2013년 3월 30일 토요일

In searching: elbow and ribs (and two sentences)

Your elbow's freedom leaves off where my ribs begin.

One man's laissez-faire was another man's intervention.

... Arthur J. Taylor, Laissez-faire and State Intervention in
Nineteenth-Century Britain (London: Macmillan, 1972). quoted in I. Wallerstein

* * *

These two sentences give me some similar image, but the descriptive meaning of the first is still elusive for me. I'm searching for that. ...

I came to imagine that two or more people are walking, swinging their elbows. Swaying elbows is natural movement in walking, and it must be free and not be restricted by any coercion. But that freedom of elbows should not touch somebody else's ribs.

메모: on P. Samuelson's textbook

Temporary note:


[발췌: Milton Friedman's] The Goldwater View of Economics (1964)

출처: The New York Times, October 11, 1964, Section Magazine 

* * *

※ 발췌 (excerpt):

What is the economic philosophy of Barry Goldwater? (...)

Yet the philosophy is far more important than the views on particular issues. (...)

Freedom and opportunity are Senator Goldwater's basic goals for mankind: freedom of the individual to pursue his own interests so long as he does not interfere with the freedom of others to do likewise; opportunity for the ordinary man to use his resources as effectively as possible to advance the well-being of himself and his family. Government exists to protect this freedom and to widen this opportunity.

Throughout history, the great enemy of freedom has been concentrated powerㅡprivate or governmental. If freedom is to be secure, power must be limited and it must be dispersed. The most effective way simultaneously to disperse private power and to limit governmental power is to rely primarily on voluntary exchange through a free marketㅡcompetitive capitalismㅡto organize economic activity. The most effective way to disperse the remaining governmental power is to rely on a constitutional system of checks and balances, and a federal system of decentralized political responsibility.


Wherever men are today reasonably free and relatively prosperous, they have gained their freedom and earned their prosperity through a system based on private property, free enterprise, and free markets. There is not a single exception. Centralized governmental control over the economy has been able to produce spectacular achievementsㅡfrom the pyramids of ancient Egypt to the sputniks and space exploits of Russia today. Such a system has been able to attain great military strength. But it has never been able to achieve either freedom or a decent standard of living for the ordinary man.

The Berlin Wall is a dramatic monument to the superiority of the free economy. (...) The result is clear for all to seeㅡgrowth and prosperity under freedom versus stagnation, deprivations and misery under collectivism.

Of course, every economy is a mixture. In all, economic activity is partly organized through a free market, partly through rigid customary relations, partly through explicit governmental authority. But the proportions vary widely. Freedom and prosperity have gone along with a mixture in which the market is dominant; tyranny and misery, with one in which custom and the government sector are dominant. Yet the evidence is often misread. After a talk I once gave in Kuala Lumpur, I was informed that the success of the United States was attributable to the 20% of socialism in its mixture, and the failure of India to the 20% of free enterprise in its!

(...) Government must provide for the common defense, preserve law and order, define the rights of men and enforce contracts among them, keep markets free, provide a stable monetary and fiscal framework for the private economy, construct public facitilites that for one reason or another cannot be provided by the market, and assist in easing distress and relieving misery.

It is always tempting to have governments go still further, to have them try to do directly for people what the people seem at the moment not to be able or to want to do for themselves. But history teaches us that this course seldom achieves the intended objectives; that it generally only weakens the capacity of the ordinary man to provide for his own needs. In addition, it has unintended consequences. Governmental power, once established, gravitates into the hands of private groups that use it for their own selfish purposesㅡgroups that, by forming a coalition with government, are able to strip the consumer of the protection of the market place.

(...) five issues: (1) The economics of defense; (2) Federal expenditures and taxation; (3) Business-cycle policy; (4) Welfare program; (5) Federal-state relations.

The Economics of Defense

Federal Expenditures and Taxation


Dic: way as meaning a distance or a length of time, especially a long one

■ some way, quite a way : quite a long distance

  • She had to park some way from the restaurant 

■ a long way off, a long way away, a long way ahead etc :  far away in distance or in time
  • A peace settlement now seems a long way off. 
  • I don't want to go all that way and not see him.
.... LDOCE

  • Britain retains an aristocratic structure ... if not to a complete meritocracy, at least some way in that direction. (Milton Friedman, 1997)

Dic: some usages of the modal ‘could’

2 [MODAL] You use could to indicate that something sometimes happened.

  • Though he had a temper and could be nasty, it never lasted...
  • He could be very pleasant when he wanted to.
 _CF. can: 4 [MODAL] You use can to indicate that something is true sometimes or is true in some circumstances.
  • ...long-term therapy that can last five years or more...
  • Exercising alone can be boring...
  • Coral can be yellow, blue, or green.
4 [MODAL] You use could to indicate that something is possibly true, or that it may possibly happen. (= might)
  • Doctors told him the disease could have been caused by years of working in smokey clubs...
  • An improvement in living standards could be years away...
6 [MODAL] You use could to talk about a possibility, ability, or opportunity that depends on other conditions.
  • Their hope was that a new and better East Germany could be born...
  • I knew that if I spoke to Myra, I could get her to call my father.

.... Cobuild

Dic: 노블레스 오블리쥬

Noblesse oblige:
노블레스 오블리쥬. 혹은 '노블레스 오블리주'라고도 쓰는 듯.
사전적 풀이를 적어보자.

* * *

Noblesse oblige.

Il faut vivre conformément à son rang et, p. anal., se conduire en faisant honneur au nom que l'on porte, à la famille à laquelle on appartient, à la position que l'on occupe. 
  • Tout ce que je viens de vous dire peut se résumer par un vieux mot: noblesse oblige! (Balzac,Lys,1836, p.164).
  • Le caractère de cette noble fille était un exemple bien frappant de la maxime: noblesse oblige. Je ne connais rien de généreux, de noble, de difficile qui fût au-dessus de sa générosité et de son désintéressement (Stendhal,H. Brulard, t.1, 1836, p.310):
  • Ces jeunes Anglais pensaient sérieusement à ressusciter la Chevalerie, son code de l'honneur, son respect religieux de la femme. La féodalité pouvait être périmée mais l'attitude féodale, qui considérait les hommes comme liés entre eux par des devoirs réciproques, restait la plus souhaitable. Ils regrettaient le temps où la règle de vie avait été «noblesse oblige». Maurois, Disraëli,1927, p.151.

♦ Noblesse oblige : Quiconque prétend être noble doit se conduire noblement. Il signifie figurément : On doit agir en conformité avec la situation qu’on occupe, avec la réputation qu’on s’est acquise.
.... Dictionnaire de l'Académie française

Noblesse oblige : la noblesse crée le devoir de faire honneur à son nom.

.... Le Nouveau Petit Robert de la langue française 2007

♦ Noblesse oblige : quiconque prétend être noble, doit se bien conduire.

.... Dictionnaire de la langue française (Littré)

2013년 3월 28일 목요일

사십 년 만에 뵌 할아버님

간밤의 꿈자리에서 할아버님을 뵈었다.

내가 초등학교 3~4학년 때 어머님과 형님과 같이 김치 비빔밥을 먹을 때 돌아가셨던 때가 1974년인데, 그때 마지막으로 뵌 지 근 40년 만에 처음으로 할아버님을 뵌 셈이다. 물 좋고 물이 흐르는 사이사이 바위가 아름다운 어떤 계곡에서 푸짐하게 차려놓은 잔치상 같은 것들이 이곳저곳에 널리 마련되어 있는 자리가 보이는 와중에 할아버님의 모습이 보였다.

아주 어릴 적에 뵈었던 기억밖에 없어서인지 할아버님의 얼굴은 근엄하시기만 했다.가까운 일가친척을 포함해 그 자리에 아버님도 계셨던 것 같은데 잘 기억나지 않는다. 어머님과 이모님이 잔치상에 들여갈 음식을 분주히 만드시는 모습도 기억난다.

* * *

꿈은 지나고 나면 잊히지만, 아무 단서 없이 내 무의식의 세계를 넘나드는 풍경이기도 하면서 나 자신을 보여주는 거울이기도 하다. 그래서 꿈을 기록하고 싶어 몇 자 적어놓는다. 2013년 3월 28일 새벽에 꾸었던 꿈이다.

Dic: a general feeling of worried, unhappy, something wrong

This is an uncountable noun, designating a general feeling of being worried or unhappy, and having something wrong, for which you don't know some exact symptoms or reasons.

  • There is no easy short-term solution to Britain's chronic economic ______.
  • He complained of depression, headaches and ______.
  • The latest crime figures are merely symptomatic of a wider ______ in society.
  • economic/financial/social ______.
  • a serious ______ among the employees.
  • a general ______ within society.
  • One year after the crash the markets remain mired in a deep ______.

  1. ______ is a state in which there is something wrong with a society or group, for which there does not seem to be a quick or easy solution. 
  2. ______ is a state in which people feel dissatisfied or unhappy but feel unable to change, usually because they do not know what is wrong.

  1. a feeling of unease or depression.
  2. a mild sickness, not symptomatic of any disease or ailment.
  3. a complex of problems affecting a country, economy, etc.

  1. the problems affecting a particular situation or group of people that are difficult to explain or identity.
  2. a general feeling of being sick, unhappy, or not satisfied, without signs of any particular problem (=unease).

  1. a general problem that is difficult to describe in an exact way.
  2. a general feeling that you are slightly ill or not happy in your life.

  1. A vague feeling of bodily discomfort, as at the beginning of an illness.
  2. A general sense of depression or unease.

  1. a general feeling of being worried, unhappy, or not satisfied.
    (1a) a feeling that you are slightly sick, although you cannot say what exactly is wrong.
  2. a situation in which a society or organization is not operating effectively.
... Cobuild, Collins, OALD, LDOCE, The American Heritage, Macmillan

[Jimmy Carter's] "Crisis of Confidence" Speech (July 15, 1979)

자료: http://millercenter.org/scripps/archive/speeches/detail/3402

* * *

( ... ... )

I invited to Camp David people from almost every segment of our society—business and labor, teachers and preachers, Governors, mayors, and private citizens. And then I left Camp David to listen to other Americans, men and women like you. It has been an extraordinary 10 days, and I want to share with you what I've heard. 

First of all, I got a lot of personal advice. Let me quote a few of the typical comments that I wrote down. 

This from a southern Governor: "Mr. President, you are not leading this Nation— you're just managing the Government." 
  • "You don't see the people enough any more." 
  • "Some of your Cabinet members don't seem loyal. There is not enough discipline among your disciples." 
  • "Don't talk to us about politics or the mechanics of government, but about an understanding of our common good." 
  • "Mr. President, we're in trouble. Talk to us about blood and sweat and tears." 
  • "If you lead, Mr. President, we will follow." 
  • Many people talked about themselves and about the condition of our Nation. This from a young woman in Pennsylvania: "I feel so far from government. I feel like ordinary people are excluded from political power." 

( ... ... )

These 10 days confirmed my belief in the decency and the strength and the wisdom of the American people, but it also bore out some of my longstanding concerns about our Nation's underlying problems. 

I know, of course, being President, that government actions and legislation can be very important. That's why I've worked hard to put my campaign promises into law—and I have to admit, with just mixed success. But after listening to the American people I have been reminded again that all the legislation in the world can't fix what's wrong with America. So, I want to speak to you first tonight about a subject even more serious than energy or inflation. I want to talk to you right now about a fundamental threat to American democracy

I do not mean our political and civil liberties. They will endure. And I do not refer to the outward strength of America, a nation that is at peace tonight everywhere in the world, with unmatched economic power and military might. 

The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our Nation

The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America. 

( ... ... )

Our people are losing that faith, not only in government itself but in the ability as citizens to serve as the ultimate rulers and shapers of our democracy. As a people we know our past and we are proud of it. Our progress has been part of the living history of America, even the world. We always believed that we were part of a great movement of humanity itself called democracy, involved in the search for freedom, and that belief has always strengthened us in our purpose. But just as we are losing our confidence in the future, we are also beginning to close the door on our past.

In a nation that was proud of hard work, strong families, close-knit communities, and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns. But we've discovered that owning things and consuming things does not satisfy our longing for meaning. We've learned that piling up material goods cannot fill the emptiness of lives which have no confidence or purpose. 

The symptoms of this crisis of the American spirit are all around us. For the first time in the history of our country a majority of our people believe that the next 5 years will be worse than the past 5 years. Two-thirds of our people do not even vote. The productivity of American workers is actually dropping, and the willingness of Americans to save for the future has fallen below that of all other people in the Western world. 

As you know, there is a growing disrespect for government and for churches and for schools, the news media, and other institutions. This is not a message of happiness or reassurance, but it is the truth and it is a warning

( ... ... )

We were sure that ours was a nation of the ballot, not the bullet, until the murders of John Kennedy and Robert Kennedy and Martin Luther King, Jr. We were taught that our armies were always invincible and our causes were always just, only to suffer the agony of Vietnam. We respected the Presidency as a place of honor until the shock of Watergate.

We remember when the phrase "sound as a dollar" was an expression of absolute dependability, until 10 years of inflation began to shrink our dollar and our savings. We believed that our Nation's resources were limitless until 1973, when we had to face a growing dependence on foreign oil.

( ... )

Looking for a way out of this crisis, our people have turned to the Federal Government and found it isolated from the mainstream of our Nation's life. Washington, D.C., has become an island. The gap between our citizens and our Government has never been so wide. The people are looking for honest answers, not easy answers; clear leadership, not false claims and evasiveness and politics as usual. 

What you see too often in Washington and elsewhere around the country is a system of government that seems incapable of action. You see a Congress twisted and pulled in every direction by hundreds of well-financed and powerful special interests. You see every extreme position defended to the last vote, almost to the last breath by one unyielding group or another. You often see a balanced and a fair approach that demands sacrifice, a little sacrifice from everyone, abandoned like an orphan without support and without friends. 

Often you see paralysis and stagnation and drift. You don't like it, and neither do I. What can we do? 

( ... )

First of all, we must face the truth, and then we can change our course.  (... ...)

Energy will be the immediate test of our ability to unite this Nation, and it can also be the standard around which we rally. On the battlefield of energy we can win for our Nation a new confidence, and we can seize control again of our common destiny.

In little more than two decades we've gone from a position of energy independence to one in which almost half the oil we use comes from foreign countries, at prices that are going through the roof. Our excessive dependence on OPEC has already taken a tremendous toll on our economy and our people. This is the direct cause of the long lines which have made millions of you spend aggravating hours waiting for gasoline. It's a cause of the increased inflation and unemployment that we now face. This intolerable dependence on foreign oil threatens our economic independence and the very security of our Nation.

The energy crisis is real. It is worldwide. It is a clear and present danger to our Nation. These are facts and we simply must face them:

What I have to say to you now about energy is simple and vitally important.

( ... ... )

Mirror: 화자가 아는 것, 청자가 아는 것, 화자도 청자도 아닌 제삼자가 아는 것

화자가 아는 것, 청자가 아는 것, 화자도 청자도 아닌 제삼자가 아는 것이 서로 다를 수 있다.

하나의 사례로 문맥의 흔적을 좀 보태서 내용을  기록:

  The Keynesians' belief that it was impossible for unemployment and inflation to rise simultaneously was shown to be false and undermined confidence in much of the rest of their theories. The certainty that Keynes brought about to the management of the economy was shattered. (...)
  But the old thinking was hard to jettison. (...) Jimmy Carter reached the White House on the Keynesian pledge of returning America to full employment. In 1978, he approved the Humphrey-Hawkins Full Employment Act, a reprise of the Full Employment Bill of 1945, mandating the president and the Federal Reserve to keep aggregate demand high enough to maintain full employment. In apparent contradiction, the act also directed the president and Congress to balance both the budget and trade balance. Like Canute commanding the tides, legislators were proving their impotence. Wishful thinking and majorities in Congress were not enough to beat stagflation. Nor was Carter the person to lead America in a new and painful direction, as was evident from his most conspicuous venture into telling unpalatable truths, the "malaise" speech suggesting the country was suffering from a "crisis that strikes at the very heat and soul and spirit of our national will."

이 뒤의 문단들에서는 밑줄 친 부분에 대한 단서를 글쓴이는 전혀 언급하지 않는다.

글쓴이는 밑줄 친 글을 쓰면서 자신이 염두에 둔 청자가 그 배경을 이미 알고 있을 거라고 전제한다.

  • ‘a new and painful direction’에서 부정관사 ‘a’를 붙였듯이 뭐가 새롭고 고통스러운 방향인지 명시적으로 말하지 않는다. 그 이전에 언급했던 스태그플레이션이 그것일 것이다라는 희미한 내용만을 독자에게 전달한다.
  • ‘unpalatable truths’를 무관사 복수형으로 쓴 것처럼 여기서도 무엇을 지칭하는지 그 대상을 적지 않은 채 뭐가 불쾌하고 받아들이기 곤란한 진실인지를 적시하지 않았다.
  • 바로 이어서 쉼표(,)로 연결해 정관사를 붙인 ‘the malaise speech suggesting ....’이 바로 그 내용임을 나타낸다.
이러한 방식의 언술은 화자와 동시대인 중 같은 문화권에서 사는 사람이라도 일부에 불과한 사람들밖에 알아들을 수 없는 서술이다. 한 세대만 더 지나면 알아들을 수 있는 사람은 더욱 줄어든다.

이런 경우 번역자는 그 출발어 문화권에서도  불완전한 화자와 청자 사이의 소통을 해당 문화권 밖에서 ‘엿듣는’ 사람이다. 그가 엿듣는 문자 그대로의 내용을 번역하면 도착어(번역어) 독자들은 당연히 무슨 말인지 전혀 알 수 없게 된다.


2013년 3월 27일 수요일

[Willaim Safire] 'Do Something' Calls Prompt Errors (February 1974)

자료: 구글뉴스

The New York Times: Washington ─ Confronting the demon of economic downturn, President Nixon extended his arms, flashed the ancient thumbs-up sign, and pronounced the mystic incantation: "There will be no recession."

Doing their bits to shoo out the dybbuk, advisers like Treasury Secretary George Schultz allowed as how bedevilled President's prophecy would self-fulfill, provided one accepts the Nixon definition of a recession, and economist Herbert Stein sturdily agreed, adding under his breath, "but we're sure gonna have the littlest boom you ever saw."

What must disturb these two believers in economic freedom is the President's willingness to make economic decisions for political reasons─that is, to listen to the populist demand to "do something!"

Last summer, popularity economics called for a wrongheaded price freeze; by satisfying the demogogic lust to "do something," the Presidentㅡoverruling Schultz and Stein, succeeded only in creating shortages and confusion.

This year, popularity economics calls for an evasion of recession at any cost, in a perversion of Keynesianism that says "inflation irritates, but recession infuriates." Some recession is surely necessary to restrain inflation and improve productivity, but the natural downturn would not help the President's plan for political survival.

When his back is to the wall, Nixon tends to adopt the economic suggestins of this Democratic opponents, and with a vengeance: taking "bold action" to freeze prices, or crack down on profits, or throw federal money at a possible recession. This frentic activity gives the illusion of leadership and temporarily answers the demands that he "do something."

But when Sen. William Proxmire ladled out the usual pap about "lack of vigorous, forceful economic leadership" to George Shultz last week at a congressional hearing, the mild-mannered witness did not grin and bear it. To everyone's surprise, Shultz banged the table and exploded: "I do not see why you just keep saying, saying, saying something that is not true... in the stampeded for 'action, action, do something,' you find yourself doing the wrong thing."

Shultz, a free-market man who fought against the kind of "vigorous," forceful leadership that caved in years ago to clamor for controlsㅡand denounced the senator's do-something fulminations as "a gross misrepresentation and I'm frankly tired of it."

Proxmire, ashamed at being caught in a demogogic posture by an economist he admires, said "So am I" and backed off.

What brings about this lust for government intervention, this dosomethingism, on the part of those who simultaneously decry excessive presidential power? Why can't "forceful leadership" ever be equated with unpopular self-restrain? Think of the economic mischief that could be avoided if voters were to say to elected officials: "Don't just do somethingㅡstand there."

For example, part of Proxmire's Complaint was with the way the independent truckers' strike had not been personally handled by the President. Presumably, the senator would have preferred the Lyndon Johnson method, with all-night bargaining sessions in the White House showing the President's personal concern.

That sort of stunting would have undermined the professional mediation which brought about a sensible settlement. It has taken five years to wean disputants away from Oval Office maternal careㅡand, of course, had the President injected himself into the settlement, the do-something set would promptly have berated him for grandstanding.

At the time when the President is especially tempted to take "the popular course," a special responsibility falls on those who airily call on him to "do something" about avoiding a recession and ㅡin the same breathㅡdemand he "do something" about rising prices, and "something" about shortages induced by price controls.

Such demogogic demands can no longer be made with impunity: the President is now all too likely to respond to them. (I had a small dog which, secure in the belief that my leash would restrain him, loved to lunge and snarl at a huge St. Bernard; one day I dropped his leash and the little dog looked at me as if I had lost my mind.)

Controls have failed; let's admit it. Heavy federal spending and a tax cut could avert a recessionㅡlet's admit that, toㅡbut at a cost in inflated prices and reduced real earnings that make it something that is wrong to do.

Instead, let's consider a capitalist's manifesto: Laissez-fairies of the world, unite! You have nothing to lose your Keynes.

2013년 3월 26일 화요일

[발췌: Interview with M. Friedman on] Richard Nixon

자료: http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/int_miltonfriedman.html

* * *

※ 발췌(excerpt): 

MILTON FRIEDMAN: Nixon was the most socialist of the presidents of the United States in the 20th century.

INTERVIEWER: I've heard Nixon accused of many things, but never [of being] a socialist before.

MILTON FRIEDMAN: Well, his ideas were not socialist, quite the opposite, but if you look at what happened during his administration, first of all, the number of pages in the Federal Register, which is full of regulations about business, doubled during his regime. During his regime the EPA, the Environmental Protection Agency, was established and the OSHA, the Occupational Safety and Health Administration, the OECA [the Office of Enforcement and Compliance Assurance of the EPA] -- about a dozen, a half-dozen alphabetic agencies were established so that you had the biggest increase in government regulation and control of industry during the Nixon administration that you had in the whole postwar period.

INTERVIEWER: Tell us how Nixon decided to adopt wage and price controls.

MILTON FRIEDMAN: Nixon, as you know, had been in the price control organization during World War II and understood that price controls were a very bad idea, and so he was strongly opposed to price controls. And yet, in 1971, August 15, 1971, he adopted wage and price controls. And the reason he did it, in my opinion, was because of something else that was happening, and that had to do with the exchange rate; that had to do with Bretton Woods and the agreement to peg the price of gold. The United States had agreed in 1944, at the Bretton Woods Conference, on an international financial system under which other countries would link their currencies to the U.S. dollar, and the United States would link its currency to gold and keep the price of gold at $35 an ounce. And because of the policies that were followed by the Kennedy and Johnson administrations, it had become very difficult to do that. We had had inflationary policies, which led to a tendency for the gold to flow out, for the price of gold to go above $35 an ounce. And the situation had become very critical in 1971. Nixon had to do something about that. If he had done nothing but close the gold window, if he had said the United States is going off the gold standard and done nothing else, every headline in every newspaper would have been, "That negative Nixon again! Just a negative act." And so instead he dressed it up by making it part of a general economic policy, a recovery policy, in which wage and price controls, which the democrats had been urging all along, became a major element. And by putting together the combination of closing the gold window and at the same time having wage and price controls, he converted what would have been a negative from a political point of view to a political positive. And that was the political reason for which he did it.

INTERVIEWER: There is a photograph of you and George Shultz with Nixon in the Oval Office. What did you say to him on that occasion? What did you tell him?

MILTON FRIEDMAN: Well, I don't know what occasion that particular one was, but the one that's relevant to your question is the last time I saw Nixon in the Oval Office with George Shultz. What we usually discussed when Nixon wanted to talk was the state of the economy: what monetary policy was doing.

Nixon was a very, very smart person. In fact, he had one of the highest IQs of any public official I've met. The problem with Nixon was not intelligence and not prejudices. The problem with him was that he was willing to sacrifice principles too easily for political advantage. But at any rate, as I was getting up to leave, President Nixon said to me, "Don't blame George for this silly business of wage and price controls," meaning George Shultz. And I believe I said to him, I think I said to him, "Oh, no, Mr. President. I don't blame George; I blame you! " (laughs) And that, I think, was the last thing I said to him. Now, the interesting point of that story is that the Nixon tapes are now available, and I have been trying to get that part of the Nixon tapes, but I haven't been able to get them yet. I want to make sure I didn't make this up.

[The U.S. Weekly Time's] We Are All Keynesians Now (December 31, 1965)

Elsewhere than the official site of the magazine could be found this supposed-to-be cover story: 

출처: Time, Friday, December 31, 1965.
자료: Some Link 

Reading this material found on the Internet, I take some partial excerpts below in trying to understand what had been said on this topic in those days of 1960s : 

* * *

※ 발췌(excerpt):


(... skipping one of the famous passages in the final pages of Keynes's General Theory ...)

Concluding his most important book with those words in 1935, John Maynard Keynes was confident that he had laid down a philosophy that would move and change men's affairs. Today, some 20 years after his death, his theories are a prime influence on the world's free economies, especially on America's, the richest and most expansionist. In Washington the men who formulate the nation's economic policies have used Keynesian principles not only to avoid the violent cycles of prewar days but to produce a phenomenal economic growth and to achieve remarkably stable prices. In 1965 they skillfully applied Keynes's ideas—together with a number of their own invention—to lift the nation through the fifth, and best, consecutive year of the most sizable, prolonged and widely distributed prosperity in history. 

By growing 5% in real terms, the U.S. experienced a sharper expansion than any other major nation. Even the most optimistic forecasts for 1965 turned out to be too low. The gross national product leaped from $628 billion to $672 billion—$14 billion more than the President's economists had expected. Among the other new records: auto production rose 22% , steel production 6% , capital spending 16% , personal income 7% and corporate profits 21%. Figuring that the U.S. had somehow discovered the secret of steady, stable, noninflationary growth, the leaders of many countries on both sides of the Iron Curtain openly tried to emulate its success. 

Basically, Washington's economic managers scaled these heights by their adherence to Keynes's central theme: the modern capitalist economy does not automatically work at top efficiency, but can be raised to that level by the intervention and influence of the government. Keynes was the first to demonstrate convincingly that government has not only the ability but the responsibility to use its powers to increase production, incomes and jobs. Moreover, he argued that government can do this without violating freedom or restraining competition. It can, he said, achieve calculated prosperity by manipulating three main tools: tax policy, credit policy and budget policy. Their use would have the effect of strengthening private spending, investment and production. 

From Mischief to Orthodoxy. When Keynes first propagated his theories, many people considered them to be bizarre or slightly subversive, and Keynes himself to be little but a left-wing mischief maker. Now Keynes and his ideas, though they still make some people nervous, have been so widely accepted that they constitute both the new orthodoxy in the universities and the touchstone of economic management in Washington. They have led to a greater degree of government involvement in the nation's economy than ever before in time of general peace. Says Budget Director Charles L. Schultze: "We can't prevent every little wiggle in the economic cycle, but we now can prevent a major slide." 

(... ...)

Why They Work. By and large, Keynesian public policies are working well because the private sector of the economy is making them work. Government gave business the incentive to expand, but it was private businessmen who made the decisions as to whether, when and where to do it. Washington gave consumers a stimulus to spend, but millions of ordinary Americans made the decisions—so vital to the economy —as to how and how much to spend. For all that it has profited from the ideas of Lord Keynes, the U.S. economy is still the world's most private and most free-enterprising. Were he alive, Keynes would certainly like it to stay that way.

The recent successes of Keynes's theories have given a new stature and luster to the men who practice what Carlyle called '.'the dismal science." Economists have descended in force from their ivory towers and now sit confidently at the elbow of almost every important leader in Government and business, where they are increasingly called upon to forecast, plan and decide. In Washington the ideas of Keynes have been carried into the White House by such activist economists as Gardner Ackley, Arthur Okun, Otto Eckstein (all members of the President's Council of Economic Advisers), Walter Heller (its former chairman), M.I.T.'s Paul Samuelson, Yale's James Tobin and Seymour Harris of the University of California at San Diego.

First the U.S. economists embraced Keynesianism, then the public accepted its tenets. Now even businessmen, traditionally hostile to Government's role in the economy, have been won over—not only because Keynesianism works but because Lyndon Johnson knows how to make it palatable. They have begun to take for granted that the Government will intervene to head off recession or choke off inflation, no longer think that deficit spending is immoral. Nor, in perhaps the greatest change of all, do they believe that Government will ever fully pay off its debt, any more than General Motors or IBM find it advisable to pay off their long-term obligations; instead of demanding payment, creditors would rather continue collecting interest.

To a New Stage. Though Keynes is the figure who looms largest in these recent changes, modern-day economists have naturally expanded and added to his theories, giving birth to a form of neo-Keynesianism. Because he was a creature of his times, Keynes was primarily interested in pulling a Depression-ridden world up to some form of prosperity and stability; today's economists are more concerned about making an already prospering economy grow still further. As Keynes might have put it: Keynesianism + the theory of growth = The New Economics. Says Gardner Ackley, chairman of the Council of Economic Advisers: "The new economics is based on Keynes. The fiscal revolution stems from him." Adds the University of Chicago's Milton Friedman, the nation's leading conservative economist, who was Presidential Candidate Barry Goldwater's adviser on economics: “We are all Keynesians now.”

Within the next two weeks, Ackley and his fellow council members will have to give President Johnson a firm economic forecast for the year ahead and advise him about what policies to follow. Their decisions will be particularly crucial because the U.S. economy is now moving into a new stage. Production is scraping up against the top levels of the nation's capacity, and federal spending and demand are soaring because of the war in Viet Nam. The economists' problem is to draw a fine line between promoting growth and preventing a debilitating inflation. As they search for new ways to accomplish this balance, they will be guided in large part by the Keynes legacy.

That legacy was the product of a man whose personality and ideas still surprise both his critics and his friends. Far from being a socialist left-winger, Keynes (pronounced canes) was a high-caste Establishment leader who disdained what he called "the boorish proletariat" and said: "For better or worse, I am a bourgeois economist." Keynes was suspicious of the power of unions, inveighed against the perils of inflation, praised the virtue of profits. "The engine which drives Enterprise," he wrote, "is not Thrift but Profit." He condemned the Marxists as being "illogical and so dull" and saw himself as a doctor of capitalism, which he was convinced could lead mankind to universal plenty within a century. Communists, Marxists and the British Labor Party's radical fringe damned Keynes because he sought to strengthen a system that they wanted to overthrow.

( ... ... )

The Whole Economy. The thrust of Keynes's personality, however strong, was vastly less important than the force of his ideas. Those ideas were so original and persuasive that Keynes now ranks with Adam Smith and Karl Marx as one of history's most significant economists. Today his theses are the basis of economic policies in Britain, Canada, Australia and part of Continental Europe, as well as in the U.S.

Economics is a young science, a mere 200 years old. Addressing its problems in the second half of its second century, Keynes was more successful than his predecessors in seeing it whole. Great theorists before him had tried to take a wide view of economic forces, but they lacked the 20th century statistical tools to do the job, and they tended to concentrate on certain specialties. Adam Smith focused on the marketplace, Malthus on population, Ricardo on rent and land, Marx on labor and wages. Modern economists call those specializations "microeconomics"; Keynes was the precursor of what is now known as "macroeconomics"—from the Greek makros, for large or extended. He decided that the way to look at the economy was to measure all the myriad forces tugging and pulling at it—production, prices, profits, incomes, interest rates, government policies.

(...) The General Theory, published in 1936. It is an uneven and ill-organized book, as difficult as Deuteronomy and open to almost as many interpretations. Yet for all its faults, it had more influence in a shorter time than any other book ever written on economics, including Smith's The Wealth of Nations and Marx's Das Kapital.

( ... ... )

2013년 3월 25일 월요일

[Reading Sennett's Craftsman] “Familiarity risks producing only more dead denotation.”

Source: Richard Sennett's The Craftsman

A short excerpt of which on p. 183, Out of its chapter, “Expressive Instructions” : 

* * *

(...) One remedy for dead denotation is to ‘‘write what you know,’’ a piece of advice frequently given to young writers. The idea is that a person can unpack instructive meaning in experiences he or she has lived through. However, this remedy is no remedy; what you know may be so familiar to you that you might take for granted its touchstone
references, assuming that others have identical touchstones. Thus you might write of an architect, ‘‘McGuppy’s slick mall resembles a Bon Jovi song.’’ A reader in Borneo might not be able to summon up the image of a slick shopping mall and I have never heard a Bon Jovi tune. Much contemporary writing is stuffed with casual references to consumer
products; in two generations, this writing will be incomprehensible. Familiarity risks producing only more dead denotation. The challenge posed by dead denotation is precisely to take apart tacit knowledge, which requires bringing to the surface of consciousness that knowledge which has become so self-evident and habitual that it
seems just natural. (...)

* * *

I wish some writers, who think some narrow span of their own experience to be something like universal and all-time culture, took into account the above remarks, especially:
Much contemporary writing is stuffed with casual references to consumer products; in two generations, this writing will be incomprehensible.

[Some lyric of a song] You're The Top

자료: A search result

This seems to be a song, and its writer seems to be known to be COLE PORTER.

* * *


You're the top! You're the coliseum! You're the top! You're the Louvre Museum!
You're a melody from a symphony by Strauss,
You're a Bendel bonnet, a Shakespeare sonnet, you're Mickey Mouse.
You're the Nile, you're the Tower of Pisa, you're the smile on the Mona Lisa;
I'm a worthless check, a total wreck, a flop,
But if baby, I'm the bottom, you're the top!


[JFK's] Address and Q&A Period at the Economic Club of New York (December 14, 1962)

자료 1: http://www.presidency.ucsb.edu/ws/index.php?pid=9057

* * *

General Royall, Mr. Trippe, Mr. Rockefeller, General Clay, gentlemen:

I feel tonight somewhat like I felt when I addressed in 1960 the Houston Ministers Conference on the separation of church and state. But I am glad to have a chance to talk to you tonight about the advantages of the free enterprise system. [Applause]

Less than a month ago this Nation reminded the world that it possessed both the will and the weapons to meet any threat to the security of free men. The gains we have made will not be given up, and the course that we have pursued will not be abandoned. But in the long run, that security will not be determined by military or diplomatic moves alone. It will be affected by the decisions of finance ministers as well as by the decisions of Secretaries of State and Secretaries of Defense; by the deployment of fiscal and monetary weapons as well as by military weapons; and above all by the strength of this Nation's economy as well as by the strength of our defenses.

You will recall that Chairman Khrushchev has said that he believed that the hinge of world history would begin to move when the Soviet Union out-produced the United States. Therefore, the subject to which we address ourselves tonight concerns not merely our own well-being, but also very vitally the defense of the free world. America's rise to world leadership in the century since the Civil War has reflected more than anything else our unprecedented economic growth. Interrupted during the decade of the thirties, the vigorous expansion of our economy was resumed in 1940 and continued for more than 15 years thereafter. It demonstrated for all to see the power of freedom and the efficiency of free institutions. The economic health of this Nation has been and is now fundamentally sound.

But a leading nation, a nation upon which all depend not only in this country but around the world, cannot afford to be satisfied, to look back or to pause. On our strength and growth depend the strength of others, the spread of free world trade and unity, and continued confidence in our leadership and our currency. The underdeveloped countries are dependent upon us for the sale of their primary commodities and for aid to their struggling economies. In short, a prosperous and growing America is important not only to Americans--it is, as the spokesman for 20 Western nations in the Organization for Economic Cooperation and Development, as he stressed this week, of vital importance to the entire Western World.

In the last 2 years we have made significant strides. Our gross national product has risen 11 percent while inflation has been arrested. Employment has been increased by 1.3 million jobs. Profits, personal income, living standards--all are setting new records. Most of the economic indicators for this quarter are up and the prospects are for further expansion in the next quarter. But we must look beyond the next quarter, or the last quarter, or even the last 2 years. For we can and must do better, much better than we have been doing for the last 5 1/2 years.

This economy is capable of producing without strain $30 to $40 billion more than we are producing today. Business earnings could be $7 to $8 billion higher than they are today. Utilization of existing plant and equipment could be much higher; and if it were, investment would rise. We need not accept an unemployment rate Of 5 percent or more, such as we have had for 60 out of the last 61 months. There is no need for us to be satisfied with a rate of growth that keeps good men out of work and good capacity out of use.

The Economic Club of New York is of course familiar with these problems. For in this State the rate of insured unemployment has been persistently higher than the national average, and the increases in personal income and employment have been slower here than in the Nation as a whole. You have seen the tragedy of chronically depressed areas upstate, of unemployed young people, and I think this might be one of our most serious national problems, unemployed young people, those under 20, one out of four is unemployed, particularly those in the minority groups, roaming the streets of New York and our other great cities, and others on relief at an early age, with the prospect that in this decade we will have between 7 and 8 million school dropouts, unskilled, coming into the labor market, at a time when the need for unskilled labor is steadily diminishing. And I know you share my conviction that, proud as we are of its progress, this Nation's economy can and must do even better than it has done in the last 5 years. Our choice, therefore, boils down to one of doing nothing and thereby risking a widening gap between our actual and potential growth in output, profits, and employment-or taking action, at the Federal level, to raise our entire economy to a new and higher level of business activity.

If we do not take action, those who have the most reason to be dissatisfied with our present rate of growth will be tempted to seek shortsighted and narrow solutions--to resist automation, to reduce the work week to 35 hours or even lower, to shut out imports, or to raise prices in a vain effort to obtain full capacity profits on under-capacity operations. But these are all self-defeating expedients which can only restrict the economy, not expand it.

There are a number of ways by which the Federal Government can meet its responsibilities to aid economic growth. We can and must improve American education and technical training. We can and must expand civilian research and technology. One of the great bottlenecks for this country's economic growth in this decade will be the shortage of doctorates in mathematics, engineering, and physics; a serious shortage with a great demand and an under-supply of highly trained manpower. We can and must step up the development of our natural resources.

But the most direct and significant kind of Federal action aiding economic growth is to make possible an increase in private consumption and investment demand--to cut the fetters which hold back private spending. In the past, this could be done in part by the increased use of credit and monetary tools, but our balance of payments situation today places limits on our use of those tools for expansion. It could also be done by increasing Federal expenditures more rapidly than necessary, but such a course would soon demoralize both the Government and our economy. If Government is to retain the confidence of the people, it must not spend more than can be justified on grounds of national need or spent with maximum efficiency. I shall say more on this in a moment.

The final and best means of strengthening demand among consumers and business is to reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system; and this administration pledged itself last summer to an across-the-board, top-to-bottom cut in personal and corporate income taxes to be enacted and become effective in 1963.

I am not talking about a "quickie" or a temporary tax cut, which would be more appropriate if a recession were imminent. Nor am I talking about giving the economy a mere shot in the arm, to ease some temporary complaint. I am talking about the accumulated evidence of the last 5 years that our present tax system, developed as it was, in good part, during World War II to restrain growth, exerts too heavy a drag on growth in peace time; that it siphons out of the private economy too large a share of personal and business purchasing power; that it reduces the financial incentives for personal effort, investment, and risk-taking.

In short, to increase demand and lift the economy, the Federal Government's most useful role is not to rush into a program of excessive increases in public expenditures, but to expand the incentives and opportunities for private expenditures.

Under these circumstances, any new tax legislation--and you can understand that under the comity which exists in the United States Constitution whereby the Ways and Means Committee in the House of Representatives have the responsibility of initiating this legislation, that the details of any proposal should wait on the meeting of the Congress in January. But you can understand that under these circumstances, in general, that any new tax legislation enacted next year should meet the following three tests:

First, it should reduce net taxes by a sufficiently early date and a sufficiently large amount to do the job required. Early action could give us extra leverage, added results, and important insurance against recession. Too large a tax cut, of course, could result in inflation and insufficient future revenues--but the greatest danger is a tax cut too little or too late to be effective.

Second, the new tax bill must increase private consumption as well as investment. Consumers are still spending between 92 and 94 'percent of their after-tax income, as they have every year since 1950. But that after-tax income could and should be greater, providing stronger markets for the products of American industry. When consumers purchase more goods, plants use more of their capacity, men are hired instead of laid off, investment increases and profits are high.

Corporate tax rates must also be cut to increase incentives and the availability of investment capital. The Government has already taken major steps this year to reduce business tax liability and to stimulate the modernization, replacement, and expansion of our productive plant and equipment. We have done this through the 1962 investment tax credit and through the liberalization of depreciation allowances--two essential parts of our first step in tax revision which amounted to a 10 percent reduction in corporate income taxes worth $2.5 billion. Now we need to increase consumer demand to make these measures fully effective--demand which will make more use of existing capacity and thus increase both profits and the incentive to invest. In fact, profits after taxes would be at least 15 percent higher today if we were operating at full employment.

For all these reasons, next year's tax bill should reduce personal as well as corporate income taxes, for those in the lower brackets, who are certain to spend their additional take-home pay, and for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and enabled to invest more capital.

Third, the new tax bill should improve both the equity and the simplicity of our present tax system. This means the enactment of long-needed tax reforms, a broadening of the tax base and the elimination or modification of many special tax privileges. These steps are not only needed to recover lost revenue and thus make possible a larger cut in present rates; they are also tied directly to our goal of greater growth. For the present patchwork of special provisions and preferences lightens the tax load of some only at the cost of placing a heavier burden on others. It distorts economic judgments and channels an undue amount of energy into efforts to avoid tax liabilities. It makes certain types of less productive activity more profitable than other more valuable undertakings. All this inhibits our growth and efficiency, as well as considerably complicating the work of both the taxpayer and the Internal Revenue Service.

These various exclusions and concessions have been justified in part as a means of overcoming oppressively high rates in the upper brackets--and a sharp reduction in those rates, accompanied by base-broadening, loophole-closing measures, would properly make the new rates not only lower but also more widely applicable. Surely this is more equitable on both counts.

Those are the three tests which the right kind of bill must meet and I am confident that the enactment of the right bill next year will in due course increase our gross national product by several times the amount of taxes actually cut. Profit margins will be improved and both the incentive to invest and the supply of internal funds for investment will be increased. There will be new interest in taking risks, in increasing productivity, in creating new jobs and new products for long-term economic growth.

Other national problems, moreover, will be aided by full employment. It will encourage the location of new plants in areas of labor surplus and provide new jobs for workers that we are retraining and facilitate the adjustment which will be necessary under our new trade expansion bill and reduce a number of government expenditures.

It will not, I'm confident, revive an inflationary spiral or adversely affect our balance of payments. If the economy today were operating close to capacity levels with little unemployment, or if a sudden change in our military requirements should cause a scramble for men and resources, then I would oppose tax reductions as irresponsible and inflationary; and I would not hesitate to recommend a tax increase, if that were necessary. But our resources and manpower are not being fully utilized; the general level of prices has been remarkably stable; and increased competition, both at home and abroad, along with increased productivity will help keep both prices and wages within appropriate limits.

The same is true of our balance of payments. While rising demand will expand imports, new investment in more efficient productive facilities will aid exports and a new economic climate could both draw capital from abroad and keep capital here at home. It will also put us in a better position, if necessary, to use monetary tools to help our international accounts. But, most importantly, confidence in the dollar in the long run rests on confidence in America, in our ability to meet our economic commitments and reach our economic goals. In a worldwide conviction that we are not drifting from recession to recession with no answer, the substantial improvement in our balance of payments position in the last 2 years makes it clear that nothing could be more foolish than to restrict our growth merely to minimize that particular problem, because a slowdown in our economy will feed that problem rather than diminish it. On the contrary, European governmental and financial authorities with almost total unanimity, far from threatening to withdraw gold, have urged us to cut taxes in order to expand our economy, attract more capital, and increase confidence in our future.

But what concerns most Americans about a tax cut, I know, is not the deficit in our balance of payments but the deficit in our Federal budget. When I announced in April of 1961 that this kind of comprehensive tax reform would follow the bill enacted this year, I had hoped to present it in an atmosphere of a balanced budget. But it has been necessary to augment sharply our nuclear and conventional forces, to step up our efforts in space, to meet the increased cost of servicing the national debt and meeting our obligations, established by law, to veterans. These expenditure increases, let me stress, constitute practically all of the increases which have occurred under this administration, the remainder having gone to fight the recession we found in industry--mostly through the supplemental employment bill-and in agriculture.

We shall, therefore, neither postpone our tax cut plans nor cut into essential national security programs. This administration is determined to protect America's security and survival and we are also determined to step up its economic growth. I think we must do both.

Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenue to balance our budget just as it will never produce enough jobs or enough profits. Surely the lesson of the last decade is that budget deficits are not caused by wild-eyed spenders but by slow economic growth and periodic recessions, and any new recession would break all deficit records.

In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. The experience of a number of European countries and Japan have borne this out. This country's own experience with tax reduction in 1954 has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.

I repeat: our practical choice is not between a tax-cut deficit and a budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy; or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve--and I believe this can be done--a budget surplus. The first type of deficit is a sign of waste and weakness; the second reflects an investment in the future.

Nevertheless, as Chairman Mills of the House Ways and Means Committee pointed out this week, the size of the deficit is to be regarded with concern, and tax reduction must be accompanied, in his words, by "increased control of the rises in expenditures." This is precisely the course we intend to follow in 1963.

At the same time as our tax program is presented to the Congress in January, the Federal budget for fiscal 1964 will also be presented. Defense and space expenditures will necessarily rise in order to carry out programs which are demanded and are necessary for our own security, and which have largely been authorized by Members in both parties of the Congress with overwhelming majorities. Fixed interest charges on the debt also rise slightly. But I can tell you now that the total of all other expenditures combined will be held at approximately its current level.
This is not an easy task. During the past 9 years, domestic civilian expenditures in the National Government have risen at an average rate of more than 71/2 percent. State and local government expenditures have risen at an annual rate of 9 percent. Expenditures by the New York State Government, for example, have risen in recent years at the rate of roughly 10 percent a year. At a time when Government pay scales have necessarily risen--and I take New York just as an example--when our population and pressures are growing and the demand for services and State aid is thus increasing, next year's Federal budget, which will hold domestic outlays at their present level, will represent a genuine effort in expenditure control. This budget will reflect, among other economies, a $750 million reduction in the postal deficit. It will reflect a savings of over $300 million in the storage costs of surplus feed grain stocks, and as a result of the feed grain bill of 1961 we will have two-thirds less in storage than we would otherwise have had in January 1963 and a savings of at least $600 million from the cancellation of obsolete or unworkable weapons systems. Secretary McNamara is undertaking a cost reduction program expected to save at least $3 billion a year in the Department of Defense, cutting down on duplication and closing down nonessential installations. Other agencies must do the same.

In addition, I have directed all heads of Government departments and agencies to hold Federal employment under the levels authorized by congressional appropriations; to absorb through greater efficiency a substantial part of this year's Federal pay increase; to achieve an increase in productivity which will enable the same amount of work to be done by fewer people; and to refrain from spending any unnecessary funds that were appropriated by the Congress.

It should also be noted that the Federal debt, as a proportion of our gross national product, has been steadily reduced in this last year. Last year the total increase in the Federal debt was 2 percent--compared to an 8 percent increase in the gross debt of State and local governments. Taking a longer view, the Federal debt today is 13 percent higher than it was in 1946, while State and local debt increased over 360 percent and private debt by over 300 percent. In fact, if it were not for Federal financial assistance to State and local governments, the Federal cash budget would show a surplus. Federal civilian employment, for example, is actually lower today than it was in 1952, while State and local government employment over the same period has increased 67 percent.

It is this setting which makes Federal tax reduction both possible and appropriate next year. I do not underestimate the obstacles which the Congress will face in enacting such legislation. No one will be satisfied. Everyone will have his own approach, his own bill, his own reduction. A high order of restraint and determination will be required if the possible is not to wait on the perfect. But a nation capable of marshaling these qualities in any dramatic threat to its security is surely capable, as a great free society, of meeting a slower and more complex threat to our economic vitality. This Nation can afford to reduce taxes, we can afford a temporary deficit, but we cannot afford to do nothing. For on the strength of our free economy rests the hope of all free nations. We shall not fail that hope, for free men and free nations must prosper and they must prevail.
Thank you.
[A question and answer period followed.]

[1.] Q. There has been much talk in Washington and elsewhere of reductions in personal income tax rates to 15 percent for the lowest brackets, and 65 for the highest brackets, in personal income taxes, and for a reduction in corporate rates to 47 percent. What many of these questioners would like to know is, are those figures generally in the ball park?

THE PRESIDENT. This legislation is going to have very difficult traveling at best, and I would suggest giving it at least the most favorable start we can, as I said in my speech, by permitting Mr. Dillon to present this before the Ways and Means Committee in January. So that I would suggest that the details of the tax reduction should wait upon presentation to the Ways and Means Committee. There might be something for everybody, though.

[2.] Q. Mr. President, my first question is: One of the great achievements of your legislative program this year was the passage of the Trade Expansion Act--would you care to comment on your program in that area of the economy?

THE PRESIDENT. We have, as you know, appointed former Secretary of State Herter to be our chief negotiator. He is assisted by Mr. Gossett, who was Vice President of the Ford Company. They will begin the discussions with the Common Market early in 1963. There are fourteen or fifteen hundred items. It will probably take well into 1963--I would say towards the end of '63--before both sides have prepared their positions. We are going to have an extremely difficult negotiation, particularly in agriculture. The United States has had a favorable market for its agricultural surpluses to Europe--or its agricultural products; it has been our best dollar earner, it has really meant that our balance of payments has not been in more difficult position than it has been. Now, with the Common Market, with the prospect of Britain's joining, with the tremendous revolution in agricultural production which is about to hit Europe-France in particular--the levies and the rates and the penalties which are placed on the introduction of agricultural commodities into Europe in the coming 3 or 4 months may be of decisive importance to us in our battle on the balance of payments, and also in our struggle to bring some sense out of the problems we face in American agriculture.

So I would say that Secretary Herter has really a responsibility comparable to what he had as Secretary of State, and one which ties into our security, because quite obviously unless we're able to meet our balance of payments in time, then we are going to have to find other means of solving it. As you know, it costs us about $3 billion a year because of national security expenditures. So that this goes to the heart of our ability to keep more than one million Americans in uniform who now are serving the United States outside the borders of the United States.

So that I think this is a very vital issue, and that is why I was particularly pleased that Mr. Herter accepted it. I'm glad to see in this New York Port Authority, the trade center that they are building, the effort that businesses are making to sell abroad. We still sell abroad much too little. As a percentage of our gross national product the United States sells abroad less than really almost any major industrialized country. We have never had before us the prospect of "export or die," and I think that if all those who are in positions of responsibility will think not only of the markets which may be abroad for investment, but also going up and down the streets and selling American products, they can make a decisive contribution to the maintenance of our balance of payments, and also serve the country and the free economy system.

So the next few months I think will be very decisive and the burdens of Mr. Herter will be very great.

[3.] Q. Mr. President, in view of the prospect for a deficit in any event, and a fairly large one if taxes are reduced, is it part of the administration's plan to finance a major part of that deficit outside the banking system in order to reduce the threat of monetary inflation?
THE PRESIDENT That will be a judgment which is primarily that of Mr. Martin and the Federal Reserve. He has commented on that to a degree before the Joint Committee this year. He is concerned about the prospect of inflation, because of course it affects us adversely, and also because it affects the balance of payments. I would hope, however, and I'm sure that he will agree, that he will--any deficit which has to be financed will be financed in a way which will be the maximum degree possible to stimulate the economy without increasing the prospect of another inflationary or speculative spiral. So it is a fine adjustment which Mr. Martin will make, but I'm sure that he will be as concerned as all of us are to get the benefit such as it may be out of the deficit, and also at the same time keep and use our monetary tools wisely enough to keep matters in control. His judgment will be, because of the Federal Reserve law, of course final.

[4-] Q. Mr. President, the strong attitude you took towards Khrushchev during the Cuban crisis has not only been applauded, but has improved the standing of our country throughout the free world. Don't you feel we would gain more respect and further improve our status by really implementing the Hickenlooper amendment on American properties which are seized largely without compensation overseas, rather than just giving lip service?

THE PRESIDENT. Well, I'm not sure I'd accept the premise of the question. The Hickenlooper amendment is very clearly and sharply drawn. We are appointing a distinguished businessmen's committee to advise us on implementing the Hickenlooper amendment. It's not altogether an easy job. We've got one controversy now in Turkey, which involves a default by a previous government which was overthrown, a number of the ministers executed, which was regarded as highly corrupt. The present government is reluctant to accept its obligations. We have the problem in Brazil where you have the seizure of some American property by local governors--a local governor--and we have looked to the National Government for relief.

The Hickenlooper amendment does not go wholly into effect for some months under its terms, but I can inform you that its provisions are being read to the finance minister of every state.

[5.] Q. Mr. President, this question cropped up in many forms. Here's one form of it: Are current tax plans giving any consideration to increased emphasis on consumption taxes by way of a broad base Federal excise tax in order to relieve some of the tax pressure on income from investment sources?

THE PRESIDENT. Once again I'll pass.

Q. I should have chosen one of the other versions !

THE PRESIDENT. When I was a Congressman I never realized how important Congress was, but now I do.

Q. I think I can paraphrase it by saying are you thinking about the possibility later on, perhaps, of using consumption or sales taxes in the tax packages that you're considering?

THE PRESIDENT. No, I suppose I--I assume what they mean is whether we are thinking of going the route which has been followed in France and some other countries of putting manufacturers' tax, and lessening the burden on income. I think on these details of the tax program that in your interest as well as mine we should wait.

[6.] Q. Mr. President, what progress has been made by our Latin American neighbors to effect tax reforms and economic reforms, so that they begin to carry their own weight under the Alliance for Progress?

THE PRESIDENT. Well, we have made some progress in some countries. I made a reference the other day at the press conference that some efforts have been made certainly to meet the principles of the Alliance for Progress in Colombia. The President of Chile, who has been visiting us this week, is putting in a new tax program, some of which is causing some concern to American companies which have investments there, but I would say that we have made some progress in some countries. But tax reform is very difficult. It's a very appealing title. But as we know from the struggle which we had in the Congress this year, in our efforts to pass the 7-percent investment credit, and at the same time to collect taxes more effectively through withholding on dividends and interest, a tax which has been on the books for 20 years, tax reform, when we become more specific, does not carry with it the same popular support. They have the same difficulty.

I think that the situation in Latin America is very critical. I would say it represents the greatest challenge which the United States now faces, except for the direct matter of our dealings with the Soviet Union. And in some of the countries the situation is far less satisfactory--the problems are staggering. And Brazil, which is a matter of great concern to us, is the largest country in Latin America, has a population 40 percent of which is under 20, substantially illiterate in some portions, particularly the northeast, living on an average income of $100 a year, some radicals in control in some areas, so I would say we face extremely serious problems in implementing the principles of the Alliance for Progress.

We do it with a good deal less resources than we did with the Marshall plan. And in many ways the Marshall plan was easier. We really only had to rebuild the plants in Europe. The manpower was there, the tradition was there, the resources were there. Latin America does not have the resources. It is dependent on two or three or four commodities for export, the prices of which have been dropping the last 3 years. It doesn't have the trained manpower or skills. It's trying to accomplish a social revolution under freedom under the greatest obstacles. So I think that we should continue our effort there and not lose heart, but I would say that we face--and Latin Americans face-staggering problems in trying to solve it. We had the guest from Honduras whose population is 60 percent illiterate. We go through country after country in Central America, the same high illiteracy, high unemployment, bad health conditions. I would say that we are facing the job of doing this revolution under freedom, and it's probably the most difficult assignment the United States has ever taken on.

In addition, because of the atmosphere in some of the countries of Latin America, there has been a flight of capital out of there. The amount of assistance which we put in under the Alliance for Progress amounts to about $550 million a year. We have been losing capital out of Latin America either to Europe or because some of our companies don't feel like reinvesting because of the social conditions-we have been losing capital at a faster rate than that out of Latin America, and with a drop in commodity prices in many ways their balance of payments is worse than it was 2 years ago. This is not the fault of the Alliance for Progress. It's the fault of the very desperate situation which these countries face: 180 million people with a chance that their population will be 600 million by the year 2000, with no particular expectation that their raw materials will dramatically increase. So I think that this deserves the attention and hard work and sympathy of us all, and not walk away because the problems are unsolved.

[7.] Q. Mr. President, many of the questions submitted dealt with monetary policies, and the central theme seemed to be whether it will be possible and desirable to use a little easy money stimulation as well as tax reduction. And to quote from one of the shorter questions, "Why not ease up on money?"

THE PRESIDENT. Well, I think there is a good supply of credit. I think the Federal Reserve Board has attempted to keep credit as free as it could, and the supply of money has been increased with the growth of the economy. I think it would be very difficult to keep it easier than it now is, without having the short term funds pour out at a higher rate than they are. After all, we have seen when Canada put its interest rates up, I think as high as 7 percent, though it has dropped them now, it affected the flow of capital here. In October, we had several cases of major investments using our markets because of our interest rates. The fact of the matter is that I'm not sure that we would get much stimulation out of the economy, but I don't see how we could possibly afford easier money than we now have, and still not have a hemorrhage at our balance of payments.

I think we have a major problem to balance off the use of monetary policy here at home and affecting our balance of payments abroad, and also that is one of the good arguments, and as a matter of fact I think that we can make the case which I think has almost unanimously been made in Europe, that the United States monetary policy in some ways is too loose, while our fiscal policy is too tight. And it is for that reason that the International Banks in Europe and others have suggested that the reverse would be more appropriate. I think we should attempt to keep monetary policy about where it is, try to liberalize fiscal policy, for the reasons that I've given tonight, but I don't see how we could possibly go any further in the direction of easier credit, while we have a balance of payments which is against us by over two and a half billion dollars a year.

[8.] Q. Mr. President, there are a number of questions about Cuba. This is a brief one. Is there a firm policy on getting the Russian manpower out of Cuba?
THE PRESIDENT Mr. Khrushchev in his agreement only committed himself to the withdrawal of the missiles and the bombers, and the manpower which was connected with the maintenance of those forces. That would amount to several thousand. In addition, he stated that he would, though he did not put a time limit on this, he would be withdrawing other elements. But that guarantee is not as precise and that commitment has not been implemented, nor was it as hard as his others, which he has kept. So this must be a matter of continuing concern, and is the reason why we are maintaining observation and verification by our own means daily, and why we will continue to do so. And while the matter of Cuba, therefore, still remains unsettled, as long as it's a Soviet military base, it of course represents a threat to peace in the Caribbean. On the other hand, it does not represent an offensive threat under present conditions, nor will it be, of course, permitted to do so.

[9'] Q. Mr. President, we received many questions which reflected some fear that if your tax message were to call for many of the tax reforms discussed from time to time by some of your advisers, the effect might offset the favorable impact of a tax reduction itself. The specific question that we decided to select here was this: "Why not have a moratorium on reform until we get back to full employment?"

THE PRESIDENT. Well, the purpose of reform really is directed to the encouraging of growth and employment. I quite agree that to launch into a full scale battle on general reform for academic reasons would be unwise. The central purpose behind the reform must therefore be to encourage those changes in our tax laws which will encourage economic growth for that purpose, and not merely because it might have some longer range interest or significance. The primary job will be to encourage the flow of capital into those areas which stimulate the national growth and not diminish it. But it is going to be a tough fight, because once you spell out, as I said before, reform, it's bound to affect adversely the interests of some, while favoring the interests of others. Therefore reform may be a longer task, and we are anxious that in the effort to get reform, that we do not lose the very important matter of tax reduction for the sake of the economy.

I know that I am not satisfying you, and I know this is going to be the major matter before the Congress, this matter of affording a tax cut at a time when we have a deficit. But I do point out that the largest peacetime deficit, which was the '58 deficit of $12.5 billion, came at a time when President Eisenhower believed that he had presented a balanced budget, and the reason of course was the recession of '58. The biggest deficit comes historically--and it has been proved, in 1958, 1960--because of a recession. That is what would really knock our budget out of shape. So that as I tried to say in my speech, we are not faced with the question of balancing our budget, or having a tax reduction. I believe we are faced with the fact that we are going to have a deficit mostly because of the sharp rise in the recent years in space and defense, and to increase our taxes sufficient to bring that budget into balance would be defeating, because of course it would provide a heavy deflationary effect on our economy, and move us into a recession at an accelerated rate. So I hope that you gentlemen will realize that we are not talking about irresponsibly increasing the deficit. We have a deficit which is already on the books. What I am concerned about is the kind of deficit we would have if we had a recession, and while the prospects for a recession are not certainly imminent before us, we do have to look at our historical record and realize that any society such as ours, particularly with the tax structure such as ours, must face that prospect at some time. So that we have to decide which kind of a deficit do we want, and for what reason, and which in the longer run offers us the better prospect of bringing our books into balance.

In addition, we are hopeful, as the Minuteman begins to come into our defenses, that we will be able to bring our defense expenditures to a level, unless we have a severe international emergency, which in a period of the not-to-distant future will cap off our defense expenditures. The Minuteman will be coming in great quantities. A large portion of our increases in defense in the next budget are due, one, to the pay increase for the military, and they have not had one since 1958, and they are far behind civilian and the other civilian employees of the Government, and for new weapons, of equipping the new divisions which we've built up, the conventional forces, and bringing into our arsenal the Minuteman. And when we have the Minuteman in quantity, Secretary McNamara believes it will be possible to peak off, and not have this steadily rising expenditure in defense.

I want to point out that we have increased in conventional forces in the last 2 years the number of our divisions from 11 to 16, and we are also providing equipment for 22 divisions in case it were necessary to mobilize our Guard. We have six divisions in Europe, and we have the equipment for two more. Now, I think the Cuban incident indicated the importance of a strong conventional force. The greatest factor on our side was the fact that we had superior conventional strength on the scene, and it would have been necessary to equalize that strength for the Soviets to initiate the use of nuclear weapons, which of course they were quite reluctant to do.

Now, in other areas we do not have a satisfactory conventional position. General Clay is more familiar with this than any man, and this is true in Western Europe. The United States is doing its part, but other countries of NATO have not met their quotas. Up until 2 or 3 years ago, the United States had its six divisions in Western Europe, its two divisions in South Korea, and its three divisions in the airborne Reserve here in the United States, and that's all. Now we have increased by five divisions, and therefore with the obligations that we bear all the way from South Korea through South Viet-Nam to Berlin, as well as our obligations in this hemisphere, I think it was only prudent to increase our conventional as well as our nuclear force. That and our commitment to space have been the big burdens in our budget. Space will continue to rise, but not excessively. Defense we hope to cap off, and that's why I believe that we are not getting in a position where we will be out of control, providing we can maintain a steady rise in our economic growth.

[10.] Q. Mr. President, why shouldn't the United States emphasize foreign aid by means of technical and material assistance from the United States private firms, backed by United States credit guarantees, rather than the prevalent government-to-government gifts which rarely help American exports? For instance, a large part of the industrial equipment being installed in India and in South America is coming from Europe on long-term credit, rather than from U.S. plants, in spite of our aid to these countries.

THE PRESIDENT. It is a fact that the United States has given economic assistance, particularly to India, at low rates of interest and with years of grace, while the other members of the consortium have given their assistance on rather short terms and high rates of interest. The fact of the matter is that the United States has carried an excessive burden in foreign assistance, in relation to Western Europe, but not in relation to need. Now, we spend about $1 .7 billion to $1.8 billion in foreign assistance which goes of course to the Pentagon to buy surplus equipment, so therefore it's an addition to our own available funds. Then we have another $2 billion which we give in the form of loans, some of which are reasonably hard, and some of which are soft, but we are emphasizing loans. Now, for that $2 billion, we sustain South Korea, which has 40 percent unemployed; it's been the country which has been the major beneficiary. There is not any doubt that it would go under immediately if the United States ceased its economic assistance. Fifty thousand Americans were killed to protect South Korea. We carry the load, not so much, but still some, on Nationalist China, and we carry a very heavy load in Viet-Nam. Viet-Nam would collapse instantaneously if it were not for United States assistance. We carry a heavy load in Thailand, India, Pakistan, Iran, Turkey, and Greece. We also carry some burden in Africa, about $250 million. I had the President of Somalia to visit me 2 weeks ago-the average income for Somalia per capita is $45 a year.

When we see how difficult it is to get the Communists out once they get in, when we see the trouble that Cuba has caused, when we see that there is not one Communist regime yet in control in Africa, or indeed in Asia, other than those in North Viet-Nam, North Korea, and China, it seems to me that for this $a billion, that considering that we put $51 or $52 billion into our defense, we are going to put nearly $5 billion into space, $5.5 billion into veterans, 19.5 billion in interest in our debt, $7 billion into agriculture, about $4 billion into public assistance--it seems to me that for that $2 billion,. which covers the Alliance for Progress, assistance to India, which has 40 percent of all the underdeveloped people of the world, I think that we should embark with some care on any effort to cut it out.

Now, what we are trying to do is cut the dollar loss, which is the real burden; and we are cutting it this year from $1.3 billion, which was the dollar loss in foreign aid, to $800 million. We have increased the support for the Export-Import Bank. We are trying to tie all of our assistance to American purchases, and we hope to have it 80 percent tied, even though it does cost us some more doing it. But if you are going to build a school or a hospital, some local assistance is needed, and most of these countries are bankrupt-Colombia and Brazil and the others. So I would like to cut out foreign aid. It's very unpopular. It is a hard fight each year. President Eisenhower had the same struggle, and so did President Truman.

General Clay, as you know, is heading a committee,1 with Mr. Lovett, Eugene Black, Mr. McCollum, and others, to look into this program. But I must say I am reminded of Mr. Robert Frost's motto about not taking down a fence until you know why it is put up, and this is a method by which the United States maintains a position of influence and control around the world, and sustains a good many countries which would definitely collapse or pass into the Communist bloc. Now, India, as I said, has 500 million people. We have been digging our way out of the loss of China for the last 12 years, and my successor in office may have to deal with the problem of a China which is carrying out an expansionary policy with nuclear weapons and missiles. But for India to go, it would seem to me that the whole balance of power in the world would change. So I think that talking about $2 billion--what really concerns me is that Western Europe does not do its part on aid, considering the great increase in its own balance of payments position. And I do believe also that the United States should tie as much as possible. But I certainly would be reluctant to see this program abandoned, because really I put it right up at the top of the essential programs in protecting the security of the United States, not for any reasons of long-range good it may do, though it does do that, but if somebody said--and I know President Eisenhower feels the same way, because for 2 years he's played an important role in getting that program by--if somebody said which programs of the United States Government really contribute to the maintenance of our position around the world, I would have to put this up near the top. But General Clay can make his judgment, and I think whatever judgment he makes can give this program a very important imprimatur.

1 The Committee to Strengthen the Security of the Free World, the establishment of which was announced by the White House on December to, 1962, has the following membership: Gen. Lucius Clay, chairman, Robert A. Lovett, George Meany, Edward S. Mason, Eugene Black, Robert B. Anderson, L. F. McCollum, Herman Phleger, and Clifford Harden.

Q. Mr. President, I simply ran out of questions. All I'd like to say to you is congratulations on your answers, and thank you, Mr. President.

THE PRESIDENT. Thank you very much.

Note: The President spoke at the Waldorf-Astoria Hotel in New York City. His opening words referred to Brig. Gen. Kenneth C. Royall (retired), former Secretary of the Army; Juan Trippe, president of the Pan American World Airways, Inc.; David Rockefeller, President of the Chase Manhattan Bank of New York City; and Gen. Lucius Clay, chairman of the Committee to Strengthen the Security of the Free World.
The questions, which had been submitted by the club members, were read by Murray Shields, partner in MacKay-Shields Associates, and Charles G. Mortimer, chairman and chief executive officer of the General Foods Corporation.

Citation: John F. Kennedy: "Address and Question and Answer Period at the Economic Club of New York.," December 14, 1962. Online by Gerhard Peters and John T. Woolley, The American Presidency Project. http://www.presidency.ucsb.edu/ws/?pid=9057.