Evening star., 1949-02-18
'Burp' or 'Be||yache,'
Business Is Worried
By Economic Outlook
Serious Reodjustment
Seen by Many Experts
In Loyoff Of Workers
Bv David Laurence

b4O~SSNAAAo'
While A. D. II. Kaplan testified
before the Joint Economic Com
mittee that the economic system
had been taking milk too fast
and just had to let UP for a bit.
there have also been some COM
ments put into the record by
other economists who think OF
the present period as one Of
serious readjustment.
Members of Congress are un-
ouestionably puzzled by the re-
ports of a rise in unemployment.
and they are wary lest any mood
Of pessimism be developed which
would retard economic opera
tions that should not be in the
least Influenced by the changes
that are going on.
The truth Is that nobody really
can have an accurate overall
picture of anything 50 large as
. s225, ,o0o, 900 900 economy. There
are no charts by which to steer
except, of course, the laws OF
supply and demand and the rules
against overexpansion and mis-
calculation of demand. Il
Long-Range Plans Difficult. "
Businessmen generally cannot
make long-range plans primarily
because they do not know what
the Government is going to do.
The doctrine of Government in
teryention has been preached on
the campaign stump to such an
extent that most people believe
that the Government can sup
mort their pay levels and that, II
they are unemployed. the Govern
nnent can take care Of them In
definitely.
At the moment checks for un-
employment compensation are
being sent out by Federal and
State agencies at an unprece-
dented rate for the postwar pc
riod. But this in itself need not
be significant. Any readjustment
Of our national economy means
temporary unemployment until
the workers laid off can be en-
nloyed again In some other line or
In other companies In the same
line.
The main reason why business
forecasting has been difficult since
VI day is that the economic
curves of the past are not suf11-
eient to form q pattern. What
the Government does changes the
normal behavior of business
trends. Thus, at the beginning
of 1946 and 1947, respectively.
there were statements made by
economists warning that the first
six months of the ensuing year
would be good but the last six
months wouldn't be. Yet 1s46
turned out to be q good year, and
90 did 1947 and 1946.
Now the economists were right
insofar as the facts available to
them we're concerned. They could
not know In advance what artifi-
cial steps would be taken by Gov
ernment to keep business boom
ing. In May. 1s47, the Marshall
Plan was born and armament on
q vast scale became a reality. BY
the end of the year the Govern
ment had pledged itself to spend
nearly $4,000. 900. 900 on inter-
national aid and defense.
Any such stimulus to the eco
nomic situation can be best
understood when 1t is realized that
In all the depression years, from
1880 to 1910, the Government in
vested $4,000, 100000 over and
above receipts from taxes to pro-
mote recovery through WPA and
other Government projects. When
$4,000. 900 900 q year Is poured
into the economic pump. some
thing more than q simple printing
has been accomplished.
Little Prospect Of Change.
Today the money being appro-
priated for armament and for in
ternational aid Is enough to keep
the present economic situation
moving along without serious
change. The danger Of defiation
lies In any sudden contraction OF
those items. Sooner or later the
spending must cease and some
thing more productive-private
spending-must be put In its
place. But for the next year
there seems little prospect OF such
q change.
Supply is catching up with de-
mand in many commodities. but
there are lots of projects which
have been laid aside because OF a
fear of Truman administration
policies. This Is related to the
plan to impose higher taxes on
CORPORATIONS and to penalize in
centiye among individuals. There
is a possibility that a tax rise
could actually result in smaller
receipts, especially in business
contracts.
Fear of work stoppages and
strikes halts plans for construc-
ton. This Is related to the kind
Of labor management law that Is
enacted.
If business really starts down.
hill. the Government may release
some of the controls such as were
imposed recently on installment
buying. Further expenditures for
public works might be undertaken
The Government has power to
soften the blow of a recession but
1t must consider also whether In
the long run it may be producing
another initiation which might
cause a major depression four OF
five years later. The Government
holds the answer to what the eco
nomic trend will be for this year
and other years to come.
1t is an unsound situation, but
realism requires that the use OF
artificial factors In a managed
he ans,rojsad ir, anv at.