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Question Raised
In Discussions On
ion, Budget
(Editor's note: Thi is the
sixth Great Decisions topic
in the current series. To
day's topic is "World Eco
nomic Revolution: What
U.S. Policy?")
How fast should the U.S
economy grow? This question
is continually raised in dis
cussions about such diverse
problems as inflation, unem
ployment, national budget,
foreign aid and " competition
with the Soviet Union. Many
officials and economists alike
consider it the key problem
America faces in today's com
petitive world situation.
Attention centers on the
rate of America's growth for
three principal reasons:
First, in what one econo
mist characterizes as our "af
fluent society," unemploy
ment still poses a serious
roadblock to full utilization of
manpower. It is also a cause
for personal hardship. Infla
tion remains a danger. And
public servics like education,
housing and transportation
have suffered neglect in the
midst of plenty, in the view
of many experts.
Contrast in Rate
Second the contrast in the
rate of economic growth be
tween the United States and
Communist countries like the
U.S.S.R. and Red China
alarms government officials
and businessmen. The boast
of Russia's Nikita S. Khrush
, chev that the Soviet Union
will outproduce America on a
per capita basis by 1972 may
in fact be possible, some econ
omists believe, unless our
own rate of growth is stepped
up.
Communist econ omic
strides also account in part
for the third concern about
America's economic capacity:
the communist bloc's interna
tional trade and aid offensive
is in direct competition with
Western trade and aid.
Most experts are sure that
Communist competition will
continue to mount in the
Afro-Asian lands and Latin
America. The Soviet agree
ment in early February to
supply economic aid and arms
to the new Iraq government
is only the most recent evi
dence of this.
In past decisions about U.S.
foreign aid Congress and the
administration faced two
problems-the overall level of
spending, and whether more
or less emphasis should be
placed on military or on eco
nomic assistance.
Crucial Issue
Now, however, the crucial
issue which is emerging is
whether we can sustain for
eign economic aid at a level
which will deal effectively
with the needs of (and U.S.
stakes in) the underdeveloped
nations of the world.
Some problems of the U.S.
mutual security program will
be explored in a published
preliminary report of a Presi
dential committee on foreign
aid, headed by William H.
Draper Jr. Whether the Unit
ed States can meet the needs
of its own growing popula
tion, while fostering adequate
economic growth in the un
derdevelopd areas, will be a
key issue in the President's
proposed legislation for for
eign aid, soon to be submitted
to Congress.
Economic War?
Even if all-out war is avoid
ed in the East-West conflict,
there is every evidence that
the Communist powers will
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2a a IF
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relentlessly continue to com
pete economically with the
West.
In such "economic war
fare" Russia and other Com
munist nations hope not only
to raise their productivity
and living standards at home,
but also to lead the underde
veloped non - Communist na
tions to find in communism
a rapid route to economic
growth.
Is the West (including in
dustrialized ' Japan) prepared
to meet this kind of competi
tion? Some recent trends are
encouraging-such as the be
ginning of a common market
in Western Europe, other re
gional trade pacts to reduce
tariffs, and the growing con
sciousness in this country
that our productivity must be
raised.
Industrial History -
The U.S. economy, with a
longer industrial history than
the Soviet Union, has been
growing at an average of
about 3 per cent a year over
the past decade. It has
dropped to an average rate of
about 1.3 per cent, however,
over the last six years.
Today, in contrast, the
growth rate of the Soviet
economy is more than twice
that of the U.S. 10-year aver
age, and is expected to in
crease to above 8 per cent
annually under the 7-year
economic plan recently un
veiled in Moscow.
Experts point to other dif
ferences in the two econo
mies. America's is geared far
more to consumer production
than that of Russia. And, the
Soviet economy is currently
ploughing back - a greater
share of investment into capi
tal goods industries and de
fense production.
But officials and econo
mists agree that a generation
hence the combined economic
power of the Communist or
bit can conceivably outstrip
that of the present Industrial
ized states..
M
E.Z. TERMS
' NO MONEY DOWN
HO PAYMENTS TILL
MAY 1st
3 YEARS TO PAY
(On Approved Credit)
The new common market
in Europe, however, may
make a difference in these
calculations. On Jan. 1 the
six nations of Western Europe
-France, West Germany,
Italy and the Low Countries
agreed reciprocally to reduce
their tariffs by 10 per cent
and to increase their import
quotas.
Experts predict that, with
success, this new experiment
may lead to the evolution in
Europe of an economic com
plex equal to that of either
the U.S.S.R. or the United
States, with extensive re
sources and mass markets.
Aside from the political
implications of such a devel
opment (which may" lead to
greater political unity in Eu
rope) what is most important
is the added strength such a
move can bring to the West.
The new trading arrange
ments will create some trade
problems both for American
and British firms, since nei
ther the United States nor
the United Kingdom is at
present committed to the
West European common mar
ket arrangements. Nor have
the common market countries
resolved all their differences,
either among themselves or
with the other nations of
Western Europe.
Present Policies
' Moreover, critics of present
Western economic policies
point out that even Europe's
new move toward economic
integration may not be suffi
cient to counter the Commu
nist threat. Various leaders
who have been involved in
NATO feel that what the
North Atlantic powers need
most is wider economic coop
eration and full political and
economic coordination to
back up mutual defense ef
forts. Viscount Montgomery for
one, recently retired from ac
tive service with NATO,
urges a top-level planning
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agency, with power similar to
that of the Anglo-American
combined chiefs of staff dur
ing World War II, to coordi
nate political, military and
economic policies of the West.
More recently, Democratic
Senator Hubert H. Humph
rey, among others in both po
litical parties, urged a pro
gram of global economic plan
ning to meet the Communist
economic challenge. Humph
rey, for his part, favors five
to seven - year development
programs for various under
developed areas, planning for
a minimum growth rate of 5
per cent a year in the United
States economy, increased
federal aid to education, and
a long-range food and medi
cal program to help new na
tions. Role of Third World'
The role of the underdevel
oped nations in today's eco
nomic revolution is widely
recognized as crucial in the
East-West cold war.
Because of fast growing
populations, postwar econom
ic developments in such dif
ferent nations as Indonesia,
India, those of the Middle
East and Latin America have
barely kept pace with mini
mum human needs.
One noted economist has
suggested that Western aid,'
to be effective in raising liv
ing standards and creating
conditions for adequate eco
nomic growth in such areas,
may take far vaster sums
than anything now contem
plated. This economist points to
the experience of Britain in
the 19th century when it ex
ported an average of 7 per
cent of its national income
for development abroad, in
cluding the development of
the United States. For the
United States to match this
ratio today would require an
investment of two whole
Marshall Plans every year.
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In round figures the Mar
shall' Plan cost America
about $13,000,000,000 from
1948-1951. The President's
budget this year proposes
about $2,300,000,000 be spent
on foreign economic aid,
mainly to underdeveloped
areas.
Once economic growth is
underway, in underdeveloped
lands, their continued pros
perity, like that of industrial
ized nations, must be support
ed; by higher levels of trade.
Raising two-way trade in the
more distant future through
out the free world, however,
depends on immediate meas
ures which will (1) step up
growth rates in the industrial
ized nations and (2) provide
these nations with the capital
to assist economic growth
elsewhere.
Many observers, as well as
the latest economic report of
the President, suggest that in
the year ahead the United
States economy will spurt
forward to a higher growth
rate in the wake of last year's
recession. More and more
economists, and studies like
the Rockefeller reports on
U.S. economic policies, insist
that a growth rate of 5 per
cent should be achieved, not
as a goal for one year, but
for an indefinite future pe
riod. Conscious Effort
None of these objectives
can be achieved without con
scious effort-at. private as
well as governmental levels.
At issue are not only the cold
figures of growth rates, but
also some of the underlying
values of our consumer
oriented economy. Political
leaders, educators and econo
mists, in increasing numbers,
feel that the United States
needs less emphasis on "tail
fins" and a keener awareness
of the nation's stake in world
wide economic growth and
the cold war.
ARE
PRODUCTION AND HOW IT IS USED
Selected countries
GROSS NATIONAL PRODUCT (1956)
(Total value of all goods and services produced )
U. S. (BILLIONS OF DOLLARS)
ALL OTHER INDUSTRIALIZED
IMinillllllllllllll III.III1HIIIIMIII1JIIILIIUIW1
(soviet union
hrTriTii'nirTii---'ir"r-J
162
ALL OTHER COMMUNIST COUNTRIES (total)
3 122
ALL UNDERDEVELOPED COUNTRIES (total)
ELL
1 134
HOW PRODUCTION IS USED ( of total production)
INDUSTRIALIZED
DEMOCRACIES
SOVIET
INVESTMENT
ESTIMATED INCOME PER
1975
$2000
U.S.
1956 : Sg
:$i5oo;
I
Jr85fjJ j
BRITAIN
CARPETS AT WHOLESALE PRICES
416
HHOiUliilli
DEMOCRACIES (total)
UNDERDEVELOPED
COUNTRIES
UNION
Note: largest share of this
is for food
CONSUMER
NEEDS
MILITARY
PERSON. AFTER TAXES
'Sources: Committee lor
Economic Development,
British and
1975 Indian governments
$1450
1956
1975
INDIA
PER SQ.
OK Market)
MAIL TRIBUNE, Medford,
Economic 'Warfare'
Favored by Great
Decisions Groups
Corvallis Economic "war
fare" against the Communist
world rather than military
alliances drew favor from
Oregon Great Decisions
groups balloting recently on
the foreign policy issue, "Will
Alliances Keep The Peace."
Opinion ballots from 20 Or
egon counties were tabulated
by Oregon State college ex
tension service, indicating
strong preference to expand
trade and economic growth
throughout the non-Communist
world. The Great Decis
ions program of local discus
sions of foreign policy issues
will continue through March.
Opinion was almost unani
mous that cold war, in one
form or another, will prob
ably continue for some time.
Loveff Smith Gets
Promotion With SP
Portland -Lovett R. Smith
Jr., supeirntendent of the
Portland division of Southern
Pacific company, has been
promoted to assistant general
manager of SP lines in Texas
and Louisiana with head
quarters in Houston, Tex., the
company has announced..
Smith was a frequent visi
tor and well-known in the
Medford area. He was ap
pointed superintendent of the
Portland division in 1955.
He will be succeeded by
Alden W. Kilborn, a native of
Dunsmuir, Calif., who is now
superintendent of the Tucson,
Ariz., division.
YD.
mm
Oregon, Sunday, March 8, 1959 5
There was also agreement
that conflicts in interests
among non- Communist na
tions will be difficult to over
come. Third World'
Underdeveloped countries
of the non-Communist world
the so-called "third world"
have been plagued with po
litical instability in recent
years. This, coupled with fast
growing populations and pov
erty, has set them up as focal
points for some of the tough
est battles of the cold war.
A majority of Oregon voters
felt that Communist influence
in the world could not be
"contained" by a system of
military alliances and favored
continued negotiation on cold
war issues. About 75 per cent
of the vote favored other non
Communist nations' right to
independent and eventual cold
war foreign policies.
United States foreign policy
in relation to Western allies
was rated in the following or
der of preference:
Closer Coordination
Closer coordination of eco
nomic policies. This would
combat the long-held Com
munist doctrine that the "capitalist-imperialist"
powers of
the West will inevitably clash
as their political and econom
ic interests come into conflict.
Second place called for
bolder policies to help solve
economic and social problems
in the underdeveloped world.
Favored policy in relation
to the non-Communist world
called for less emphasis on
building the military capaci
ties of underdeveloped allies
and more on their economic
and social development.