American Democrats & British Labour
In their economic policy and ideas on the way to deal with threats of unemployment there are many resemblances between the American Democrats and the Labour Party, and both have been much influenced by Keynesian theories. The following summary of the Democrats’ policy in the Presidential election, written by a correspondent of the Economist (6/8/60) could almost all of it have been written about the Labour Party and their slight differences from the Conservatives:
The Democrats assert that the past eight years have consisted of “ two recessions . . . . separated by the most severe peace-time inflation in history,” and they blame the Administration's tight money policy for the present slackness in business. They blame credit restraint also for adding to the cost of servicing the growing public debt. The Democrats offer to end the tight money-policy and to set the economy moving forward at the brisk rate of 5 per cent, each year “without inflation.” How inflation can be avoided is not revealed in detail, although "a variety of remedies” is said to be at hand; since "monetary and credit policies properly applied" are among these, it is not clear how the Democratic policy would differ from the Republican in practice. The Democrats are, however, more willing than are the Republicans to counteract recessionary trends by prompt spending on public works and by temporary tax cuts.
It will be seen thal the Democrats and the Labour Party both favour low interest rates and a policy of cncouraging a greater expansion of production; and both accuse their opponents of having been responsible for inflation and high prices—forgetting how inflation went on when they were in power, up to 1951 in Britain and 1953 in U.S.A. Both parties believe that it is now within the power of a government to rule out for all time the possibility of a severe depression, and if anything approaching a severe depression does occur under Republican or Tory government it will be blamed on their perversity or ineptness.
Of course, experience of Labour and Democrats in office before the last war did not support their confidence about their powers. The British Labour Party came in with a promise to reduce unemployment (then at about 1,100,000) and saw it leap to 2½ million. In U.S.A. Roosevelt was elected in 1933 and seven years later unemployment in U.S.A. was still 14.3 per cent. (16.9 per cent., according to the American trade unions).
Exports
Mr. Macmillan has been exhorting business men to increase their exports and to cultivate what he called “export joy,” but he made it clear that what is wanted is an aggressive selling policy in overseas markets. As all the newspapers backed him up, as also did some trade union spokesmen, we may assume that selling more goods in foreign countries is generally considered "a good thing.”
But, elementary as it may appear to be, there are numberless people who write about trade who have never yet grasped that one country's exports are another's imports. So we read in the Sunday Dispatch (17/7/60) that many of the 400 of Britain's trade chiefs who are being urged by Macmillan to join in the fun of selling more abroad, could see nothing at all funny in the Japs "selling more abroad" in Britain. On the contrary, they ‘‘were seething yesterday as they digested the Jap pact," which "will flood Britain with an extra £3.000,000 worth of cheap Japanese goods." The ground for their anger was said to be the cheapness of the Japanese goods, against which British manufacturers could not compete—but it is certain that every additional ton of British goods sold in a foreign market through the export drive will work up some local manufacturer into seething indignation, too.
One commentator on Macmillan's speech (Daily Herald, 18/7/60) recalled that “this is the biggest ‘export crisis' session since the days when Sir Stafford Cripps went round the country exhorting British industry to make its post-war export drive." He might equally and more usefully have recalled an earlier speech of Sir Stafford Cripps, made during the war, when he said that “If . . . . we were to start once again the vicious circle of international trade competition we should be lost, and in a few years would be confronting another war."
World Food
Early in August a Freedom From Hunger Conference was held at Oxford under the auspices of the Oxford Committee for Famine Relief. Lord Boyd Orr, former Director-General of the U.N. Food and Agriculture Organization spoke, as he often has before, about the almost boundless possibility of increasing world food production:
If the nations of the world will cooperate, we can wash out the hunger of the world in ten years, and provide enough food for the increasing world population for the next 100 years." (Daily Telegraph, 2/8/60.)
He attacked the profit motive and complained that only in war-time will governments set out to provide food according to human need—at which lime, though he did not say this, they will also organize for destruction of life and property utterly without regard to cost.
The Assistant Director-General of U.N. Food and Agriculture Organization, Mr. Veillet-Lavallee, said that “there is now less to eat in the Far East than there was before the war,” and “in some parts of Africa 80 per cent. of the children are underfed or badly fed." (News Chronicle, 1/8/60.) He also stated that North America’s surplus wheat now amounts to 1,382,000 bushels a year and that it costs £350,000 a day to preserve the surplus which they hold because they cannot sell it.
Boom in land
For weeks the newspapers and politicians have been discussing the rocketing prices of land as more and more keen buyers chase after the shrinking acres available for use as building sites. Nearly ninety years ago Frederick Engels wrote a series of articles on the Housing Question for the Leipzig Social-Democratic paper Volkstaat. In them he had this to say about the situation then:
The growth of the big modern cities gives the land in certain areas, particularly in those which are centrally situated, an artificial and often colossally increasing value; the buildings erected in these areas depress this value, instead of increasing it, because they no longer correspond to the changed circumstances. They are pulled down and replaced by others. This takes place above all with workers’ houses which are situated centrally and where rents, even with the greatest overcrowding, can never, or only very slowly, increase above a certain maximum. They are pulled down and in their stead, shops, warehouses and public buildings are erected. Through its Haussmann in Paris, Bonapartism exploited this tendency tremendously for swindling and private enrichment. But the spirit of Haussmann has also been abroad in London. Manchester and Liverpool, and seems to feel itself just as much at home in Berlin and Vienna. The result is that the workers are forced out of the centre of the towns towards the outskirts: that workers' dwellings, and small dwellings in general, become rare and expensive and often altogether unobtainable, for under those circumstances the building industry, which is offered a much better field for speculation by more expensive houses, builds workers’ dwellings only by way of exception.
But what goes up sometimes comes down equally fast and some land booms end in a crash. There are reports already that much of the recently built office accommodation is not meeting additional demand but squeezing out existing older buildings. The Star (19/7/60) had the following about a land crash in Venezuela:
Just when there is a great to-do about soaring land values in Britain here is some news about a land boom that has gone bust.Out in Venezuela they have had one of the biggest slumps in land values since the famous Florida crash in the 20’s.Office blocks, houses and property in Caracas have come tumbling down in price with the growing inability of Venezuela to sell her glut of oil in world markets.In Caracas landlords, who three or four years ago could demand almost any price for accommodation, are now virtually bankrupt. For most of them have raised huge loans on inflated values, which have disappeared over night.
According to the Star some of the depressed property in Venezuela was backed by British and American insurance companies.
Edgar Hardcastle
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