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HOW TO REVIVE the U.S. ECONOMY [Editor's note: Dr. Boorman earned his Ph.D. in Econom ics from the University of Geneva, Switzerland. He has held major positions with General Electric, A.T.r & T., and the World Trade Institute. Today he teaches Economics at National Uni versity, San Diego, and heads his own international business consulting firm. ] By Patrick M. Boarman The precepitous decline in the past decade of the power and influence of the United States is the most talked- about subject in the world today. And with good rea son. Policymakers in other nations, whose fortunes are linked directly or indirectly with those of the U.S., are aghast at the threat to their very survival which the collapse of U.S. leadership betokens. ernment regulations shifting capital from capacity — en larging investments to activ ities such as abatement of environmental pollution. Also, productivity is de pendent on savings, the source of investment capital. Our virulent inflation today stunts the growth of sav ings, because with inflation at 18%, even high interest rates yield a negative re turn. Today, people don’t save much. They tend to buy consumer goods now... be fore the price goes up! The U.S. also lags today in technological innovation due to inadequate tax in centives for business re search and development. And the fact that American- made products are not al ways competitively salable in world and domestic mar kets inhibits productivity as well. How is this collapse to be explained? There is persua sive evidence that it is the progressive decay of the U.S. economy, whose symp toms are rampant inflation and declining productivity, to which must be ascribed the major blame for the diminishment of our world role. While the Carter Admin istration did not initiate the U.S. inflation nor trigger the fall-off in U.S. product ivity, its zigzag economic policies greatly aggravated both of these morbid phen- othena. Together they have debased the U.S. dollar at home and internationally, threatening the whole West ern economic order. Our raging inflation, or sagging productivity and our faltering economic post ure abroad are interrelated and interdependent. What are we doing wrong that others are doing right? Con sider first the weakness of our productivity perform ance. The numbers in recent years tell a stark and de pressing story. In the 1960s, productivity — output per man-hour — was growing at an annual rate of 3%. In 1977, productivity was growmg at a rate of only 1% a year and in 1978 it was nearly zero. In 1979 product ivity in the U.S. fell by 2%! This turgid productivity performance of the U.S. has led to low economic gfrowth, high budget deficits, and inevitably, inflation. If the nation is ever to get a handle on the roaring inflation and the stagnant growth which feeds it, pro ductivity must be raised by a significant margin. This depends on our ability and willingness to alter those determinants of productiv ity over which we have some control. These include: (1) the rate and level of invest ment, i.e., of capital forma tion; (2) the rate of saving; and (3) the rate and level of technological innovation. Regarding the rate of investment, the U.S. has been spending too much and saving too little. Many of our basic industrial plants are virtual antiques, outmoded and inefficient. This short fall in investment is rooted in polices, made in Wash ington, that deter invest ment — high taxes on capi tal gains, excessive govern ment spending, unrealistic depreciation schedules, gov The perscriptions for cop ing with the productivity malaise include: (1) Tax reform to encourage savings and capital formation. Gov ernment limits on the a- mount of interest that banks and other savings institu tions can pay should be abolished and taxes on that interest should be eliminat ed. These reforms would help to raise the rate of private savings in the U.S. far above its present woeful ly low level. Also, the long standing and onerous double taxation of corporate income (via the tax on dividends to investors) should be ended, to channel a vast flow of new savings into the hands of U.S. entrepreneurs. (2) En couragement of investment by selective reduction of regulation. Economists and politicians of every persua sion agpree that the U.S. economy is in imminent dan ger of strangulation by ex cessive reg^ulation. (3) Infla tion should be brought to a halt by planning for a balan ced budged on a permanent basis (with provision for emergency unbalancing). The explosive and danger ous growth in transfer pay ments from 28% to the total federal budget in the mid- 1960s to more than 50% today should be halted, with any future increases in such payments limited to increas es in real economic growth. (4) The growth of the money supply should also be held within the range of the real growth of the economy, i.e., real GNP, or between 4 and 6% per annum. Money sup ply increases should be steady and continuous, and manipulation of the interest rate should cease to be a tar get of Federal Reserve poli cy. (5) Domestic oil product ion should be encouraged by cancelling the windfall prof its tax. This totally miscon strues the economic function of profits and contradicts the purpose of price decontrol of oil, the purpose of which is to restrain consumer de mand and provide producers with incentives to get more oil out of the ground. To levy a tax on the profits earned under decontrol is to take away with the left hand what the right hand has given; to raise the price of oil beyond the uncontrolled price because producers will inevitably pass the tax through to the price; and to give the government a huge tax bonanza that will again depress productivity, inhibit innovation, and contribute little to increased energy production! Today there is evidence that a significant ideological change is in the making in the United States. Many prominent officeholders are just discovering the advant ages of supply-side econom ics. For example, a recent report of the Joint Economic Committee of the Congress states that the U.S. can try to lower the inflation rate by restrictive monetary and fis cal policies, knowing that the amount of restriction re quired to stop a 20% infla tion and unemployment through targeted tax cuts aimed at lifting investment, productivity and output. Americans in the early 1980s face one over-riding choice; Either trim sail a- broad and lower the stand ard of living at home; or rally the society for a mighty new surge of wealth-creat ing production. Can there be any doubt as to which of these two options we should choose? Americanism Educational League CONPORS NO TEA i^r- lAjasTiK SINGLE FAMIL/ PWELLING5 ORLV THE SCOTT REPORT Pieesr f 1 by PAUL SCOTT SOVIETS DEFECT IN AFGHANISTAN AFGHANISTAN DESERTIONS A reliable report from Kabul states that one of the largest mass defections from the Afghanistan Army since the Soviet takeover has occurred near Kandahar. Approximately 1,000 officers and men from the Afghan 7th Infantry Division deserted with their weapons to moujahedin freedom fighters while the division was en route to combat the Muslim insurgents. The mass desertion reduced the vastly understrengthed 7th Infantry Division by nearly 50%. Afghan insurgents in the Kandahar area have been considerably strengthened as a result of this desertion, particularly by crew-served weapons and trained personnel to man them. More desert ions from the 7th Infantry Division and other puppet Afghan Army units are expected. The Soviet Army of Occupation in Afghanistan is finding the going tougher day by day. RED CUTS Beset with monumental financial and eco nomic problems brought on by communist mismanagement under the Mao regime, Red China is cutting its defence spending for 1981 and 1982. Party officials report that PL A military leaders are to strengthen manage ment, simplify administration and to increase training efficiency with current arms and equipment in an effort to reduce China’s defence spending. Peking is stressing energy conservation, especially petrol, electricity and water. With a bungled economy and a steadily increasing population, Peking’s communist leadership is worried over possible internal political upheavals in the near future which will increase with the passage of time. —Intelligence Digestt 17 Rodney Rd., Cheltenham, Gloucestershire, GL50IJQ, U.K. )i Rugged, reliable 49 cc two-stroke engine fS7S Moped (PASO) 120M.P.G. Signals Extra If Wanted $479.00 Yamaha-Honda Of Shelby 1854 East Dixon Blvd. Shelby, N.C. 28150 Phone 487-7261 Timeless Tidbits “I can stand brute force, but brute reason is quite unbearable. There is some thing unfair about its use. It is hitting below the intel lect.” f —Oscar Wilde ■iziz-tr Washington, D.C., A So viet military unit of 52 soldiers recently defected in Afghanistan and is now be ing held in a heavily g;uarded section of a refugee camp in Pakistan. This is the highly explo sive information gathered by NATO intelligence offi cials who have been monit oring the fighting in Afghan istan and have access to high-ranking military offi cers in Pakistan. Their confidential report, being circulated at the high est levels of the Reagan Administration, reveals that the defectors are being de briefed while Pakistan offi cials determine what should be done with them. The group defection of Soviet military personnel, the first of its kind in the Afghan war, came after the Afghan freedom fighters switched their military-pol itical strategy in battling the Soviet invaders. The general policy of the Afghans until recently was against taking prisoners be cause of the cruelty of the Soviet attackers and the problem of keeping and feeding those captured. The no prisoner policy was changed in May. Soviet soldiers are now being urged to defect or surrender. The Russians are being given assurances that they will not be harmed and that their defection can be their ticket to freedom in the West via Pakistan. Word of the group defect ion has been suppressed by Pakistan officials because of their concern that Moscow will react militarily. Pakis tan officials also haven’t yet worked out a policy on what to do with the detectors. The Soviet military al ready have used helicopter gRinships and aircraft to strike across the Pakistan border at Afghan freedom fighters when they took temporary refuge in that country. The new concern of Pakis tan officials is that the Soviets will try to bomb the camps where the Russian defectors are being held once they learn of their location. By keeping the secrecy lid on the defection, Pakistan officials hope to discourage the Russians from moving. raises new questions about the reliability and morale of Soviet military personnel not only in Afghanistan, but also in Poland should the Soviets decide to use force in that East European country. While most of the details of the defection are still secret, one report out of Pakistan is that the soldiers were distressed over the policy of destroying entire villages in Afghanistan after Soviet convoys were attack ing the region. Rather than carry out this policy, the unit decided to defect. Another far reaching de velopment in the war is that Soviet leaders have begun admitting to their people that things are more difficult in Afghanistan than had been made public. A front page story in Pravda earlier this month by a Soviet military correspon dent described the difficult ies in dealing with the Afghan fighters. The story admitted that savage fight ing was raging in the east ern part of Afghanistan, particularly around Kabul and in Pakistan province. This is the first time there has been such a report since the Soviets launched their U.S. Remaining Silent The trouble with many people in trying times is that they stop trying. — The Lion Soviet Morale Problem SOCIAL SECUEI’TY FRAUD A government report con cedes that up to 20% of almost 3 million people re ceiving Social Security dis ability benefits are not entit led to them. Although there have been other recent reports indica ting that the fighting in Afghanistan has not been going too well for the So viets, the group defection of Soviet soldiers caught Pak istan and other Western military officials by sur prise. The incident which took place in the first part of May The policy of the Reagan Administration is to publicly remain silent about the So viet defection for several compelling reasons. The first of these is that Pakistan officials want the security lid kept on for now. The second is that U.S. experts have been unable to determine if the group de fection is an isolated incident or a sign of a much bigger and serious morale problem among Soviet troops in Af ghanistan. If the latter should be the case, this could influence a hotley debated dispute with in the Reagan Administra tion over whether to furnish covert arms aid to the Afghan freedom fighters. Supporters of the aid say the defection could greatly help their argument if it is shown that the fighting in Afghanistan is creating a major morale problem a- mong the Soviet troops. Such a crack in the Soviet military, made possible by the brave stand of the Afghan freedom fighters, could be the turning point in this strategic conflict. If taken advantage of by the West, there are some intelli gence-military experts that believe the fallout could spread swiftly to Eastern Europe where the Polish Free Labor Movement is gradually setting the stage for the dismantling of com munist rule. Welfare has become a giganitc make-loaf program which is destroying the character of those residing permanently in its womb, while it bankrupts and so cializes our nation. In “Fun City” alone, more than a million people are now getting government re lief checks. That's one out of every seven residents. (They call New York Fun City because it’s a riot.) The Food Stamp program was initially a small part of the welfare program. It has mushroomed into a scandal ous racket. Food Stamps are now purchased not only by the needy, but by college students, hippies, military men and unionists “out on strike.” The Food Stamp program has become a bar gaining tool which encour ages striking unions to hold out against management at taxpayers’ expense. The combination of public welfare and Food Stamps has enabled the unions to force management capitula tions in many union strikes. Thus, the government has sabotaged collective bar gaining at taxpayers’ ex pense. The General Accounting Office presumably investi gated anti-poverty officials in New York City who “lost” $8 million during a three- year period. (But who’s guarding the guards?) The word “lost” means $8 million is unaccounted for. One dol lar out of every four they handled merely vamoosed. Your tax dollars have financ ed riots, anarchy, subver sion, crime syndicates and Marxism. Millions of taxpayers’ dol lars have been used by killers, karate instructors, Maoists, Marxists, anarch ists and Castroites. Vast sums of money are flushed through intricate pipes go ing to countless regional, sectional, municipal, neigh borhood and street divis ions, organizations, agencies and fronts. Someone has said that freedom is like a handful of sand. The second you relax any of your fingers, it starts slipping away from you. We’ve relaxed our grip on freedom for a handout — for “security.” The only people who have “security” are the inmates of institutions: three hots a day and a place to flop. The government can’t give you security with out making you an inmate. And if you are an inmate of the welfare state, you still haven’t got security because the state itself will surely decay and be destroyed. Welfare states always have. The welfare state is a poiiticdl organization which confiscates private property from the productive to give to the unproductive. It’s a system wherein an army of political and bureaucratic Robin Hoods are at liberty to pursue either happiness by stealing from rich and poor to redistribute, after taking care of themselves, according to the prevalent political formula: Give a little something to every body and get everybody’s vote. Get from each accord ing to his ability to pay, and give to each according to the need for him at the ballot box. We Could, Would, & Should The opposition mounts. The demagogs and Demo crats, often indistinguish able, scream that President Reagan is robbing the poor and protecting the rich. The Food Stamp program was begun in 1964 by that pore-folks lover, Lyndon Johnson, who started out pore and ended up worth about $30 million, on the public payroll all the way. In 1968 the Food Stamp pro gram cost $118 million. In 1980. it cost only some 15 times that. Remember all those starving children with distended bellies and the derilicts prostrate in the gutters prior to 1964? Fifty-seven percent of Puerto Rico’s people are on our Food Stamps. Otherwise they might become a dep endency of Cuba? Although we’re in a war for survival as a free people under God, more people get government checks for not working than at any time in history. That’s because our government is so huge, so socialistic, so crooked, so immoral, and so influenced by minority pressure groups. Private charities in our country could, and would if allowed, take care of all deserving cases. Children should not go hungry, re gardless. Able-bodied adults who depend on government and refuse to work should go hungry. It is immoral and unconstitutional for the gov ernment to gouge money from the rest of us to subsidize indolence, fornica tion, unwed motherhood, crime, agricultural over-pro duction, government “art,” rents, ad stealeum. When a government dispenses “charity,” you can be certain that the political favorites, the Bureaucrats, and not the needy wUl receive most of it. Total government planning has no room for true Christ ian charity! The best way to reduce the exploitation of man by man is to embrace Christian ity. The Christian tenet holds that the reformation of society begins with the indi vidual himself, is activated by a regeneration of the spirit and maintained by faith, works and thanksgiv ing. ________ Tell Us Guest commentary by S.Taiz, Taiz of Tucson tobacco blender, 1062 North Campbell Avenue, Tucson, Arizona 85719. We older “squares” are accused of not understanding the rebellious, pot smoking, shacking-up generation. It would help if they would reveal their standards. If you have moral codes, what are they? If you have thoughts for the future, what are they? You beat your breast for the environment, yet after rock concerts and other groupings, communities spend much time and money cleaning the mess you create. You protest against the dangers of nuclear plants, yet you endanger more lives when you drive under the influence of alcohol or drugs. You reject the religion of your parents and embrace religions sometimes mystical. You reject patriotism. Do you owe society or your parents anything? You scream exploitation. Is the acceptance of food stamps by healthy students not exploiting your neighbor? Do you know the difference between love and lust? Are you better off away from home? It is not enough to reject, one must have a better substitute. Perhaps we can join you in a better life, if you can explain your lifestyle, and where you are going. You reject standards used over 5000 years. If you have better, it is your duty to reveal them. I am not being facetious. I really want to know. —Manchester Union Leader STOP, THIEF! The National Science Foundation stole $65,000 of our tax money trying to find out what makes people laugh and cry. ■ \ * .\,i» ■ V
The Foothills View (Boiling Springs, N.C.)
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June 18, 1981, edition 1
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