Harpers

VOL 190 No 1137 February 1945

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EMPLOYMENT?

STANLEY

LEBERGOTT

Mr. Lebergott is a Washington economist specializing in postwar em-} ployment problems. Articles of his have been published in vari{ ous technical journals, but this is his first appearance in Harper's.

in 1941 a well-known publicist suggested that "at attainable full employment" the United States could produce even more than the 99 billion dollars' worth of goods and services turned out in the then unequaled boom year 1929. Many an eminent economist and business man politely called him a visionary. But, to everybody's amazement, the war has demonstrated that a production of 150 billion dollars or more is quite possible. Furthermore-and this is the frightening thing-this vast flood of production. has been achieved without any of the ten

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million energetic and efficient young men who normally provide the backbone of the labor force.

Obviously, therefore, the problem of finding jobs in postwar production for ten million ex-service men and heaven
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alone knows how many millions of unemployed munitions, ship, and aircraft workers is a matter demanding the utmost sobriety and forethought, not the bland wishful thinking of the love-will-find-away school of economic analysis. We must face the gloomy possibilities with the tough-minded clarity of a man taking out insurance to protect his family, or a board of directors setting aside reserves against the coming of a lean year. An effort to deal with such possibilities in advance is an essential part of the duty of every responsible parent and business man-indeed, of every responsible citizen who is concerned for the future of our country. At present this responsibility is, by and large, being ignored. There has been talk of 60 million postwar jobs, but we have
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A better way of giving business a black eye-r-since the change-over will not be painless-could hardly have been figured out. For if business fails to come up with the jobs, it will find that its generous promises have laid up a store of wrath. Of course business men will do their best to follow the terms of the Selective Service Act, and we may depend upon it that they will do everything possible to provide jobs for displaced civilian workers as well as for returning service men. But we must keep an eye on what is possible, as well as what is desirable. Business alone could do the job if it had (1) the resources; (2) the united direction; and (3) the willingness to buy raw materials, turn out goods, and keep men at work, regardless of sales, profits, and general economic conditions. How about the resources? It is true that some businesses have' been making enormous profits and h..• e laid aside huge v reserves. These concerns may be able to assure postwar jobs to a relatively small slice of the total labor force. But for every firm in this category, there are a hundred others which either do not have substantial reserves or cannot convert to peacetime production. The shipyards, which have been absorbing workers and II still more workers ever since Pearl HarIRsT, let us look at the plans of business. bor, are an example. During less than Many far-sighted business men have two years of war we tripled our ocean realized that another major depression tonnage, and we will go into the peace might wreck our system of private enter- with a merchant marine at least equal prise for good, and they have planned as to that of all other nations combined. Obviously we will not need to build very never before to forestall such a catastrophe. It is a poor firm indeed which does not many more ships for some time to come.' have its Vice President in Charge of The huge chemical factories can hardly Postwar Planning-often with a consid- expect stump-blowing and highway blasterable staff-and many trade associations ing to require explosives on anything like and special organizations (such as the the scale demanded by the siege of Aachen Committee for Economic Development) or the bombing of Tokyo. Plane demand, have laid plans for whole groups of indus- according to the Aeronautical Chamber of tries. Moreover, nearly all businesses ex- Commerce, is likely to skid by 85 or 90 per cent, and with it will go the demand pect to hire back their veterans "where possible" in accordance with the terms for astronomical tonnages of aluminum of the Selective Service Act. A good deal and magnesium. The machine tool inof energy and advertising space has been dustry has turned out enough equipment devoted to spreading the idea that this during the war, in the estimation of some legal provision, together with the well- manufacturers, to supply the needs of the publicized plans of the business commu- next twenty years. And so on. How nity, will make the return to peace a rela- many jobs can such industries safely tively smooth and painless affair. promise?

yet to see a detailed plan, with strong business or government support, which proposes to assure them. Throughout the country a happy-go-lucky optimism says to the soldier and war worker: "Take it easy, bud. There'll be work a-plenty. Three hundred_bucks in dismissal pay is a lot of money for a soldier.; and every war worker has his little pile of savings. There will be more than enough loose money to get things going again." But will there be? In support of the comfortable belief that the postwar world is bound to be one of humming prosperity, three arguments are commonly advanced: 1. Business is planning it that way. 2. The spending of war savings will bring about an unprecedented demand for goods. 3. The plastics, light metals, electronic gadgets, and other scientific wonders developed in the course ofthe war will create new demands, new industries, and new high levels of business activity. It would seem to be simple prudence to examine each of these arguments to find out whether it really contains a satisfactory answer to our coming employment problem.

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business is neither a monster directed from some mythical Wall Street lair, as some people believe, nor the single-souled Hercules which the institutional advertisements sometimes picture. It is a collection of many enterprises, big and little and in between. Each of them has a healthy tendency to go its own way; every firm is intent, first of all, on doing the best it can for itself. No spokesman, however eminent and encrusted with directorships, can honestly speak for "business" as a whole. At best, there can be only a great many individual plans, which we hope may add up to something approaching full employment. And it can be only a hope, not a guarantee. Only one business in a hundred can promise to hire a given number of workers, or turn out a fixed tonnage of its product, regardless of general business conditions. Many a firm has a neat postwar plan for hiring lots of men, for turning out plenty of goods, and perhaps even for expanding its plant; but it also has a reservation which doesn't show on the blueprints-it expects to wait and see how things are going after the war before it puts the plan into effect. 'A spokesman for the Association of American Railroads, for example, recently asserted that "the nation's railroads do not expect to place orders for new postwar equipment until at least six months after the close of the present conflict, at which time it will be possible to determine their postwar needs." This wait-and-see attitude is perfectly reasonable. Any business which would guarantee to buy equipment and provide jobs before it had a shrewd notion whether it could sell its product at a profit would simply be risking suicide. But while each individual firm waits to see what other industries will do, what the general postwar business picture may look like, exsoldiers will be waiting for jobs. In this period of prudent waiting, a deflationary trend may well set in, which will make the shiny postwar plan of each firm look impractical, and which may indeed dictate a further curtailment. It would be utterly unfair to expect business men-each intent on the survival of his own firm-to shoulder the sole responsibility for guaranteeing jobs for all

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veterans regardless of uncertain markets. The business man will have problems enough, in all conscience. He is going to have to help Captain Joe, who commanded a bomber on fifty combat missions, to make the delicate adjustment back to a humdrum stock clerk's job .. He is going to have to switch machines which made bomb components over to making some peacetime gadget, and to try to find a market for the new product. He must find some way to make his employees content with a normal wage, in the face of the fact that the GI had an income-including pay, clothing, food, and quarters -considerably higher than the average real income of single men in peacetime. Surely these are .problems enough. Is it fair, in addition, to hold a shotgun at the head of business and say: "Employ all these men, or take the responsibility for bringing on a postwar depression'tr The insistence that all will be well just because business wants it to be well not only will fail to solve the basic problem-sit also will boomerang on business itself. William Carpenter, economist for the Edison Electric Institute, has warned that "unless planning rests upon a solid founda- . tion of common sense, the public, oversold on the future, will inevitably react in disappointment, and will look around for someone to blame." There is only one way out of this impossible situation, in which we want employment assured and want business to do the assuring. That is to support the assurance of each individual firm to keep its output and employment at the maximum with some general assurance concerning the overall volume of employmen t, and hence the overall demand for the products of business. The possibility of providing such an underlying guarantee is discussed in a later section of this article. III

estimates of the pent-up flood of postwar demand are misleading. It would be difficult for the average American to buy in the few months after the war's end the three cars which he normally would have

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bought in the war years, or the one and a consumer. It will create a "new pattern half refrigerators and two radios which of spending and saving. Some 20 million some ca1cuiators expect him to buy. And .families, thanks to war savings, may be to these swollen estimates of demand is inclined to use their current earnings more added the confident assumption that peo- freely, and their spending may check the ple not only will want these unusual tendency toward oversaving which many numbers of cars and radios, but will be students hold responsible for deflationary phenomena in the 1930's." able to buy them. With the billionssome economic soothsayers put the figure Maybe so. But most of us know from at $250 billion-of wartime savings which simple experience, as well as from the will be on hand, we are told that we shall budget surveys of the Bureau of Labor Stahave a perfect thunderhead of spending tistics and the Bureau of Home Econompower, which is bound to sweep us into ics, that the middle and lower income groups always have spent all of their earnprosperity. Here again the comforting legend re- ings.i aside from the slender and probably quires a little cold-blooded dissection. irreducible margin saved for emergencies. First of all, it must be realized that the These families will continue to save and massive estimates of "savings" which are spend in about the same pattern after the being bandied about are savings only in war-unless we develop a much broader the economist's very special sense. They system of social security than we have. reainclude such items as decreases in prewar son to anticipate. It was not the savings debts, larger holdings of insurance, and in- of these families that created the deflationcreases in the liquid assets of the upper ary spiral of the last depression. I t will income groups. If we want a realistic not be their unnatural spending behavior estimate of the immediate postwar de- which will create a postwar boom. Forty mand for consumers' goods, .such items or 50 billion dollars split among 39 million have to be stricken out. People rarely families is not enough to change their cash in their insurance policies to buy a long-established buying habits, or to wipe new radio. Nor are rich families in the out their worries about the future. habit of trespassing on their savings in HERE is another school of thought order to purchase a second car or a new which admits that wartime savings set of flat silver; they are more likely to may not radically change the average live on their ample current incomes. Any useful estimate would count only man's pattern for spending his current the reasonably spendable savings tucked income, but argues that these savings will away during the war by the lower and be spent directly for consumers' goods. Followers of this school point to U. S. middle income groups earning less. than $5,000 a year. And it must not include Chamber of Commerce surveys which inthe basic reserves which these families dicate that 1,500,000 families will build or had built up before the war, since what we buy new homes, 3,700,000 will seek autoare concerned with is the increase in mobiles, and so on for furniture, washing spendable money-the "something new" machines, and refrigerators. Such estiwhich might bring prosperity. Such an mates give some indication of what people estimate recently was compiled by the would like to do. But in order to foresee Federal Reserve Board, which calculated what they actually will do, we need some that in June, 1944, the increase in the more information. This was fairly well readily spendable savings of these families provided by a recent public opinion suramounted to about $40 billion. To this vey of War Bond owners. It disclosed may be added whatever sum seems rea- that 100 per cent wanted to spend, and sonable for the rest of the war. How that 11 per cent were going to spend right away after the coming of peace. But 73 potent a force do we get? per cent planned to wait a while and see ERRIFIC, according to one school of how things went. While they wait, busithought. This fund will be a source ness will wait. Production will wait. of security. It will ease the mind of the And employment will wait.

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The reasons why consumers may go slow in their postwar spending are by no means trivial: 1. Overtime payments-now running at perhaps $12 billion a year and averaging 15 to 20 per cent of payrolls-will be wiped out at the end of the war, or perhaps earlier if we taper off on production after the defeat of Germany. 2. Many workers who shift into peacetime industries must expect lower pay. For in general, pay rates in those occupations which dominate peacetime activity-light manufacturing, retailing, service trades, farming, finance-s-are' considerably lower for the average worker than wage rates in the highly productive durable-goods industries which are dominant in wartime. For example, in the month before Pearl Harbor hourly earnings in durable-goods manufacturing averaged about 82 cents, or a full 24 per cent higher than earnings in light non-durablegoods industry. Those workers who shift over to the making of durable consumers' goods, such as automobiles and washing machines, have better prospects, of course; but they will be far fewer than those who must shift from highly paid war industries to less lucrative jobs, such as running cotton looms or driving laundry trucks. This shift, plus loss of overtime, probably ,will more than offset any reduction in taxes and decline in bond purchases. 3. The conversion period probably will range from a week or two for some lucky plants up to six months for those which face a lot of complicated retooling and reorganization. During this period, of whatever length, most of the factory's workers will be idle, and their futures will be uncertain. Naturally they will hang on to their savings until they are sure of steady work again. 4. The price of postwar consumers' goods may determine to a considerable extent the vigor of the buying boom. A few manufacturers, such as Ford and Charles E. Wilson of General Electric, have announced that they hope to price their products as low as they were before the war, or lower-that greater efficiency in manufacturing can be expected to offset higher labor and raw material costs. But many other 'producers expect to set their

prices as much as 40 per cent above prewar levels. If this happens on a widespread scale, many potential buyers can be expected to wait a while for prices to drop back to the levels they have long regarded as "normal." All this might be summarized by noting that the primary factor which will determine postwar spending will be not the size of past savings but the size of anticipated future income. Job security, not wartime savings, is the key to what lies ahead. Give the average consumer a reasonable assurance of steady work and he will spend a good part of his wartime reserves. But leave him uncertain of the future and he will hoard. The mere promise of security, in other words, would go a long way toward creating jobs; while fear of unemployment inevitably will help bring on the very thing we fear. IV about new products? Perhaps the gaudiest of all the arguments that insist on automatic prosperity after the war is the one which points to the Marvels of Science. Technical and scientific developments during the war, we are told, have created a whole range of new products and potential new industries. The demand for plastic houses, electronic quickfreezers, magnesium dishwashers, and a helicopter in every garage is certain to bring jobs and more jobs. For any given industry, these hopeful predictions may well be true. But we must be quite clear about the difference between such a conclusion and the conclusion we are interested in getting at: will there be a net-gain in employment as the result of such substitutions?

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few cases there may. If the development of prefabricated plastic-andaluminum houses, for example, helps break down the network of restrictions which have so greatly hampered a real boom in home-building, then we can look for new business activity and new jobs. But to the extent that plastics merely replace steel and glass, or magnesium replaces cast iron, there will be no immediate
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MAGAZINE Here, therefore, it is enough to note that reliance on a foreign trade boom seems to be as ill-founded as belief in the other panaceas. The GI Bill of Rights sometimes is cited as a solution for the re-employment problem. This legislation is an excellent thing in itself-but it is not the answer we are looking for. The $300 maximum dismissal pay which it provides will take care of transportation, civilian clothes, a brief necessary vacation, and a short period of jobhunting for the ex-soldier; but it gives him no assurance of steady work. The provision for retraining and education will be a godsend to those service men who want to take advantage of it. They will number less than 10 per cent of all men in the services, however, if Army surveys are correct. It is clear that most of the veterans will want real jobs with adequate incomes as soon as possible to support themselves and their families. No legislation now on the books pretends to give any such assurance to the veterans, much less to the civilians who will be looking for jobs immediately after the war. ow many jobs will they need? In November, 1944, America's total labor force amounted to about 65 million men and women. Of this number, some 10 million were in the armed forces, while 55 million were at work in our factories, farms, and service trades. There were, of course, virtually no unemployed. Assuming .that the war ends sometime in 1946, we can calculate that our labor force will then total something like 60 million. At least 5 million women, old folks, and youngsters now busy in war work can be expected to leave the labor market to raise families, retire, or go back to school. At a guess, perhaps 2,U million men will remain in the services to police occupied countries and to provide a larger standing army' than we ever had in the past. Another 2 million or so will fit into what economists describe as "the pool of frictional unemployment." These are people temporarily out of work while they shift from job to job. A relatively small pool of this sort-between 3 and 4 per cent of the total labor force-is necessary to make our economy flexible at the joints; it is not the

increase in employment. There will be more jobs in the plastics factories, but fewer in the steel and glass plants. Often, in fact, there may be a net decrease injobs, since one of the most attractive things about many of the new products is that they can be turned out with a lower labor cost. (A recent addition to' one of the big aluminum plants in the South cost several million dollars, and phenomenally increased the output of the factory; but the increase in employment totaled only forty workers.) There will of course be some new hiring to build factories and machinery for the new products, but this source of employment is easy to exaggerate. For the war will leave us with a huge stock of generalpurpose industrial buildings and equipment which can be adapted to the manufacture of many gadgets still in the incubator stage. For many years construction of factories is likely to lag below the prewar "normal." We are not concerned here with the question of whether replacement of old products by new ones is a good thing for our economy in the long run. Every advance in technology may eventually increase employment, by making our industry more efficient and labor more valuable. Our concern here, however, is for the immediate postwar months and years. And within that period there is little prospect that the Marvels of Science will provide a substantial number of additional jobs. Whatever gains are made in one industry are likely to be largely offset by losses in another.

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to these three Dream Highways to Prosperity, there are other paths and byways which some people hope may lead us automatically out of the economic woods. In many circles, for example, there is a touching confidence that a soaring increase in foreign trade will avert a postwar employment crisis. This possibility is examined elsewhere in this issue of Harper's in an article by Bernard B. Smith and John A. Kouwenhoven on the dangers of an export boom unaccompanied by a great increase in imports.
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kind of chronic, large-scale unemployment we are worrying about. That leaves 55?'5 million men and women who will have to find jobs if we are to achieve anything like "full employment." Roughly the same number, or perhaps 1 per cent less, were at work when war production was at its 1944'peak. Nobody really knows what may happen when war spending is cut from the present $84 billion a year to, say, $3 billion, which was about what we spent on "defense" in 1940. It is probably conservative, however, to estimate that at least 7 million people might be thrown out of work. The total might add up to a good many more; after all, we had some 7,400,000 unemployed in 1940. this forecast is too gloomy. Such skepticism about the job-providing capabilities of the wave of postwar spending, the plans of business, and the blossoming of a host of new products may be all wrong. Maybe the optimists will turn out to have been right after all. The basic moral problem still remains. All the optimism in the world-right or wrong-s-cannot touch it. That problem is simply this: are we going to let security for our demobilized soldiers depend on chance, on the hope that the optimists are guessing right about an indefinite future? Or does the nation have a responsibility for guaranteeing security and an opportunity to work to all veterans and war workers, just as they have the individual duty of doing their share in wartime? Is the economy which clothes and feeds the service man with such amazing efficiency today unable to carry out the essentially similar function of assuring him work the month after the war ends? I am arguing that when peace comes the nation will have to take on this responsibility. From that day on, it will have to guarantee jobs for something like 55 million people. This will become one of the fundamental tasks of government, just as keeping the peace and providing for the common defense have been its fundamental tasks in the past. . Those who shrink from this conclusion may argue that we have faced large-scale unemployment in the past, and that in all

these crises the government has successfully avoided taking on the responsibility of assuring work to all who wanted it. Even the New Deal in 1933 never pretended to put all the unemployed to work; at most it managed to rig up makeshift, temporary jobs for something less than half of them. Can't we get by in the same equivocal fashion if we run into a postwar unemployment crisis? The veterans are not going to accept unemployment with the bewildered docility which was characteristic of most of the jobless in the last depression. Anyone who thinks they will simply does not understand the vast gulf between what the American civilian is getting out of this war and what the American service man is getting. And if we do not all realize it in time, it will be firmly-perhaps violently-brought to our attention. The civilian-because of age or a rickety physique-has been able to remain safe and secure at home. He has his wife if married, and the chance to meet plenty of eligible young women if not. He has been left almost completely free to decide where to work and where to move if he chooses. By and large, he has eaten better than he did in peacetime. He has had his choice of a vast range of clothing, from ornate ties to silk hats. He has had at once more security and more luxuries thaI) any other civilian in the world. By contrast, the men in the services have been given the privilege of forsaking their families, friends, and careers. They have endured discomfort, colossal boredom, and in many cases danger. The years in which they can learn most rapidly, get ahead fastest, are lost forever. The years in which age and economic standing make marriage possible are passing. Many who are already married will return older, less resilient, less able to take up their lives gaily where they left off. Some will return so crippled, physically or mentally, that they cannot take up the thread at all; they will have to begin all over again, under heavy handicaps. This contrast is underlined in the soldier's mind by the stories which newspapers and gossip carry into every post
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exchange and USO-manufacturers remarking: "I don't want much profit .. with my profit cut down to $1,200,000 my road is made extremely difficult financially"; contractors who gleefully announce that if the war lasts another two years they will salt away ten million bucks; shipyard workers earning $5 an hour, $50 a day; strikes in war industries; war plants palming off defective material on the Army; civilians demanding a halt in war production so they can get more whisky, complaining about gas rationing, whining about a shortage of prime steaks and cigarettes in a world aflame. None of the stories is pretty. And some of them are true. True or not, these' stories get around, and on them (together with others that are unprintable) most service men are basing their attitude toward those who have stayed at home. What action will result from that attitude, when the veteran hunting work is met with cheery statements that "things are bound to turn out all right," "just wait till the reconversion period is over," and "the spending of war savings ought to produce a lot ofjobs any day now"? Nobody knows, of course. But we have some hints, and they are hints which should make any American start worrying. One of them is the report of a historian who watched fascism rise in Italy and Germany after the last war. He noted then that "everyone who had no chance of a peaceful occupation was offered the opportunity to be a soldier in a civil war in which the opponent was not armed. Pent-up resentment found an easy outlet. . .." Another is a warning from the commander of the Veterans of Foreign Wars that "there has been too much talk and not enough action on the idea of making sure our men in the service have jobs waiting for them after the war . . . a hungry man will listen to proposals he would never otherwise dream of." And there already are discharged veterans who are saying: "The country could feed me and give me clothes and furnish medical care so long as I was fighting. We can provide jobs for everybody while the war's on-why can't we do the same , thing in peacetime, if we really make up \ our minds to it?"

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What we need is

a firm assurance that unemployment never ag~in will be permitted to become a national problem. Such an assurance is re-

quired not only to meet our obligation to the returning veterans; it is required to protect the stability of our whole system of private enterprise. Nobody can suppose that a war which has put 10 million men under arms and affected every fiber of our economy can end without a dangerously violent shock to the entire system -a shock which we must prepare now to meet. A guarantee against large-scale unemployment would be no panacea, no sure-fire recipe for eternal prosperity; but it might prevent the shock of peace from wrecking our economy. Such a guarantee might take the form of an official statement of national policy by Congress and the President, with the advance concurrence if possible of the major organizations of industry and labor. It might simply declare that unemployment, aside from seasonal fluctuations, would never be permitted to exceed 4 per cent of the total labor force. If the number of jobless should climb above this level during any three-month period, the Executive, with the advice and consent of a joint congressional committee, would then take action to put the guarantee into operation. And Congress should set forth in, specific legislation precisely the kind of action which should be taken whenever the guarantee needed to be invoked. I t is quite possible that the guarantee would rarely have to be put into effectthat its very existence would be enough to prevent a major depression. It would serve as an assurance to business that it could go ahead and put its postwar plans into operation immediately, with confidence that there would be an ample market for its products. It would forestall the retrenchment and precautionary moves which business must make when a depression seems possible-and which themselves help bring on depression. It would assure every family that it could safely spend its wartime savings for that new automobile or radio right now, without waiting to see how the postwar job situation turns

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out. It would put an end to that uncertainty and fear of the future which are among the major obstacles to an expanding economy.

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HE principle on which this -suggestion is based has been universally accepted by Americans for two hundred years. It is, of course, simply the insurance principle. So far, our closest approach to this kind of measure on a national scale is the guarantee of bank deposits by the Federal Deposit Insurance Corporation. That guarantee has achieved its purpose at trivial cost. It has, in fact, almost never been invoked, because its mere existence has eliminated those runs on the banks which were so common and so disastrous in the earlier periods of our history. The entire banking system stands higher in public esteem, safer against any kind of attack, because of that assurance. Similarly, the National Employment Guarantee might never have to be invoked, if our system of private enterprise still possessesthat vitality which has made American production the envy of the world. It should, in fact, be made quite clear that no government action beyond the guarantee is anticipated in the first instance. Operations to make the guarantee effective would begin only when unemployment threatened to become a national problem, only when the economy needed the underpinning which the government alone can provide. Just how the guarantee should be put into effect if the need ever arose is a matter for Congress and the Executive to decide, after prolonged debate and much careful planning. Undoubtedly the primary method would be public works. Not hastily improvised WPA leaf-raking projects, but well-conceived investment in enterprises which would protect our natural resources and build up our productive capacity. Reclamation projects, reforestation.. rural schools, soil conservation, new highways, development of the great river valleys on the TVA pattern-these are the obvious examples. And employment should not be handled on a WP A basis; the men hired for such undertakings should have regular jobs, at regular salaries, and should be held to regular standards of efficiency.

Public works projects might well be supplemented by other measures to stabilize employment, some governmental and some private. A more adequate social security system, higher minimum wages to bolster consumer spending, a shorter work week, incentive taxation, establishment of the annual. wage principle in industries where it is feasible-all these would help. A rigid formula is the last thing we want. Experience and ingenuity should constantly produce better economic devices for fighting unemployment, just as they bring forth a continuous stream of new weapons in wartime. VII can we afford it? Many worried citizens, who are by no means reactionaries, will point to our postwar debt of some $300 billion. How can we go on spending to guarantee employment without shoving the country into bankruptcy? And will the guarantee really do much good if people doubt the fiscal ability of the government to make it work? What good is an insurance policy backed by a company of doubtful solvency? This, of course, is a critical problem, and the question has to be answered squarely. There are at least two factors to be noted. First, we know that the government is going to have to spend public funds to deal with unemployment in any case. Prolonged unemployment on a large scale is no longer politically possible. The 10 million veterans won't stand for it-nor will the 45 million other members of our labor force. The alternative to the guarantee is not economy; it is spending in a relatively wasteful and haphazard fashion after unemployment has reached the stage of crisis. The real question is: shall we commit ourselves in advance to spend whatever is necessary to keep men at work, or shall we spend hurriedly and on a larger scale to put them back to work after a depression has hit? If we make the commitment in advance, there is a good chance that we may never have to spend at all. If we do, we can spend in an orderly and methodical way to produce the most benefit with the
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least waste. We can avoid rushing into expensive boondoggles in an attempt to put men to work. as quickly as possible. Moreover, we shall not invite a political - upheaval which might smash our traditional fiscal system and endanger our democratic institutions as well. Second-and most important-the cost of a National Employment Guarantee would hinge upon its success in revitalizing the spirit of enterprise, in opening the door to a truly expanding economy. It is clear that our $300 billion debt can be handled onlY if we succeed in maintaining a high level of production, employment, and national income. If we can keep the national income at $140 billion a year, the carrying charges can be met handily and we can make some progress at paying off the principal. If the national income should slump back to the 1932 level, however, the present debt would become completely unmanageable, and we would be bankrupt indeed. Under these circumstances, the public spending of a few billion a year in order to avert a major depression would seem to be simply good business. If the guarantee enabled us to increase our output of goods and services at a faster rate than it increased the cost of government, it would be the most profitable of irivestments. The cost should of course be met out of current tax revenues whenever possible, painful as that may seem. If part of it must be covered from time to time by deficit financing, however, that need not be catastrophic. As a matter of fact, the addition of a few billion to a debt already a hundred times that size would hardly be felt-so long as employment and the total national income remained high. And if income does not remain high, if our economy does not continue to' expand, all considerations of interest, debt, and taxation may become the most academic of matters. . It is true that a National Employment Guarantee would involve some fiscal risk -but it would be far smaller than the

be noted in passing that an

1l overall guarantee of this sort would
have another important advantage. It would reduce the pressure on Congress for a host of costly individual guarantees to protect various special groups in the economy. If farmers did not fear a general spiral of falling prices, they might be less insistent on subsidies and crop control to prop up farm prices. Labor might forego some of the "featherbed rules" and restrictions on output which now protect jobs in certain industries. Business men might be willing to give up tariffs and cartel arrangements which serve as their private dugouts against an economic storm. Each of these special guarantees not only is expensive; it also damages the economy as a whole, making it lessefficient, lessflexible, lesscompetitive -and less able to resist depression. Yet there is little hope of removing them unless some general assurance can be offered in their place. The first step is simply for Congress and the President to make a formal acknowledgment-now-of the responsibilitywhich they cannot in any case escape. They need go only as far as Emil Schramm, the sagacious and conservative president of the New York Stock Exchange, who has warned that "any sound postwar domestic program must contemplate the production of goods and services at a level sufficiently high to occupy all who wish to work and are able to do so." If this can be established as a settled national policy, with assurance that the full resources of the nation will, if necessary, be mobilized to .carry it out, we not only will be discharging an obligation to' our service men; we will be taking our first effective measure to insure the whole country against another economic disaster.

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