SPECIAL REPORT TO BUSINESSMEN
By Senator John F. Kennedy
EDITOR'S NOTE.-On July 19 I wrote Vice President Nixon and Senator Kennedy, requesting that each supply to readers of the Executive a statement about "the implications your policies would have for the businessman should you be elected President."
I stated that businessmen were currently concerned about the next administration's views on fiscal and monetary policy, the balance-of-payments situation, and expansion of governmental operations into areas that have been the domain of private enterprise.
Immediately below is Kennedy's reply, followed by that of Vice President Nixon.
A strong, growing economy is essential to our national security, to building tho stable international order which is the only guarantee of peace, and also to sound business conditions and social progress here at home.
Our recent rate of growth is disturbingly low. In the period 1953-59, our rate of growth was substantially below the long-term average. It was much less than half the rate of growth in the Soviet Union, according to the most reliable estimates, and well below the growth rate of every other major industrial nation.
The Democratic Party is committed to achieving a substantially higher rate of growth. We realize that there is no panacea, but there are constructive measures which would have achieved a much healthier rate of growth than we have enjoyed during the Republican administration.
1. We must put back to work our idle machines and unemployed workers. Unemployment, adjusted for seasonal variations, is running well above 5 percent. The basic steel mills are operating below 60 percent of capacity. By providing 2 million additional jobs - thereby reducing unemployment to a little less than 3 percent - we would increase the gross national product by more than $12 billion, in addition to caring for the needs of 3 to 4 million persons in the families of the workers.
2. We can achieve a higher rate of growth by public investments which unlock the riches of our national resources. From our forests must come the timber; from our rivers must come the water and power; and from our mines the fuels and metals to meet the needs of an expanding population. The unified development of TVA raised the economy of the entire Southeast. The Bonneville and Grand Coulee Dams have repaid their cost a hundredfold. We grow strong by developing our resources.
3. It is essential that we find ways of increasing productivity. The lag in per capita output is the most disturbing aspect of our declining rate of growth. In the period 1953-59, the per capita increase in the gross national product averaged but 0.6 percent-only two-fifths of the long-run average.
Automation holds out promise of a stronger and more prosperous America. Unhappily, it also spreads fear among workers and their families - fear of unemployment, deprivation, and poverty. This problem must be solved in order to reap the full gains of automation. I suggested a number of constructive measures for both collective bargaining and governmental action in an address to the Michigan AFL-CIO last spring.
4. Increased educational opportunities, although chiefly important because they broaden and deepen human experience, also yield large economic dividends. A skilled and adaptable labor force is the backbone of an economy. Recent studies at M.I.T. and elsewhere show that the superior educational background of American workers was an important factor in the relatively high rates of growth which we formerly enjoyed.
5. Additional public investment in scientific research would accelerate economic growth. Almost every industrial process today, excepting such basic operations as the smelting of common metals, can be traced to scientific experiments conducted within the last century by scientists who were little concerned with practical application. We pay too little attention to basic research in America.
6. We can encourage investment in new plants and facilities by appropriate tax revision and also by abandoning the restrictive monetary policies which have been pursued by the Republican administration. While large corporations are increasingly able to finance expansion out of profits, new industries and small entrepreneurs find it desperately necessary to borrow. The tight money policies pursued by the Republican administration until this election year, and the resulting high interest rates, discourage these businesses from expanding and thereby creating new jobs.
Properly regulate, easing of money is not inconsistent with a responsible financial program. I shall never hesitate to face up to any excess of dollar demand that threatens to pull up prices. When business and employment are declining, the Government may wisely preserve, and even step up, its needed expenditure programs. When overall dollar demand rises, creating inflationary pressures, the budget should be vigorously balanced, or even overbalanced, so as to yield a surplus.
The need for responsible financial management has been increased by the recent deficits in our balance of payments. Increasing our own productivity by investment in education, scientific research and technology will improve our competitive position. In the short run we can push our exports by a variety of measures including negotiation of the removal of discriminations against our products in the Free Market, the Common Market, and elsewhere. Other remedies are available, if we face the issues squarely without either falling into outworn slogans which restrict the economy or resorting to drastic nostrums.
Let us be plain that these measures for increasing growth are not a panacea. They look to growth without disturbing the established private enterprise system, but rather to enable its most fruitful functionings. The Government should not take over functions which are being or can be performed by private enterprise. In the end our annual production is the result of the investments and skill and labor of 73 million men and women - carpenters, executives, scientists, managers, civil servants, farmers, factory workers, stenographers, miners, and clerks. When the public spends money for schools, roads, or national defense, the schools and roads are built and even the needs of the Defense Establishment are largely supplied by private industry. It misses the point completely to talk about economic growth as if the very idea were a threat to private enterprise.
BUSINESS POLICIES IN THE NEXT ADMINISTRATION
By Richard M. Nixon
The struggle for peace and freedom
in the world today is the foremost issue of our times. The strength of
American business and the role it will play in helping to assure the peace
of the world is of vital concern to us all.
To keep America strong, we must produce and grow at a rate that reflects the vigor and supremacy of our free enterprise system. There are those who maintain that private enterprise is inadequate to the job of providing a proper growth rate. They say that the Federal Government must take over the job, to do it right.
It is my belief that the role of the Government in promoting the economic growth of our Nation must always be a supporting one - that it must supplement and stimulate, but not supplant, private enterprise. For maximum economic growth, the most important role must be played by private enterprise - management and labor working together - with support from all levels of government, Federal, State, and local.
There is no way to insure a high rate of growth through Federal planning and control. When our opponents advocate this they put too much emphasis on the role of Government. It is an unsound theory that growth can be stimulated by pegging interest rates at artificially low levels and by allowing uncontrolled bank credit.
Private enterprise, while not sacrosanct, is nevertheless more efficient, more productive, and more desirable for Americans than Government enterprise in assuring economic progress and providing for the needs of the people. And I believe that the Government should give more attention, more emphasis, to providing increased opportunities for our citizens. Government, of course, has a heavy obligation to help protect those in need against the hazards of old age, unemployment, sickness, and ill health. But that should not be its major function.
That is why we must put our primary emphasis on providing opportunitieson promoting enterprise, growth, and a maximum contribution by each individual. The way to assure maximum growth in America is not by expanding the functions of Government, but by increasing the opportunities for investment and creative enterprise for millions of individual Americans. At a time when the Communists have found it necessary to turn to decentralization of their economy and turn to the use of individual incentives to increase productivity - at a time, in other words, when they are turning our way - we must not make the mistake of turning in the direction of the Communists.
In the long run, instead of expanding our economy, this policy would wreck it. The Federal Government has no magic means for planning the myriad details of maximum economic growth. It has not proved itself more capable than responsible owners and managers of industry or responsible leaders of labor. The badge of office does not increase the intelligence of the citizen.
To promote a maximum rate of sustainable economic growth, governments must live within their means. We should aim for balancing expenditures and revenues over a period of years rather than in each individual year. This will help to preserve reasonably stable prices and yet allow the Federal Government to contribute to smoothing the curve of growth.
There are many ways, of course, in which Government can aid the growth of American industry. Control of inflation is one. A fairer tax structure is another. There is room, too, for more liberal depreciation allowances, and for a look at our hodge-podge of excise taxes. The stimulating effect of even a small cut in our corporate tax rate of 52 percent is worth exploring. Confiscatory income taxes that stifle incentive and prevent risk-taking are denying some of the growth that we seek. Unleashing new capital for private venture would not only produce more revenue for Government in the long run, but - more important - would inevitably provide more and better jobs for our people.
In the field of world trade, I believe that we must seek more, not less, of an exchange of goods with other nations. World tensions will not be eased until the flows of trade minimize the traditional fears and jealousies of nations. Trade is essential in keeping our allies. It is essential to our own economy. The basic interest of the United States demands that the barriers of trade must be reduced.
Largely due to our obligations abroad in meeting the national security and foreign policy objectives of the United States, we are faced today with the challenge of conquering the large deficit in our balance of payments.
I am convinced that our present deficit can be overcome by an energetic and sustained export drive by private enterprise, aided by the Government. We have rejected as shortsighted such stopgap measures as curtailing imports, cutting foreign aid, or weakening our defense posture. Instead, the President has promoted the national export expansion program, through the Department of Commerce and other agencies. More than 300 of the Nation's leading businessmen throughout the country are now helping with regional export drives. Five teams of experts have been exploring opportunities in five widely separated trading areas of the world: Mexico-Central America, Australia-New Zealand, Nigeria, Vietnam, and the Near East.
In addition, the Export-Import Bank has inaugurated two new programs to aid U.S. exporters in meeting international competition in foreign markets. One program involves participation by the Export-Import Bank with U.S. private commercial banks in financing on a medium term basis. The second is a program under which the Export-Import Bank guarantees noncommercial risks for short-term export credits. These two approaches to the problems confronting our exporters have met with the enthusiastic approval of the domestic industry interested in foreign trade.
Even more can be done through our export program if more funds are made available for it. There is room for expansion of the trade promotion services of the Commerce and Agriculture Departments, for the commercial activities of the Foreign Service, for new oversea trade centers, for more information services for American exporters, for more tourist promotion for U.S. travel, and for more international trade fairs and missions to stimulate the interest of foreign buyers in our products.
The task is not a simple one - to balance our need for world trade with an equal determination not to visit undue hardship on our own domestic industry from world competition. Yet support for the trade of our allies and the uncommitted nations of the world is imperative. Freedom for all is our goal. Free business can help us achieve it.