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We believe strongly that national policy should be the encouragement of the further growth of private efforts in these fields. The expanding expectations of our society in the social welfare field should be met only in part by the activities of government.

## F. CONCLUSION

If, over the greater part of man's existence, social distress was as little questioned as the calamities of nature, this was due in no small part to the futility of seeking to eliminate it. Not until the industrial revolution brought into being productive capacities heretofore not even envisaged, could the eternal spectacle of want suggest itself as an object of more constructive feelings than pity or anger, or as a target for more constructive action than charity. Social welfare even in its most limited sense had to become a possibility before it could become a true social concern.

But the growth of the material possibilities of our system has made possible an expansion of our concept of social welfare. From a close identification with charity and "relief", the idea of social welfare first dealt with the repair of economic injustice. Then it grew beyond the cure to the prevention of distress. Thus emerged the principle of the social insurance of the individual, first against the vicissitudes of unemployment, then against the spectre of indigent old age.

As our economy expands, the concept of social welfare should refer less and less to the assistance of the individual who falls below economic

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subsistence, and more to creative programs conducive to self-achievement.

It is likely that "welfare" will shed its remaining vestiges of charitable con-
notation, and come to stand for those public programs by which the tenor and
content of life is enhanced. It will become an expression of the morale and
motivation of an economy of growth.

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VI - THE PROBLEM OF MOTIVATION

Nothing so dramatically illustrates the central importance of economic motivation as our recent interest in the problems of underdeveloped countries. For there we often see potential growth stalled by an absence of proper motivations. A labor force without an aspiration toward a rising standard of living simply converts a raise in pay into more time off. A managerial group without the motivations of enterprise or a sense of social responsibility will be more interested in wide profit margins than in high productivity.

The incentives which impel an industrial system are complex but it is clear that an essential prerequisite is a quality which may be called economic faith: a belief in a realizable future and a confidence in the economic system as a vehicle for arriving there. Without economic faith a people will lack the incentive for major effort; the economy will stagnate because it will lack the leaven of creativity.

Subpanel V will deal with the problem of motivation in a large setting and in greater detail. Here we will confine ourselves to calling attention to an aspect of the problem particularly relevant to economic growth:

One is that an economy of growth cannot remain static in its incentives. The condition of its growth is the constant discovery of new opportunity, a never-ending need for new talent and new categories of talent. The danger in such a society is not only that it may lose its ability to find an adequate supply of talent for its existing tasks, but perhaps even more

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importantly that it may become rigid in defining certain categories of talent
as the only valid ones and thereby lose its dynamism.

One of the difficulties we have had in attracting high talent into
critical fields has been the fact that the skills which our society most critically
needs are not always those it most highly rewards. Our scale of rewards still
reflects an age where the attraction of talent into economic activity was rightly
accorded the highest priority in society. Placing its emphasis on economic
growth, society left the staffing of "service" tasks to those who had not
taste for or less success in the competitive economic race.

But as our economy expands and our society becomes more interdependent, what used to be considered service functions become ever more essential. The tasks at <u>all</u> levels grow increasingly complex and the "frontiers" are constantly changing. If these frontiers are to be staffed by our best people, we will require a new estimation of certain kinds of work. The stereotype of the dowdy educator and of the mysterious scientist may be as serious obstacles to our development and allocation of talent as the differentials in pay which serve to reinforce and perpetuate the stereotypes.

The condition of growth then is flexibility in the development and
definition of talent at all levels. Our society must be ready psychologically
to redirect its efforts and it must make it possible technically through pro-
visions for retraining and reconversion of skills.

This flexibility faces a major obstacle, however, in the increasing
share played in our national life by large organizations. It is not that

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bureaucracy is in itself an evil. An increasingly interdependent society
cannot run without synchronization and routine. Bureaucracy is the corollary
to the specialization which has conferred such dynamism on our economy.

But the very efficiency of bureaucracies may bring about rigidity both
in the discovery of talent and in dealing with new opportunities. For while
the leadership at the top of these organizations requires creativity and
originality of a high order, the method of conducting affairs at the middle
or lower level may run counter to producing these qualities. The concern of
a bureaucracy is for minimum risk; it is run by a standard of average perfor-
mance. But the task of leadership is to break through routine, to galvanize
energies for tasks of innovation. The concern of a bureaucracy is with
equilibrium; but the growth of a society depends on the ability to prevent
equilibrium from turning into stagnation. There is a danger that the qualities
which are encouraged on the rise to the top of large organizations are not the
qualities which are most useful when eminence is reached. The very smooth-
ness of operation of bureaucratic machines in many walks of our life may
tempt our most talented individuals to set their sights too low.

The relevant questions then become: What organizational patterns
and practices may be devised which are least destructive of individual
initiative and autonomy? How is it that with all our intricacy of social
mechanism a good many astonishingly free, flexible, creative and autonomous
individuals exist -- some of them in the very midst of the great bureaucracies?

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How may we best prepare our young people to keep their individuality, initiative and creativity in an intricately-meshed society? How do we shatter the informal "ceilings" placed upon performance in an organizational setting in which order and harmony and predictability are more important than individual achievement.

When we arrive at questions of this fundamental importance, we are no longer simply talking about economic motivation but about one of the gravest issues in the future of our society. The continuing tensions between the needs of the organization and the creativity of the individual will unquestionably be one of the most fateful struggles in our future. It is all the more crucial for being intangible and not amenable to formal solutions. The answers we devise will reflect the quality of our society and determine its character.

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## VII - THE PROBLEM OF NATIONAL PRIORITIES

To govern, it has been said, is to choose. And no more difficult choice is imposed upon any society than the use it seeks to make of its economic product. For there is one adamant limitation on our -- or any other -- society: it cannot, unless it literally consumes its own substance, put to use more than it currently produces. There is no such thing as deficit financing of total output. However vast its productive capacity, a nation is nonetheless limited in its choice of economic objectives by the compatibility of its total demands with its actual production of goods and services.

In a modern industrial society, this actual production of goods and services goes to satisfy three separate categories of demand. One of these is the demand of the public for the goods and services it consumes. A second is the demand of enterprise to maintain and add to its stock of productive equipment and capital assets. And a third is the demand of the public authorities to provide the goods and services which they have been authorized to make available.

In a static economy, if one of these categories of demands expands, another must shrink. But in a growth economy, there is an alternative. It is possible to apportion the successive increases in national output among the three claimants. Thus in a growing economy it is possible to accommodate new claims without giving up previous patterns of output use.

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But while this simplifies what would otherwise be a bitterly contested problem of choice, the flexibility of growth adds its own category of problems. It imposes upon a nation the need to make value judgments _over time_ -- to apportion its output not alone by the exigencies of the moment, but in the longer perspective of growth itself. Thus a static economy has very little if any incentive to defer present enjoyments, since the sum total of its enjoyable output will be no larger on the morrow than it is today. But the very core of the problem of a choice for a dynamic economy is the problem of deferment. A growing economy can _realistically_ set its goals in excess of its current capabilities. But then it must also determine the priorities by which its growth in output will be put to use. And it must exercise the patience to allow the phenomenon of growth to occur.

It is this problem which the United States faces over the period ahead. For its current Gross National Product of $434 billion -- unprecedentedly large though it is -- falls far short of accommodating the full range of demands which is visible in the immediate future. Indeed, the question we must face is whether even the maximum Gross National Product which may be available to us in another ten years will suffice to cover the demands likely to be made upon it. This is the important question to which we must now turn.

Obviously such a projection into the future is essentially an extension of certain trends of the past. It does not predict that given expenditures or a certain Gross National Product will in fact materialize. Rather it confronts

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us with the choices we will have to make if certain probable trends do materialize. Thus, the figures cited in this chapter are far from inflexible. The Gross National Product can go beyond its projection through a sustained national effort or it can fall below it as the result of a sustained recession which is not effectively met. The main categories of demand may also vary considerably. But the projection indicates general base lines which are likely, and it serves as an illustration of the type of choices our society may have to make over the time period of this report.

With these reservations, we will attempt to project our Gross National Product, the most pressing claims against it, and to give the broad outlines for accommodating them.

## A. THE PROSPECTS FOR OUR GROSS NATIONAL PRODUCT

For the past decade our Gross National Product has grown at the average rate of 4 per cent a year, compared with a general growth trend of 3 per cent in the period 1870-1930. Although accompanied by an inflationary trend averaging about 1.5 per cent a year, our recent rise in physical output has been the most sustained advance in the history of our economy.

If we act effectively and purposefully, there is every reason to expect a continuation of a growth rate of 3 - 4 per cent per year over the next decade and beyond. If the problems of growth are formidable, we have

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also found the impetus of our economy enormous. Thus we begin with a
potential economic volume of the following magnitude:

<table><thead><tr><th rowspan="2"></th><th colspan="4">Billions of Dollars</th></tr><tr><th>Actual<br>1957</th><th>1960</th><th>Projected *<br>1965</th><th>1975</th></tr></thead><tbody><tr><td>GNP 4% growth</td><td>434</td><td>488</td><td>594</td><td>879</td></tr><tr><td>GNP 3% growth</td><td>434</td><td>474</td><td>550</td><td>739</td></tr></tbody></table>

In order to give more concrete meaning to these figures it may be
helpful to translate them into rates of average annual increase. Thus at a
4 per cent growth rate we will experience an annual *increase* of nearly
$20 billion by 1960. By 1965 the *annual* increment would have risen to
$24 billion a year. Over the entire period 1957-1965, we would have avail-
able a growth margin totaling $160 billion. At 3 per cent a year our growth
margin would equal $116 billion. These margins represent the added capacity
which would be available to us to satisfy the demands of a growing popula-
tion, a rising standard of living, and the increased burdens placed on our
governments at national and local levels.

* In this and all subsequent tables it is assumed that the 1957 price level will be maintained. Thus our dollar figures are indicative of *real* changes in output.

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## B. HOW SHALL WE UTILIZE OUR OUTPUT IN 1965?

In order to allocate the nation's total production, including its growth margin, among its component demands, it is necessary to make projections of these various demands for the period to 1965. Many of the figures below are drawn from the recommendations of other Panels and represent their considered claims against our total available resources. The projected claims required for government expenditures for social programs and the probable trend of private investment and consumer expenditures were developed by Panel IV. No effort will be made at this stage to accommodate these recommended programs to the scale of the nation's economic potential.

### 1. Government Programs

**Total National Security Expenditures** * are expected to rise by nearly $2.8 billion each year between now and 1965 to meet stated requirements. This would result in a security budget of around $68.4 billion in 1965. In terms of percentages of the Gross National Product security expenditures would rise from the current 8 per cent of the GNP to 11.5 per cent -- a figure which must be compared to the ____ per cent the USSR devotes to military expenditures. The estimated increases by departments follow:

* For full development of these figures, see Report of Panel II: "International Security: The Military Aspect," published by Doubleday & Co.

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**Defense Department** spending would rise from $39.5 billion in 1957 to $56.6 billion in 1965.

**Civil Defense** expenditures would increase from $0.4 billion in 1957 to $1.2 billion in 1965. If there should be a decision to build fall-out shelters, expenditures of $5.6 billion a year for 4-5 years would be involved. (Estimates in the table below do not cover the costs of such shelters.)

**Military Aid** would increase by $1.6 billion (from $2.4 billion in 1957 to $4 billion in 1965) to cover the cost of equipping allied forces with new weapons.

**Atomic Energy** expenditures would continue to rise while **stockpile purchases** would be ended.

**Economic Aid** which now runs to about $1.6 billion a year (of which half to two-thirds goes for "Defense Support"), would rise by $1.5 billion, or as rapidly as it could be effectively used by recipient nations.

**Total Welfare** expenditures can be expected to rise from present levels of $28.5 billion to $53.6 billion by 1965. Most of the increase lies in Social Insurance and will take place automatically under existing legislation. The remaining increases, largely

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for health and education programs, have been proposed
by our Panel and are itemized on the table below.

<u>Public Works</u> expenditures can be expected to rise from
the current $13 billion to a minimum of $22.9 billion
in 1965.

<u>Other</u> expenses include the necessarily growing item of
interest, and also cover the costs of administration and
operation which have been calculated at a conservative
rate of increase to cover expanded activities. This cate-
gory also makes an estimate for economies recommended
by this Report, particularly in agricultural support pay-
ments and in non-service veterans' disability payments.

If we now aggregate these items, we arrive at a projection of the
general dimensions of the government programs considered important for the
nation's security and well-being by this and other Panels.

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new taxes. The comparisons for 1957-1965 (which assume that tax receipts will grow more rapidly than the Gross National Product) are given below:

Government Expenditure Requirements
Compared to Revenues

<table><thead><tr><th></th><th colspan="3" style="text-align: center;">Billions of Dollars</th></tr><tr><th></th><th style="text-align: center;">Actual</th><th colspan="2" style="text-align: center;">Projected</th></tr><tr><th></th><th style="text-align: center;">1957</th><th style="text-align: center;">1960</th><th style="text-align: center;">1965</th></tr></thead><tbody><tr><th scope="row" style="text-align: left;">Government Cash Expenditures</th><td style="text-align: right;">112.3</td><td style="text-align: right;">134.4</td><td style="text-align: right;">168.8</td></tr><tr><th scope="row" style="text-align: left;">Revenues</th><td style="text-align: right;">113.2</td><td style="text-align: right;">127.3</td><td style="text-align: right;">154.8</td></tr><tr><th scope="row" style="text-align: left;">Surplus (Deficit)</th><td style="text-align: right;">.9</td><td style="text-align: right;">(7.1)</td><td style="text-align: right;">(14.0)</td></tr></tbody></table>

The projected scale of government expenditures could not be met by the yields of our existing tax structure. This finding reinforces our earlier conclusion that a large-scale reduction of tax rates is not warranted.

In fact, the potential deficits for 1960 and 1965 suggest that possible new sources of tax revenue should be studied. The projected governmental expenditures assume, of course, a continuation of present international tensions. Should the international situation make possible a substantial reduction of armaments we could accommodate <u>all</u> other programs recommended by the various <u>Panels</u> and a tax reduction. *

* Under present trends most of the deficit would occur at the state and local level. This reinforces an earlier conclusion about the importance of restudying the allocation of responsibilities and taxing power between the federal and state and local governments.

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However, these total figures for government expenditures are not yet
*net* claims against the resources of the economy. They include expenditures,
such as social insurance, which do not make an actual demand for goods and
services in exchange for payments. Projecting these transfer payments on the
basis of past trends, we arrive at the following estimates:

<table><thead><tr><th></th><th colspan="3" style="text-align: center;">Billions of Dollars</th></tr><tr><th></th><th style="text-align: center;">Actual</th><th style="text-align: center;">Projected</th><th></th></tr><tr><th></th><th style="text-align: center;">1957</th><th style="text-align: center;">1960</th><th style="text-align: center;">1965</th></tr></thead><tbody><tr><td>Government Cash Expenditures</td><td style="text-align: right;">112.3</td><td style="text-align: right;">134.4</td><td style="text-align: right;">168.8</td></tr><tr><td>less transfer payments</td><td style="text-align: right;">25.9</td><td style="text-align: right;">30.3</td><td style="text-align: right;">38.6</td></tr><tr><td>Government Demands for Goods and Services</td><td style="text-align: right;">86.4</td><td style="text-align: right;">104.1</td><td style="text-align: right;">130.2</td></tr></tbody></table>

On this calculation government programs would by 1965 rise about 50 per cent over their 1957 level. The percentage of goods and services they would take from the GNP would increase from 19.8 per cent of the GNP in 1957 to 22 per cent of the GNP in 1965.

The requirements of government must now be considered in relation to
other claims, specifically private investment and consumption.

## 2. Private Investment

Business investment in new plant and equipment is the key element in
economic growth. Over the past decade our 4 per cent growth rate has been

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accompanied by the investment of an average of 10.7 per cent of GNP into plant and equipment and 0.7 per cent into enlarged business inventories. It would appear that this proportion of the Gross National Product may be required to support a 4 per cent average annual growth in GNP. This investment figure, it should be noted, includes depreciation, making it considerably larger than the *net* expenditures for new plant and equipment.

Moreover, if we are to meet the demands of our growing population for improved housing, we shall also have to increase the share of private residential construction in GNP from 3-4 per cent in 1957 to 4.1 per cent in 1965 or from $17.6 billion to $24.0 billion. This estimate includes an estimate of $3 billion a year for *private* investment in urban renewal projects and it would be supplemented by at least $1 billion of government expenditures.

Private foreign investment is projected to rise to $3 billion in 1965 or 50 per cent above the 1957 figure. Granted the proper incentives in the form of tax abatement, the increase could be even greater.

The figures for "Other Private Investment" cover schools, hospitals, churches and other private institutions. It is assumed that such expenditures will rise 75 per cent by 1965 to cover needs in these areas.

This gross flow of investment may be considered a first claim against our economy if business is to continue to act as the growing edge of our economy. In addition, this general magnitude of investment seems to be in balance with the probable future flow of savings, although some encouragement to

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consumer saving may be needed to balance the savings-investment equilibrium
in years of very high economic activity.

We are thus able to cast up the first balance of our projection:

<table><thead><tr><th></th><th colspan="3" style="text-align: center;">Billions of Dollars</th></tr><tr><th></th><th style="text-align: center;">Actual</th><th style="text-align: center;">Projected</th><th></th></tr><tr><th></th><th style="text-align: center;">1957</th><th style="text-align: center;">1960</th><th style="text-align: center;">1965</th></tr></thead><tbody><tr><td>GNP (4% growth rate)</td><td style="text-align: right;">434</td><td style="text-align: right;">488</td><td style="text-align: right;">594</td></tr><tr><td>Private Investment</td><td></td><td></td><td></td></tr><tr><td style="padding-left: 20px;">Business</td><td style="text-align: right;">49.4</td><td style="text-align: right;">55.5</td><td style="text-align: right;">67.5</td></tr><tr><td style="padding-left: 20px;">Housing and other</td><td style="text-align: right;">17.6</td><td style="text-align: right;">20.0</td><td style="text-align: right;">24.0</td></tr><tr><td>Total</td><td style="text-align: right;">67.0</td><td style="text-align: right;">75.5</td><td style="text-align: right;">91.5</td></tr><tr><td>Leaving available for other uses<br>(in round numbers)</td><td style="text-align: right;">367</td><td style="text-align: right;">412</td><td style="text-align: right;">502</td></tr></tbody></table>

To be sure, these figures are somewhat flexible. A considerable
amount of the expenditures listed under "housing and other" may not be
required for growth in any single year. Over the longer period of this Report,
however, the steady addition to our housing plant is probably as necessary
for a growing economy as the other items. We shall therefore treat the total
investment claim as fixed and concern ourselves with the disposition of the
remainder of our economic product.

### 3. Consumer Requirements

How may consumer requirements be projected? During a national
emergency, the consumer may be considered as the residual claimant against

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the economy after the requirements of investment and government expenditures have been met. However, in normal times in a free economy, consumer decisions about spending and saving play a significant and even decisive role. A steadily rising flow of consumer outlays is not only a result of growth, but a vital stimulus to further growth. In recent years consumer expenditures have been rising at an average annual rate of 4 per cent.

Of course there is no absolute requirement that consumption must continue to increase at this rate. The figure simply provides an indication of the general *rate* of improvement of the standard of living which the American public has come to accept as normal. Obviously consumption could be kept at its 1957 levels by an appropriate combination of heavily increased consumption taxes and increased savings. But such a holding-down of consumption against its natural propensity to rise involves a host of exceedingly difficult problems.

The following table illustrates *alternate* claims for consumer expenditures against the economy based on the assumption of 4 per cent, or 3 per cent increase in consumer expenditures. These figures make allowance for the projected increase in population over the period in question.

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C. CAN WE ACCOMMODATE ALL CLAIMS?

We can now recapitulate our entire survey:

<u>Billions of Dollars</u>

| | Actual 1957 | Projected 1960 | Projected 1965 |
|:---|:---:|:---:|:---:|
| GNP available (4% growth rate) | 434 | 488 | 594 |
| less private investment needs | 67 | 76 | 92 |
| consumption at 4% annual rise | 281 | 316 | 384 |
| resources not claimed by private sectors | 86 | 96 | 118 |
| Government Demands for Goods and Services (round numbers) | 86 | 104 | 130 |
| Margin of Deficit () | 0 | (8) | (12) |

The conclusion is obvious. <u>Under our assumptions we are not quite able to accommodate the requirements which a minimum forecast of government responsibilities and of business investment and consumption trends indicate.</u> If we enlarge the government expenditure claim to include many desirable as well as necessitous obligations -- such as a larger program of urban rehabilitation -- the stringencies of our future economic potential are still more obvious. If we are not able to effect certain economies, such as those in veterans and agriculture payments, the gap is more difficult yet.

<u>And if our growth rate does not realize the 4 per cent goal we have set for it,</u>

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the accommodation of these claims will be entirely impossible.

The first basic conclusion which emerges from our analysis is the
very great importance of a continued high rate of growth. A 4 per cent rate
of growth will enable us to accommodate essentially all the claims outlined
in this Report -- if not immediately at least over a time span of between 10-15
years. This rate of growth will thus come extremely close to meeting our
most vitally required (but not <u>all</u> our desirable) government programs; it will
make possible a rapidly rising level of living standards, and it will permit us
to come close to balancing our budget without much additional taxation.

However, even with a 4 per cent rate of growth, we will be pressing
against the margin of our capacities for the next 10 years. The threat of
inflation will be ever present and vigorous anti-inflation measures remain

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imperative. On the financial side, the likelihood that some tax measures
may be needed heightens the urgency of our recommendations for reform of
the existing tax structure.

The future then, even at an optimum rate of growth, will make heavy
demands on our ability to make choices. While we can envisage an era of
well-being far beyond our present level, it will not come about automatically.
We will be able to achieve much immediately and a great deal more over a
period of time; we cannot however achieve all our goals simultaneously.

All the goals outlined in this Report are achievable within a twenty-year period. But over the immediate future the challenge will be to our sense of purpose and to our self-restraint. We must decide between the essential and the desirable; between our necessities and our aspirations. To seek to do too much will increase our economic problems but not our economic results. Not to do enough would belie our prospects and our aspirations.

This is by no means a call for austerity. We accept the statement of
Panel II in regard to need for heavy defense expenditures, and we agree that
these must continue to be the first charge on our resources, overriding normal
budgetary considerations. Yet even with the defense expenditures outlined
above we can still provide many of the public assets and social services
described as essential or desirable by this and other Panels. And consumption
can still increase substantially. But we may have to decide between a
slower rate of increase of consumption or a slower rate of increase of public

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assets or social welfare programs. The nature of the sacrifice in either case
is a <u>relative</u> one. It does not mean giving up something permanently. It
involves <u>deferring</u> a potential gain in consumption or public assets or social
welfare for the sake of national security. That deferment can easily be made
up over the longer future.

For example, if consumption rises by only 3 per cent a year it will,
by 1965, have increased, from the 1957 figure of $280.9 billion to $355
billion or an increase of 26 per cent. At the same time, per capita consump-
tion would have increased by 12 per cent. This substantial advance would,
under the projection of a 4 per cent growth rate in GNP, provide <u>another</u>
$29.2 billion for the public sector or more than double the "deficit" in goods
and services of $12 billion estimated for 1965.

Similarly, as long as national security involves major outlays, we
will have to scrutinize new programs in the fields of public works to
determine whether they will compete with the resources needed for a rapid
build-up of military strength. This backlog of badly needed public assets
indicates that we do not "need" military expenditures to sustain our economy
as some of our critics claim. On the contrary our military expenditures hold
us back from more constructive tasks. The rebuilding of our cities alone
could more than absorb any reduction in military expenditures for the indefinite
future.

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To be sure a growth rate of 4 per cent is an optimistic assumption.
But even if our growth rate should temporarily falter, the prospects of our
economy are not nearly as tight as a statistical approach would indicate.
If we choose wisely we can realize all the aspirations described in this
Report by 1975. And if we consider the challenge sufficient, we can always
increase the resources available to us by a sustained national effort to
increase productivity. Our economy has a notable record of responding to
challenges. If we can generate this response, the problem of accommodating
the demands generated by our needs and aspirations will be less difficult
than any purely mechanical appraisal indicates. Everything therefore depends
on the courage and vision of our leadership and the wisdom and self-restraint
of our people.

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VIII - THE ECONOMY OF 1975 IN PERSPECTIVE

At the conclusion of this survey of the prospects for American social and economic development over the next twenty years, it is well that we seek a renewed perspective on the problem as a whole.

We began our Report with a projection of the economy of relative abundance which awaited Americans at the end of twenty more years as productive as the past decade. We end our Report with a warning that we may not be able to do all the things we want to achieve despite our growth. How can we reconcile these ideas?

We are asking of the economy of 1975 more than we are asking -- or could realistically ask -- of the economy of 1957. It is to defend us, educate us, insure us, and provide us with public services on a scale considerably larger than today. And it is to support a standard of living far in excess of our current one. The tightness of our economy, as projected to 1975 -- and especially in the shorter period to 1965 -- reflects the magnitude of our aspirations more than the inadequacy of our resources.

Thus there is not a basic incompatibility between the scale on which we projected the American opportunity for 1975 and the need for restraint, patience, and deferment of some desirable objectives which we might like to realize by 1965 or earlier. The economy of 1965 will be only a partial realization of the economy of 1975. We should be encouraged at the opportunities which it

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will promise rather than discouraged by the economies which it will still
impose. For all the sense of strain, of desires in excess of capacities which
occupies our immediate attention, we should not lose sight of the fact that
we can accommodate a larger number of desires than ever before, and that
the picture of America in ten years, should be one of very great progress.
If we manage our affairs now with prudence and foresight we shall accelerate
the transition to that economy of opportunity to which we aspire.

Yet the very magnitude of the opportunity must give us a deeper sense
of the need for prompt, intelligent, and far-sighted action today. Our
transition to an economy of well-being will not happen automatically. We
shall have to make it happen by applying ourselves to the measures which
are essential to bring it about. The recommendations of this Report for an
economic and social policy of growth take on an added urgency when we
extend the range of our concern. To lose sight of the measures required for
continued growth is to allow a great opportunity to escape us by sheer lack of
foresight.

A final word concerns the nature of that opportunity. It is a very necessar
companion for our buoyant and hopeful economic expectations to have a sense
of the finitude of material achievement. It is to the improvement of this quality
of life -- partly but by no means wholly attainable by an improvement in the
quantities of life's goods -- that we must ultimately address our deepest efforts.
It is to the extent that we are a spiritually, intellectually, morally richer

IV - Report
January 31, 1958

- 94 -

nation, rather than the extent to which we are simply a wealthier one, that
history will judge the use we have made of the opportunity before us.