Evening star., 1950-10-01

VI tllC TCuCIdi 1sCDC1NC OyoUCAAs
of Mr.. McCabe's conclusion. I'm
is sore" was treated by Congress
md Turing them away from former
Jobs by offers of higher wages.
The incentive for this, in the
absence of controls, lies in the fact
hat rearmament is to be imposed
IN an economy that was already
operating at virtually full capac-
ty. Unemployment was down to
rs million in August, not far from
the mininaal point described as
'frictional unemployment" where
those so listed are not jobless in
the full sense of the term but
simply in the process of trans
ferring from one job to another.
The civilian labor force of 64.8
million in August is to be further
reduced by expansion Of the
forces to about 3 million
men, against the 1887 900 under
arms in August. The labor force
is elastic. but not nearly so much
so as 1t was in World War II.
The reservoir is chiefly women
and those over IS who have re-
tired. The high birth rate Of re-
cent years tends to reduce the
number of those over IS who
might be drawn back into in
dustry.
A Administrations Stand
One means of increasing the ef-
fective labor force is to increase
the number Of hours worked q
week, which was a fraction over
40 hours in July, the latest month
for which figures are available.
The wartime standard was often
48, or sometimes As hours. But
hours worked over 40 generally
call for premium overtime pay.
which would add to inflationary
pressures.
The official line has been that
we are to meet these inflationary
pressures by increasing produc-
ton; draining off purchasing pow
er by much higher taxes, and
curbing credit imitation.
President Truman, in a radio
address to the Nation September
9. called for pay-as-you-go taxes
to meet the costs Of rearmament.
of the Treasury Snyder
echoed the theme last week, ad-
dressing the American Bankers
Association in New York, when he
said that most of the money for
mobilization would come out Of
taxes and that the cost Of 1t
would be far more than most peo-
pie realized. He pointed out that
in the fiscal year to end
next June 80. we are planning to
spend $50 billion for defense and
foreign aid and the budget for
these purposes in the following
year probably will be much greater.
There have been three slight
evidences of doubt in official cir
cles that the controls and taxes
imposed and to be imposed, may
not do the job.
Mr.. McCabe of the Federal Re
serve has said that it will take
time for a tax program to be ef-
fective and that in the meantime
our main reliance must be on al
locations, control of inventories
and curbing private credit. The
steps already taken are by them
selves inadequate, he confessed.
but optimistically he added that
they were a good beginning.
Psychological Factor
More blunt was the newest
member of the Presidents Coun-
ell of Economic Advisers, Roy
Blough, who just a few days ago
said he was in accord with the
general agreement" that rearm--
ament could be accomplished on
4 pay-as-we-go basis. But he
added that the general agree
nent" may not be very deeply
rooted, and that when the public
what 1t means
there are influential groups
which will discover other better
is, borrowing"
And one of the experts on the
Council of Economic Advisers. re-
naming anonymous, was quoted
last week as saying: 1T hasn't
done much good to ask for re-
straint in wage demands and price
increases. We can't fool around
Tor long with voluntary remedies
N a situation as dangerous as
his"
Not to be overlooked in this con-
nection is a psychological factor.
When things were going badly for
is in Korea, the war tension and
patriotic fervor made almost any
sacrifice acceptable to most peo-
pie. Now the tide has turned in
Korea. If in the months to come
he shooting war stops and we go
back to a war of nerves, such sac
'ifices will not be so readily en-
oraced.
Mr.. Truman in that September
, radio address made no over
statement when he said that "for
rears to come" We must maintain
! very strong military establish.
nent, with its accompanying
trains on the civilian economy and
is accompanying threat of infla-
ion.
But exhortation and oratory are
lot very good substitutes for a
disciplined economy necessary to
meet recurring threats Of aggres-
ion.
Imitation is the product of too