Evening star., 1947-04-24
Politics Seen Decline
Blow to Economy

Blow to Economy
Truman Reasoning on Wage.
and Taxes Called Curious
By Dapid Laurence
Something curious is happening to the
reasoning processes of the Truman adj
ministration something that may result
in serious blow at the American econ-
omy.
The administration, on the one hand,
is saying that 1t would be infiationary
to reduce taxes and put extra money into
the pockets of the people and on the
other hand it is encouraging wage in
creases which also put extra money into
the pockets of certain workers and is
saying nothing about this inf1ationary
trend.
The tax reduction is spread straight
across the board, affecting all people,
while the wage increases affect small
segment where union pressure or politi-
cal influence of the administration causes
an uneven application of the wage-in.
crease idea.
The Congress last year passed law
creating an Economic Council and ex-
perts have been appointed to it, but
the political views of the administra.
ton seem to have pervaded the so.
called economic theory that emanates
nowadays from the Government. The
argument against tax reduction while
encouraging wage increases Is case in
point.
Recession Is in Sight.
Most serious, however. is the fact
that high prices are not being really
remedied. In many instances industries
cannot reduce prices even if wages are
kept at present levels Other industries
where the labor cost is the paramount
factor will find it necessary to increase
prices if wage increases are forced on
them by unions
A recession is in sight but union labor
leaders, aided and abetted by President
Truman's misguided remarks are slowly
but surely threatening something more
serious than recession. Already many
companies which had high profits in 1946
are finding their profits absorbed by high
costs of materials. Already, also many
companies which have the capital avail
able to use for new equipment and for
expansion have stopped their buying
because they cannot pay the high prices
involved either in equipment or mate
rails. Such prices cannot, in various in
stances, be reduced because the labor
cost will not come down.
1t had been hoped that the increased
wages would mean increase in output
per man and that in this way price
reductions could be brought about But
the increase in output per man hour has
been alarmingly small since VI day
and the disappointment that has swept
industry over the failure of labor to CO.
operate in increasing output is notice
able.
Issue to Be Forced.
1t looks now as if wages will not be
revised downward as they were in the
recession after World War and that the
union pressure will be adequate to main
tain high wage scales. This ultimately
will mean tremendous Unemployment
roll for America. Companies will force
the issue by laying off men and insisting
on higher output per man.
The rise of unemployment will be more
serious this time than it was after World
War because the wages paid now are
higher in total and the cut in family
income will be felt more acutely. EN-
Y,1oy,nrc xrylyS, ,, 10,
penses will have no alternative but to
cut down their number of employees.
This is already happening in some
industries
President Truman's responsibility for
the debacle will become clearer as un-
employment grows. For he has sup
ported the unionized groups wage de-
mands and compelled the unorganized
workers and persons on State, city and
Federal payrolls, who have had no COM
mensurate increases in income, to foot
the bill. These people cannot continue
to buy, and that will be one of the fac
tors in the eventual drop off of retail
sales in various communities.
The economy is out of balance because
the politicians, led by the President,
have put 1t out of balance. All the
political speeches denouncing business
and encouraging wage groups to ask for
more pay at the expense of the other
groups in the community will not erase
the facts when they emerge-as they
certainly will before the end of 1947
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