now accepted even by Neanderthals of the far right...
...Two fundamental pressures have produced the concrete realities and explain this dominance of the growth-public-poverty-private-affluence issue...
...For one thing, as we have shown, it is not responsive to a number of basic community needs...
...Consider the remarkable degree to which this subject not only preoccupied Senator Kennedy and Vice President Nixon but also the columnists and editorialists...
...So also have been the persuasive new formulations of the "issue" by Professor John K. Galbraith, above all, and by Professor Arthur M. Schlesinger, Jr...
...One of our best social critics, William H. Whyte, Jr., author of The Organization Man and The Exploding Metropolis, has become so exercised by the problem that he has carried on a one-man crusade to try to persuade state legislatures to create funds to "lease" land use rights from farmers and other open land holders...
...Yet we have so far proved incapable of devising a method of financing this precious medium that does not cripple its essential quality...
...Since the agents of the price-market system are the corporations that produce our goods and services and employ our people, it might be said that the true polarity is between the corporations, with their prime obligation to returning a profit to their shareholders, and our government, with its unlimited responsibility to the total population...
...In effect this is conceding the need for central direction, for government playing that bigger role in our lives that even doctrinaire New Dealers nowadays seem afraid to admit...
...The shift to metropolitan areas, the population boom, and the concurrent reliance upon automotive transport have made the urban crisis too formidable to be left to laissez-faire...
...And freedom means freedom not only from restraints but freedom to enjoy minimal conditions for self-fulfillment—such matters as tolerable urban housing, efficient inexpensive public transportation, adequate medical care, and an education equal to the demands of the modern age...
...The facts also belie the cautionary arguments on the right (for example, Hayek, Fortune, and the Republicans' fiscal strategists) that the price-market system is a fragile and sacred device that we modify through government action only at our mortal peril...
...Because the resultant more complex society and economy are composed of specialized activities so intimately interdependent and interrelated that central planning and financing become crucial if we are to avoid chaos and inordinate waste...
...Our final instance of an area in which new issues are created owing to the impact of technological progress and demographic change—land use—presents a new notion to Americans, still bemused with vestigial fantasies of the frontier...
...This argument has a strong authoritarian smell, an odor of desire to enforce the advocates' tastes on others through governmental machinery...
...it does not touch it...
...This is by no means an altogether happy prospect, given the inevitable inefficiencies of bureaucracy and the degree to which individualism will be inhibited...
...In our metropolitan areas, where two-thirds of our population now resides, public mass transportation systems—commuter rail lines, subways, and busses—are fast becoming deficit operations, requiring in many instances heavy subsidies, tax relief, and, increasingly, outright purchase and operation by government...
...THE FORCES BEHIND THE GROWTH DEBATE by EDWARD T. CHASE Why did the recent election debate center, as never before in our history, on the economic growth rate and "public poverty versus private affluence...
...let growth in the private sector solve this"—this once again is a palpably impossible solution...
...Is it a cataclysm that we are suggesting...
...The truth is that even in the short run much that is worthwhile in our cities will die without prompt, substantial, thoroughly planned government aid...
...and its new locus in giant urban areas...
...Government intervention, if we care to save the day, has become essential...
...Furthermore, television as a sales force, by the condition of its being sustained by the private enterprise price-market system, is confined to promoting private goods, not public goods...
...Land use planning (which is the antecedent to city planning and transportation planning, since land use determines traffic volume) has become a new national priority only in the recent past as we witnessed the end of our open land as well as irremediable debasement of presently used land...
...Thus we witness the classic confrontation: the price-market system unable to supply an essential service...
...In his essay, Riesman suggests we need some new political devices to solve the problems that are precipitated by profound technological and demographic changes...
...Why must there be this augmented role for the Federal government if we are to win the growth-rate battle and end the imbalance between the private and public sectors...
...Yet what challenge has a higher priority...
...The reason it is important to understand the "material" bases of the growth argument is that the facts give a compelling foundation to the liberal position, namely that the problem is not one of growth alone so much as a qualitative change in that growth...
...sixty per cent, incomes under $1,000...
...Lloyd's estimate is that we are now spending about $145 billion of our $500 billion G.N.P...
...Because, as we have seen, there is no substitute device capable of dealing with the perpetrations of modem technology and demographic change...
...and, more importantly, perhaps, our urge to demonstrate to the newly emergent nations the superiority of our system over the Soviet's in supplying goods and employment...
...In television, technology has provided us with perhaps the ultimate in conveying immediate intelligence about the realities of our world...
...This is an unpleasant prospect for many of us, yet not quite so unpleasant as the prospect of our nation in decline...
...Certainly the current prominence of the growth issue is partially explicable in terms of the Cold War—our national anxiety over winning technological and productive ascendancy...
...There are several easy answers to the question...
...But as David Riesman states in his Abundance for What?, we do not quite yet have "a culture in which the desire for quality in urban and rural landscape justifies conservation not only of a few natural grandeurs and historical mementos, but of the textures (and aesthetic values generally) which have been built over generations into whole regions and cities . . . what is lacking is not only the willingness to tax and spend for such collective purposes—purposes that will outlive any one of us—but also the kind of political and cultural organization to accomplish anything like so radical a change with no apparent crisis to make our 'needs' visible and dramatic...
...spent on public services has if anything decreased in recent years...
...Its cost has far outdistanced general postwar inflation...
...What's more, such intervention must embrace planning and operational direction on financing as well, or the imbalance between public and private transportation will persist and grow...
...Not only can they not afford it...
...In no conceivable way can the famed "invisible hand" of the price-market system intervene beneficently here...
...The first pressure is the effect of postwar technological progress...
...It is reminiscent of groups abroad that used government power to burn other people's books, but our group wants to burn other people's tail fins...
...The example of education, where our school system must meet an unparalleled population boom, is too well known to require elaboration...
...It had to be imposed upon us by concrete realities of our times...
...It takes more than journalists and social scientists to establish a national issue, though...
...What a galaxy...
...Hospital costs, which have mounted relentlessly by five per cent year in, year out, and are the biggest single factor in the medical cost spectrum, have been reliably estimated as bound to rise another fifty per cent by 1967...
...Where Berle gets closest to the mark is in his notion of a national governmental planning authority coordinating all our present regulatory agencies...
...see The Progressive, September, 1960), Walter Lippmann, and other liberal pundits...
...The price-market system depends today as never before upon the successful marketing of goods and services (as it once did upon production...
...Russell Lynes, Dwight Mac-donald, David Riesman, Daniel Bell, W. H. Whyte, Jr., C. Wright Mills, Vance Packard, David Potter, Eric Larrabee, Frank Gibney, John Keats, and a score of lesser known names, all suggesting from one approach or another that, whatever its other effects, the price-market system as the cardinal dynamic in our society is a corrupting cultural force...
...With the single exception of television's curious dilemma (direct pay TV offers the best promise here), the active leadership of central government is required to solve the problems I have noted...
...Economist W. Allen Wallis, consultant to President Eisenhower and top wheel of the Cabinet Committee on Price Stability for Economic Growth, said recently: "One of the more pretentious versions of the 'needs' argument is that we have shameful public squalor in the midst of vulgar private opulence...
...No one would deny and most would acknowledge sadly that planning does indeed curb certain freedoms...
...the only alternative, if we are to meet the need in the foreseeable future, support from the government, in all probability at the Federal level in view of state financial limitations...
...The principle of massive Federal aid has been won more as a consequence, sadly enough, of Sputnik than of a vision of a better society...
...Central planning backed by adequate financing at the Federal level is no longer a proposition that serious politicians can only admit in private and evade in public...
...It must be faced, and it can be faced once it is understood in pragmatic terms, as a new social necessity, not as an ideological abstraction...
...We cannot afford to deceive ourselves on this point...
...It leaves them untouched...
...Without the nourishment of profit, of course, the system does not function, and it is sophistry of a dangerous order to suggest that, in the long run, effective demand will somehow register even in the complicated and immensely expensive task of rebuilding our cities...
Vol. 24 • December 1960 • No. 12
