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WESTERN RESERVE UNIVERSITY ASSEMBLY

ON NATIONAL GOALS

Cleveland, Ohio, May 11 -14, 1961

Notes Prepared

by

Louis Ruthenberg

with R"espect to

Economic Growth, Technological Advancement

and Organization of the Economy

SENT TO YOU AS A MATTER


OF POSSIBLE INTEREST , ,-,
WESTERN RESERVE UNIVERSITY ASSEMBLY ON NATIONAL GOALS

Cleveland, Ohio, May 11- 14, 1961

Notes* Prepared

by

Louis Ruthenburg

with respect to

Economic, Growth, Technological Advancement and Organization of the Economy

It seems that any analysis of unfavorable influences will lead to the con­
clusion that policies we are now following are quite inadequate for ensuring
satisfactory levels of employment, for increasing the annual rate of economic
growth and of technological progress.
These goals are interdependent. Meas,ures which bring about adequate
employment will contribute to accelerated growth rate of the economy and tech­
nology.
That observation is confirmed by the following recent report on "Why
Europe's Industries Grow So Fast": **

liAs Walter Heller, the President's economic adviser, was leaving for
Europe, President Kennedy remarked to him:

"'Don't come back unless you find out why German, French and Italian
economies are growing two to th�ee times more rapidly than that of the
United States.'

"Dr. Heller, in his search for answers to the President's question, is


understood to have come up with these basic reasons for Europe's fast
growth:

"Europeans invest a larger part of their over-all spending in new plant


and equipment than do U. S. companies.

"They spend less on defense, and thus have more to invest in new
factories.

"They put more stress and money on training of scientists and other
specialists needed for these technologies.

"They have held down prices and wages to spur growth.

* Under Assembly procedure these notes could not be presented in their entirety.
** U. S. NEWS AND WORLD REPORT, May 8 , 1961

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"

" They tailor their prices and products to exports, thus gaining big
new markets.

"The expansion that results is leading to full employment, and that in


turn generates still more growth.

"There is said to be some feeling that margins of profit in the U. S.


have been squeezed so far as to discourage a level of investment that
will speed growth.

"Tax incentive to spur investment by business is suggested as one


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answer for the U. S.

Dr. Wriston has pointed out (page 57), " The amazing economic recovery
of Western Germany illustrates that dedication, skill and hard work still make
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progress possible. It should be noted that such remarkable progress was
accomplished in the presence of sound and conservative economic policy.
Some of the more obvious measures that are needed to accomplish these
goals seem to be these:

l. Immediate Development of Effective Foreign Policy.

2. Tax Reform.

3. Drastic Reduction of Government Competition with Free Business.

4. Equitable Labor Legislation.

In the time reasonably available to me, these complex matters can be dis­
cussed only in a few brief and wholly inadequate sentences.

FOREIGN POLICY

For discussion of Foreign Policy, I am without competence, except as a


man in the street who has observed developments for many years. The foreign
policies of the United States under leadership of Presidents from McKinley to
Kennedy have inv.olved wide and interesting variations in principles and in re­
suIts.
In 1953, a short time before his death, Robert Taft declared to the new
President, to the Congress and to the American people:

The moral and political imperatives for a Senate audit of our foreign
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affairs from 1940 are beyond question. We cannot clean up the mess in
Washington, balance the budget, reduce taxes, check creeping socialism,
tell what is muscle or fat in our sprawling rearmament programs and purge

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subversives from our State Department unless we come to grips with our
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foreign policy upon which all other policies depend.

Notwithstanding the fact that this was said eight years ago, there is
nothing in that declaration that is not more urgently applicable today.
Since the end of World War II, our international relationships have
reached an all-time low. Blunder, after fantastic blunder have convicted us
of lack of resolution, timidity and hypocrisy. From bad we have gone to worse
under the leadership of Roosevelt, Truman and Eisenhower. What a heritage
Kennedy has received from prior administrations!
How can our leaders prate of lIa just and lasting peace" and continue to
assert that "we'll never intervene" after we' ve repeatedly been caught with our
defenses down, have abjectly apologized, and have again and again and again
been made ridiculous in the eyes of the world?
Can one imagine an appraisal of our sorry situation by the shades of
Washington, Jefferson, Jackson, Lincoln and Theodore Roosevelt?
After the disasters of Laos and Cuba, will Americans rise up and demand
an end to appeasement and retreat? Continuing apathy in such circumstances
is tantamount to surrender.
Since the government of the United States awarded diplomatic recognition
to Russia in 1933, we are faced with overwhelming evidence that prior policy of
non-recognition was fully justified. Since recognizing Communist Russia, the
United States of America, more than any other force or agency, has "made her
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what she is today.
With cynical singleness of purpose, Russia has consistently disregarded
pledges and abrogated solemn agreements. She has stolen assets of incalcul'­
able value from friend and foe alike. With cold-blooded calculation, she has
shot down our planes and has imprisoned our citizens. She has brutally in­
sulted our officials, including Presidents of the United States. She has flouted
and emasculated the Monroe Doctrine.
The United States has consistenly retreated before the onslaught, after
repeated and futile efforts of appeasement.
Recently U. S. NEWS AND WORLD REPORT published a summary of
Russia is successful aggression. The recorc;i is well known to most Americans,
although many are inclined to bury their heads rather than face the facts --

" What's impressive is speed of the Communist advance and Western re­
'
treat in continent after continent. Look at these key dates covering a
very few years:

" 1948: Russia grabbed Czechoslovakia, wrapped up conquest of East


Europe within three years after world war ended shutting the West out
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completely.

11 1949: Mainland China and 600 million Chinese taken over by Communists.

" 1954: Vietnam partitioned, North Vietnam added to Reds' Asian real
estate.

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111956: Russia, through Nasser, gets Mideast foothold first time in
history.

11 1959: Cuba falls to Castro and slips into the Communist orbit.

11 1960: Red subversion begins to pay off in Africa--Guinea, the Congo.

"1961: Communist hold tightens on Southeast Asia. West asks compro­


mise. And in Cuba, Soviet MIGI s and tanks go into action for first time
in North America.

"In other words, within 16 years Communists have won control over more
than 8 00 million people in 13 countries and have advanced from a base
in Russia to win sensational successes in four continents, including
North America.

"U. S. and West, in turn, have retreated from East Europe" much of Asia
and Mideast, now are on the defensive in Africa and in the Western
Hemisphere.

"All this is a very big change within a relatively short period of time.

II Next in Latin America? Governments openly pro-U. S. , anti-Castro are


on the spot. They're bracing for retaliation by mobs turned loose by
Castro and local Reds. Itl s a tossup how long some of these Govern­
ments can hold out.

IIAnti-American rioting was especially violent the other day in Guatemala,


Bolivia, Venezuela. This violence is a measure of Castro and Red
strength. It probably means more serious trouble ahead in Guatemala
City, La Paz, Caracas. II

As this is written, we are faced with Russian-instigated emergencies in


Cuba, in Southeast Asia, in Africa and in Berlin. Report from a dependable
European authority indicates that not only Algeria but Morocco and Tunisia soon
will fall under Russian domination. It is said that air bases which the United
States established at great cost in Morocco are now being preempted by Russia.
Foreign aid, following the Marshall Plan, ha s been characterized by
gross extravagance and questionable allocations. Extravagant expenditures for
foreign aid have resulted in substantial imbalance of international payment s,
dangerous outflow of gold reserves, threatened loss of confidence in the dollar.
This subject is clearly and comprehensively discussed by Mr. McCloy (pages
352-355) .
Allocati.ons of foreign aid have enabled oversea s indu strial nations to
compete dangerously with American industry in all markets of the world, in­
cluding our home market. Such competition has caused many American com­
panies to establish plants overseas.
Such developments contribute to unemployment and retarded industrial
growth. Foreign aid also has contributed to inflation in the United States by
increasing the national debt and tax burden.

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Closely related to revision of foreign policy is the need for removing
Communists and those sympathetic with their objectives from all positions of
influence in this country.
Informed Americans will endorse Mr. Meany's reservation on page 28:

"Damage is done, however when governmentally-appointed heads of


governmentally-controlled organizations from behind the Iron Curtain are
welcomed as non-governmental delegates and are permitted to gain re­
spectability and legitimacy in the eyes of the free world. This applies
with particular emphasis in relation to trade unionism which is assigned
such a key role in the subversive efforts of Soviet Communism and in:: its
goal of penetration of workers' organizations throughout the free world. "

Mr. Meany' s unremitting efforts to eliminate communistic influence from


American labor unions deserve the nation s gratitude. More effective coopera­
I

tion by Washington in this effort would be helpful.


A number of unions, peripheral to AFL-CIO, are communistically oriented.
It is conceivable that orders from Russia issued to such unions could paralyze
important facilities of transportation and communication. In the event of hosti­
lities, it seems possible that orders from Moscow could seriously obstruct
cooperation on the part of Hawaii.
Revision of foreign policy cannot be effective unless the Federal Govern­
ment shall engage in a parallel and effective program which will detect and
eliminate communistic infiltration, espionage and potential sabotage, not only
in labor unions, but in all departments of government, in all educational insti­
tutions and in all other harbors in which subversive influence now finds pro­
tection.
Such organizations as the F. B. I. and congressional committees devoted
to investigation of subversive activity should be greatly strengthened. At all
costs they should be protected against communist-inspired attack.
The enemy within our gates may be more dangerous than the enemy out-
side.
Surely dangerous developments now require that we discard sophistry,
become tough and reali stic.
What are the policies and where are the forces to meet these monumental
problems? Clearly past and current policies have brought us to the edge of
disaster. What can be done to overcome the "clear and present danger"?
Answers to problems so complex cannot corne from the man in the street.
Nor can a modern Cato formulate our foreign policy.
Such policies can only be hammered out under leadership of the President
of the United States after he has taken counsel with the ablest, best informed
and most courageous men of both parties.
Careful attention should be given to the advice of Senator Goldwater, who
has been quite articulate, tough and courageous. Among other things, he asks
�s to proceed in traditional American fashion by formulating and following our
own policy. With many other thoughtful Americans, Senator Goldwater believes
that repeated compromise under the paralyzing influence of our allies and the
United Nations has contributed to one failure after another.
Even as we support and finance U. N. forces in Africa, there is a re-

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ported at�empt to destroy the leadership of Moise Tshombe in Katanga -- an
attack that defeats our cause and plays into the hands of the Communists. An
American editor expresses the hope that Moise Tshombe licks hell out of the
U. N. Can confusion be worse confused?
Unless we quickly formulate and follow fresh and effective foreign poli­
cies, we need not concern ourselves with other measures for ensuring growth
and employment, because we shall, by a great sin of omission, invite dicta­
tion from Moscow of all future policy and practice in this hemisphere.

II

TAX REFORM

The survival and growth of our economy during the past thirty years,
despite heavy and inequitable tax burdens, inflation, coercive labor union
practices, wage increases far exceeding growth of productivity, increasing
impact of foreign competition, declining corporate profits, are truly amazing.
Such survival and growth, under heavy handicaps, seem to demonstrate
the residual strength and almost indestructible vitality of an economy founded
on the principles set forth in our Declaration of Independence, in our Consti­
tution and in the economic principles that were enunciated by Adam Smith in
the same year in which Jefferson wrote the Declaration of Independence.
Mr. Greenewalt has well said (page 25):

" A vigorous and expanding industrial economy is essential to our domestic


well being and to our position of world leadership. We dare not weaken
it; we must do all we can to strengthen it . . . We must act promptly to
improve the atmosphere for vigorous economic growth. Two things should
be done. Depreciation policies, as indicated in the report, should be
modified to permit rapid amortization of new plant and equipment . .
the steep progression in our personal income tax should be abated. "

There is much more in Mr. Greenewalt' s statement that is worthy of


emphasis.
Dr. Wriston' s essay on The Individual deserves high and imperishable
position among American classics. On page 49, we find this Significant state­
ment:

"The power to tax involves the power to destroy. In less extreme forms
it is the power to redistribute wealth and reshape society, either to pro­
tect the individual or to impair his incentive and cripple his initiative.
1\

Tax reform reminds one of Mark Twain' s much-quoted comment about the
weather. But, whereas we are now beneficiaries of air-conditioning, there has
been endless talk in the absence of any effective action in the area of tax re­
form.
Concern with the Russian threat 1s frequently expressed by contributors

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to GOALS FOR AMERICANS, How many Americans appreciate the degree to
which Russia has relied upon compelling incentives to develop her "vigorous
and expanding economy"?
Tragically, during the same period in which Russia has so effectively
used all manner of incentives to; stimulate accomplishment in every area of
activity, the force of incentives has sharply declined in the United States of
America.
Incentives for optimum individual performance are impaired by our
Marxian, steeply-graduated income tax.
Paradoxically, although Russian Communism is based upon Marxian
philosophy, Russia, alive to the value of incentives, avoided the trap of a
steeply-graduated income tax, although Marx had favored this measure as an
effective means for developing Communism.
Incentive to modernize our industrial plant is vitiated by archaic policies
with respect to depreciation allowances. A shocking proportion of plant faci­
lities in these Untted States is obsolescent.
During Stalin's early regime, according to an article written by Peter
Drucker for the SATURDAY EVENING POST in 1945, * "an official Russian publi­
cation announced the amazing discovery that if is capitalism that tends to
equalize incomes and concluded therefrom capltalism is degenerate. "
Our confused, complex tax system is so restrictive as to generate dimin­
ishing returns. Liberalization of depreciation allowances and abatement in
progreSSion could so expand the tax base as to generate increased tax revenue.
In December, 1959, a series of six editorials appeared in THE INDIANA­
POLIS STAR. This series should be studied by everyone interested in American
goals. Destructive effects of the graduated income tax are fully explored.
Outright repeal of this tax measure is considered quite feasible, and such re­
peal is advocated. Sound suggestions are offered for obtaining necessary tax
revenues through measures less repressive.
Fred Clark, distinguished chairman of The American Economic Foundation,
recently delivered a well-reasoned address in which he advocated repeal of the
16th Amendment. After an interesting discussion of the origin and effects of
the progressive income tax, Clark said, "Nothing is as vulnerable and as
easily defeated as an idea that has been tried and found wanting. "
Certainly if we hope to ensure adequate employment and optimum rate of
economic growth, we must have early and radical tax reform which will, among
other things, relieve Americans of the depreSSing effects of the graduated in­
come tax and restrictive depreciation allowances.

III

DRASTIC REDUCTION OF GOVERNMENT COMPETITION WITH FREE BUSINESS

Attainment of the goals of high employment, accelerated growth of the


economy and technology is made difficult by government competition in many
areas. Because the subject has been thoroughly explored in reports by the
Hoover Commission, I shall not take time to discuss it in great detail.

* STALIN PAYS 'EM WHAT THEY'RE WORTH, Saturday Evening Post, July 21, 1945
7.
A flagrant example of such competition exists in the generation, distri­
bution and sale of electrtcity. The Tennessee Valley Authority, for example,
is tax-free. It charges major operating costs arbitrarily to flood control and
aids to navigation. Its power reservoirs flood and remove from production
many thousands of acres of the area s most productive farm lands. Today most
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of TVA power output flows, not from hydroelectric plants, but from coal-fired
boilers.
The Authority sells electricity at rates below the bare tax costs of inves­
tor-owned utilities.
By what constitu4onal authority does the Federal government finance and
operate such a monstrosity?
TVA 1s only one of many instances of such unfair competition by govern­
ment with investor-owned utilities. Upon good author!:ty it is said that
electricity now generated in the United States and financed by taxpayers'
money rapidly approaches one-third of the total national output of electrical
energy.
Lenin is quoted as having defined Communism as"Socialism plus electri­
city. "
Reduction or elimination of unfair competition by government with free
business would stimulate economic growth by reducing dissipation of tax funds
and by increasing tax revenues from free business. Thus could the tax burden
generally be substantially reduced.
The proposed 23rd Amendment, which was introduced in Congress in 1958
by Congressman James B. Utt of California, would require disposal of all
Federal corporations and properties that compete with free business. Book
value of 700 Federal corporations has been estimated at 262 billions of dollars.
In 1959 these ventures are said to have incurred losses of 19 billions. More
than one million employees, according to the same authority, receive compen­
sation of 4 1/ 3 billions annually from the taxpayers of America.
-

Such figures outline the dimensions of waste, extravagance and retarding


effect upon national growth that arise from competition by government with free
business.
GOALS FOR AMERICANS embody many proposals which will require greatly
increased expenditures. Would it not be in the public interest to institute
economies in government to provIde such funds?
Here, indeed, is a rich lode which should be carefully appraised and
diligently exploited ..

IV

EQUITABLE LABOR LEGISLATION

Perceptive students of labor relations will be confused and puzzled by


Dr. Clark KerrBs statements on page 154 under the subhead, "Area two: the
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balance of strength.
Why"is it not possible or useful to say that the balance of power lies
on one side in general or the other"?

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How can one "accurately say that a roughl over-all balance of strength
prevails between management and labor in a great many segments of the Ameri­
can economy'''?
Dr. Wriston writes realistically about labor relations on page 52:

Unions were organized to protect the individual because he was in an


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adverse bargaining position facing the power of a corporation. In so


doing they performed a vital service of permanent value to our demo­
I

cratic society. But a union may go far beyond its essential service. By
making membership compulsory and collecting dues by check-off sharp
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limitations are laid upon voluntarism. There have -been instances where
overstress upon uniform wages seniority rights work quotas feather­
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bedding 'rules/' and other devices accentuated losses in individuality


ariSing from machine production instead of offsetting them. The union
may curb merit increases and promotions; it may impair incentives.
When the leader establishes an effective dictatorship it is an assault
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upon freedom. Then the individual is a tool not a master as in the


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democratic process he has a right -- and an obligation -- to be. "

For many years the late Donald R. Richberg was among the most effective
fighters for the rights of labor. He took part in the early struggles to unionize
industry co-authored the famed Railway Labor Act of 1926 and the National
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Recovery Act of 1933. The legislation of 1933 you may recall embodied the
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famous Clause 7A which the labor lobby had vainly advocated for generations.
Richberg attempted reconciliation of industry labor and public interests as
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the last head of N. R.A. in 1936.


Twenty years later Mr. Richberg courageously and realistically reap­
praised the fruit which had been produced by the seeds he had helped to plant .
He then sounded the alarm. He wrote a bookl first published in 1957 -­
LABOR UNION MONOPOLY -- A CLEAR AND PRESENT DANGER.
In that book he clearly protrayed a monstrous and destructive develop­
ment and demonstrated "how collective bargaining has become ,collective
coercion how the aim of industrial justice has become greed for industrial
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domination and how political influence once sought to protect fair dealing,
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is now sought to accomplish personal political goals. "


Those of us who have spent many weary hours at the bargaining table I

who have experienced the tensions of labor disputes and strikes who have I

been coerced by that greatly prejudiced tribunal the National Labor Relations
I

Board mustl as the result of much bitter experiencel agree with Mr. Richberg
rather than with Dr. Kerr.
From that costly teacher experience, we have learned that under cur­
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rent conditions management invariably plays against cards that are stacked
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and against dice that are loaded. The cards were stacked and the dice were
loaded by legislators bureaucrats and courts who ignored and violated the
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ancient precept of equality under the law.


The plain facts are that labor union leaders numerically an inSignificant
I

minority group, have become a major force in national, state and local politics.
Through their maneuvers they dictate, to a great degree, the course of our
economy.

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,"'-.
In the political arena, leaders of organized labor take full advantage of
privilege and immunity under the law. Millions of dollars, derived from dues
and assessments levied against union members, are used by union leaders to
achieve
. their political goals and to subsidize officeholders.
Union members who object to such use of their money are igdored or
punished. Thus the influence of labor leaders has become a dominant force in
legislatures state and nationaL The same pressure group strongly influences
I

executive dec� sions and policies. Nor are the courts of our land immune from
the pervasive influence of labor leaders 0

Competent authorities agree that the recently enacted minimum wage law
will inflate the entire wage structure, increase costs and cause unemployment .
Nevertheless, political influence of labor leaders forces us to live under these
penalties.
Stimulation of the economy through more realistic allowances for de­
preciation may be denied through political influence of union labor leaders.
The following editorial is enlightening:

"Almost all economists from orthodox to Keynesian, support the Presi­


I

dentO s announced intention to revise depreciation rules as one method


for stepping up the economy's growth, lowering costs and thus improv­
I

ing our position on the world market. But action Is being stymied by
sharp opposition from the AFL-CIO. The labor leadership, after long
hesitation over the issue, has taken its negative stand. A faster rate
of depreciation argues the AFL-CIO correctly, will speed up automation;
I

and by displacing workers will result, it continues incorrectly, in still


further unemployment beyond the already uncomfortable level. Just such
was the reasoning of their grandfathers when Henry Ford set up the first
assembly line; and of their grandfathersD grandfathers when they smashed
the first spinning jennies in Manchester."

Collusion between British labor leaders and the Socialistic Fabian Society
resulted in the capture and virtual extinction of the British Liberal Party. After
the labor party came into power England was driven to the brink of bankruptcy
I

by the socialistic Labor Partyl s nationalization policies.


From that bit of recent history, people in this country seem to have
learned little. Here, as in England, socialistic labor leaders have allied them­
selves with socialistic intellectuals. The alliance has ever-increasing poli­
tical influence. Shall we continue to follow the exact path that led England to
the edge of ruin?
England was rescued by heavy transfusion of American money. The United
States of America cannot be Similarly saved.
We turn now to more direct influence of union labor leaders on the economy.
At the end of 1960, as a result of labor union monopoly and coercion,
private, non-farm employee compensation, including benefits, had advanced to
220 per cent from a 1947 base of 100 per cent. Output of private, non-farm
goods and services had risen to about 155 per cent, and compensation per unit
of output had increased to 138 per cent.'*

* U. S. NEWS & WORLD REPORT -- based on U. S. Dept. of Labor statistics

10.
During the same period prices increased, business profits declined,
competition of foreign-made products became increasingly acute, many Ameri­
can plants were built overseas where, in place of American labor, they employ
relatively cheap, hard-working foreign labor.
Are such developments conducive to adequate employment and accelerated
economic growth?
Monopolistic and coercive practices and capabilities of labor leaders
stem, in large measure, from legislation which violates one of the most ancient
precepts for the government of free men. The principle of equality under the
law was recognized and enunciated by Aristotle 2, 000 .years before Jefferson
wrote the same principle into our own Declaration of Independence.
That ancient precept was observed by the founders of this Republic and
by many generations of our lawmakers. Then it came to be considered smart
politics to legalize special privileges and immunities for the leaders of
organized labor.
In 1914 the Clayton Act granted labor unions immunity from the anti-trust
laws. Then in 1926 the Railway Labor Act was adopted -- the "first successful
attempt of organized labor to use the power of government for its own benefit. "
In 1932 the Norris-La Guardia Act limited the injunctive power of the courts with
respect to labor unions, and in 1935 the infamous Wagner Act was designed to
promote the organi zation of labor unions and to prevent reasonable protection
against them.
In 1947, passage of the Taft-Hartley Act represented a wholly inadequate
effort to restore some degree of balance. Legislation enacted in the last ses­
sion of Congress is quite inadequate and mischievous.
The series of acts which bestow special privilege and immunities on
organized labor have brought about the " clear and present danger" of labor
union monopoly. Innumerable court interpretations and decisions, emanating
from the quasi-judicial Labor Relations Board, from intermediate tribunals and
from the Supreme Court of the United States have vastly extended the powers
and privileges of organized labor.

* * * * * * *

Can Labor Relations Reform be reasonably suggested as a goal for Ameri­


cans?
If we are to reach the goals of adequate employment and optimum economic
growth, it seems that an objective study of labor relations and pertinent legisla­
tion is essential.
Such an objective study by an able and unbiased commission could pro­
vide the basis for a shining new Labor Relations Act wh ich would reestablish
equality in the eye of the law, . protect the legitimate interests of labor,
organized and unorganized, take fully into account consumer interest and deal
fairly with investors.

11.
IN CONCLUSION

May I conclude these remarks by a few quotations which seem to be


pertinent?
The first is from a message recently received on .a form headed MARTIAN
INTERPLANETARY RADIO SYSTEM. The form indicates that it was released by
the Martian Bureau of Economic and Political Infor�ation. It is identified as
II
Dispatch #3 from Agent X assigned to Planet Earth. " The content of the mes­
sage is as follows:

"The word that best describes the economic policies of the United States
of America is 'confused, , America as the leader of the non-Communist
nations, is trying to be all things to all people. The Communists, being
totalitarian, can ignore public opinion and drive toward their goals.

"There is an expression used on Earth to describe a confused person:


'He leaped into the saddle and galloped off in all directions. ' This ap­
plies to national thinking in the United States.

"This dispatch concerns itself with seven examples:

" 1. Remedies for unemployment are being urgently studied by the Federal
government. At the same time the government is legislating higher
minimum wages which will inevitably increase unemployment.

" 2. The Federal administration is fighting the inflation which has halved
the value of the currency, but'is continuing deficit spending which
is one of the principal causes of inflation.

"3. Industry is being exhorted by government to speed up its rate of


growth, but is not permitted to set aside the depreciation necessary
to replace and modernize its plant and equipment.

"4. The leaders of organized labor, whose members stand to lose most
from the obsolescence of tools, are opposed to the legislative
changes which would remove from industry the tax burden which now
retards tool replacement and modernization.

"5. To lift the living standards of its friendly competitors, America has
given away billions,on ultra-modern tools and has welcomed, into its
domestic market, the resulting flow of low cost products. Yet the
government has placed obstacles in the way of cost reduction within
its own borders by withholding adequate depreciation allowances and
by encouraging cost-inflating wage rates.

"6. The United States is avowedly fighting the principles of Communism


(Marxism) which include steeply rising schedule of personal taxes to
penalize large incomes. Nevertheless, America has adopted this
principle. . People :pay personal income taxes up to 91%; a much
steeper rate than is imposed in Russia. Strangely enough this tax
is called 'progressive. '

12.
117.
The government is investigating and prosecuting manufacturers for
'administering' selling prices while ignoring the monopolistic
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forces that 'administer' costs.

IIA more general and complicated paradox is the attitude toward personal
freedom -- the original and supposedly enduring, national ideal. America
was the first place on earth where there was no limit on personal achieve­
ment. Naturally, this new nation soon led the world in production. But
today there is a national guilt complex based on the fact that every citi­
zen, regardless of his contribution to the economy, is not prosperous.

"Most of the American people who still believe in self-reliance cannot


defend themselves against the theoretically humanitarian arguments in
favor of group security. It would appear that, within 200 years of their
dramatic discovery of freedom, these people are about to throw it aside.
Perhaps they have never really understood what it was that they had dis­
covered. "

Many of you have read Marston Bates's notable book, THE FOREST AND THE
SEA. In his chapter on Man's Place in Nature, the author quotes a dictum from
Francis Bacon's NOVUM ORGANUM:

"We cannot command nature except by obeying her. "

The chapter is concluded by the following significant paragraphs:

"Yet, despite this abundance and progress, almost all attempts to look
at man' s future are gloomy . . .

"Our anxiety about the future, when we analyze it, turns largely on
three related things: the likelihood of continuing warfare, the dizzy rate
of human population growth, and the exhaustion of resources. But these
don' t look like insoluble problems. Surely men who can manufacture a
moon can learn to stop killing each other; men who can control infectious
disease can learn to breed more thoughtfully than guinea pigs; men who
can measure the universe can learn to act wisely in handling the materials
of the universe. Why are we so peSSimistic?

"Chiefly, I suspect, because we have come more and more to doubt our
ability to act rationally. Reason seems to be a property of individual
men, not of the species or of organized groups. Somewhere we have lost
the faith of the Eighteenth Century French philosophers in the perfectibi­
lity of man, and the rather different faith of the Nineteenth Century in the
idea of progress. "

Finally, may I quote the words of a man I have quoted over the years,
oftener than any other?
Here are two sentences from a recent interview with Dr. Wriston:

"Changed conditions give old goals new intensity. "

"What we want to do is to reenergize the goals we've taken too much for
granted. "

13.