Evening star., 1949-07-13
Government Influence
On Business Shown
In Economic Report
Council and White House
Should Be More Detached
To Reflect PubIic's View
Bv David Laurence

Inc ulllucI1Cc VI VIC 0oFcAA
nent on the ups and downs Of
business has never been 50 ex-
plicitly set forth as by the Coun-
Gil of Economic Advisers to the
President in its latest economic
report.
Whether this influence is ex-
erted by public or private pump
priming" and whether the policies
are conservative or radical. the
point which is stressed now is
that business is directly related
to Government action. Here is
how the Council Of Economic Ad-
visers expresses 1t:
"The mere fact that the Fed
eral Government is currently
withdrawing well over 40 billion
dollars a year from private-in-
come channels and Is disbursing
o like or even greater amount
into the market and income
stream means that the Govern
ment is already the most influ-
entail single factor in the current
operation of the economy. What
the legislative representatives and
the executive agents Of the peo-
pie decide to do by way OF
enlarging, contracting, or redi-
recting these money streams and
how they shape by legislative act
or administrative policy the in
stitutions through which workers,
traders and investors conduct
their private affairs may sharply
affect conditions in the next few
months and strongly affect them
for the longer pull
Restraint in Statement.
This carefully worded statement
Is significant for its restraint. The
council might well have pointed
out that psychological factors,
such as the failure on the part
of Government to clarity its tax
policy, can have a retarding effect
on expansion and cause curtall-
ment Of plans.
The council points specifically
to the need for keeping private
investment incentives active" and
there can be no doubt that shifts
and turns In legislative policy
keep business on the anxious seat.
While the council did not go
into detail as to what are the
influences that tend to discourage
or encourage business. 1t might
have pointed out that 1t is many
years since there has been any
revision of the administrative pro-
visions of the tax laws. Business
is operating under a multitude Of
uncertainties due to ambiguous
laws and worn-out methods Of
handling the various items In
business accounting. Thus busi-
ness wants a new approach to
the problem of depreciation or
amortization Of capital spent for
plant and equipment. Yet, be-
cause there is to be no change
In tax rates for the present. prob
ably neither the House Ways
and Means Committee nor the
Senate Finance Committee will
do anything to carry out the
advice of the Council of Economic
Advisers about keeping private
investment incentives active"
The prestige Of the Council Of
Economic Advisers has not risen
as yet to the point where Con-
gress is likely to follow its advice
as much as it should. Indeed,
part Of the trouble is the fact
that political approaches have
been used in interpreting the
councils reports and findings.
Just so long as the party in
power endeavors, directly or indi-
rectly, to make political capital
out Of what the council says, just
50 long will there be delay In
affording proper recognition to the
recommendations of the council.
; Nourse Highly Regarded.
With respect to business in gen.
eral, there is some hesitancy, too,
about accepting the councils
statements. though it must be said
that the situation in that regard
is changing somewhat due to the
Importance attached to the views
of Chairman Edwin q. Nourse,
who has managed to keep himself
from being regarded as a ghost
writer for Truman speeches or
messages on economic subjects.
There ought to be as much de-
tachment between the council and
the White House as there is be-
tween the courts and the legis-
lative or executive branches of the
Government. Technically. the
council Is a part Of the executive
establishment but actually it must
function as a truly independent
agency If 1t is to achieve public
acceptance. Thus the kind Of ad-
vice given would be accepted more
seriously II there were a feeling
that the council was accorded due
weight by the Executive or by Con-
gress. The council would stand
higher if it were as fortnight in
advising the President and Con-
gress about legislation as it seems
to be In talking to businessmen.
Here is a paragraph, for example,
which contains some pointed ad-
vice.:
Businessmen should realize that
Il is safer to pursue q course of
accepting minimum profits or even
temporary losses than to conduct
q rear-guard action to protect
profit per unit"
One could not find it difficult
to pen analogous advice to the
Congress and the President about
how they respectively should con-
duct themselves in q precarious
period of postwar transition.