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PASTOR GENERAL'S REPORT, December 20, 1979
the same time as adapting gov
ernment to new ways of think
ing about and dealing with the
economy. It's not surprising
that this is quickly translated
into a pervasive feeling of un-
certainty.
To compound the future un
certainty. no one is reaHy sure
how to describe the present
economic s i tuat ion in the
l"nited States. Last month. the
'.'\ational Bureau of Economic
Research. the final arbiter of
when recessions are recog
nized to have begun or ended,
canceled a news conference at
which it had planned to dis
cuss whether a recession had
already begun. A bureau econ
omist stated that the data are
so contradictory that it's hard
to say where the United States
actually does stand. The major
imponderables include the like
lihood of oil price rises or fur
ther interruptions in supplies
and the uncert:tin effect of the
Federal Reserve Bank's re
newed efforts to controt expea
sion of the money supply.
While a downturn is expected.
neither its length nor severity
can be safely predicted.
In this context. it is also not
too surprising that one or the
current themes of political dis
cussion in the United States is
that of leadership. In a recent
speech in Philadelphia. presi
dential hopeful Sen. Ted Ken
nedy mentioned the word lead
ership 17 times. Cntil the politi
c a I
p r o c e s s
f o r c e s t h e
candidates to state more clear
ly what they think should be
done. something American pol
iticians are loathe to spell out
in any great detail. this lead
ership theme may well pre
dominate. There is a general
feeling among the voting popu
lace. and it certainly hasn't es
caped notice. that decisive gov
ernment action. however ap
propriate.
is psychologically
important to keep the natton
from divisive turmoil.
The overall direction the
next president will take on eco
nomic issues. however. will
surely be influenced by a per
ceptible shift to the right or
the political spectrum on the
part of the middle class. Amer
icans are becoming more sus
picious of big government,
more cynical of campaign
promises. and more fiscally
conservati\'e.
There has been a very popu
lar television character In
America called Archie Bunker.
The creators o! theshoW. a sit
uation comedy that often uses
current political or social con
troversies as its subject. ace
clearly identified with the in
tellectual left in American ide
ology. Their idea, borrowed in
part from the English, was to
create a very conservative
character who would be ex
posed as an anti-intellectual,
insensitive bigot. They now ad
mit surprise that many of the
viewers actually identify with
the character they made the
subject of ridicule, and thepn,
ducers are somewhat cha
grined .to think that Archie
Bunker struck such a respon
sive chord.
Cost-Conscious Atmosphere
Traditional conservative val
ues seem to be enjoying some
what or a renaissance. Jimmy
Carter was the least liberal of
the Democratic candidates in
1976, and many attribute his
suceess at that time. to his
anti-big-government posture.
Increased defense spending.
longcriticized by liberal candi
dates. is now a virtual cer
tai nty. Deregulation of the
tra�rtation
industries has
attracted politicians of all
stripes,
including Kennedy
who has spearheaded the con
gres.sional movement. Environ
mental concerns and other tra
ditional liberal causes are also
being re-examined in a more
cost-conscious regul.atDry at
mosphere.
And perhaps the most signifl·
cant movement toward fiscal
conservatism is the tax revolt
that
first attracted national
stature. with the passage In
CaliCornia of Proposition l:l. a
property tax limitation inltta
t Iv e. It h a s now s p r e a d
through other states and is di!·
ficult to ignore at the federal
level.
But a true scaling down of
the federal government. a dis
mantling of "The Great So
ciety" that Lyndori Johnson ad
vocated in the· 1960s, that is a
change of such magnitude that
It cannot happen overnight
v.1thout great turmoil. Once a
government spending program
has been established It devel
ops Its own constituency and
lobbyists. and It Is difficult to
displace. Its advocates are
real And vocal. while opposi
tion may be almost non�xist·
ent. except for a general dts
may
at
the overall level of gov
ernment spending.
TaxRevolt Example
Toe property tax revolt In
CallCornia is instructive. Even
though there was a large sur
plus ot tax revenues. the se
lected state officials were
unable to �gree on any plan
for reducing taxes. Proposals
for specific reductions for spe
cific groups of taxpayers made
the debates hopelessly com
plex. And the temptation to
hand out the surplus in new
projects, presumably
in ex
change for the good will and
votes of the electorate. proved
almost irresistible. That is
why a group of conservative
taxpayers banded together and
drafted what became Proposi·
tion 1:r.
California has an initiative
process whereby voters can
put a referendUm on the ballot
in spite of the ordinary legisla
tive process.
It takes a grass
roots.
signature-gathering
campaign and a lot of door-to
door volunteer effort. Even
though the p-0pular support
was overwhelming. elected of·
ficials, municipal employees
and government in general
were all bitterly opposed to the
proposal. They saw such apop
ularmovement as quite threat
e ning and promi sed ut ter
chaos if it should succeed.
Even though Proposition n
did succeed. chaos did not en
sue. In fact. California still has
surplus revenues. But the fed·
era! government is not so eas
ily restricted. First, there is no
natl-Ona! referendum process.
Americans will have to depend
upon the representative legisla
tive process to deal with such
issues. This automaticaUy
shifts the debate back into an
arena where special interest
groups are more effective than
general sentiments.
Second, the belief is yet
widely held. although it is com
ing under increasingly welHo
cu se d and persua sive i n
tellectual attack. that. at least
at the nattooal level, strong
government Intervention In
an<t management of the econo
my ls necessary tn an uncer
tain world economy. The e'l!C·
treme reluctance to let market
forces allocate energy re-
Paqe
12
sources. preferring rather an
incredibly
inefficient
federal
energy bureaucracy. is a clear
case in point.
GNP Comparisons
'nie extent of government ln
votvement is demonstrated by
a comparison with other econo·
mies. As a percentage of GNP.
real U.S. government expendi
tures are more than twice as
high as Japan·s. To finance
the burgeoning bureaucracy,
an Organization for Economic
Cooperation and Development
study indicates that in 19i6 the
l:.S. taxed capital gains and
assets at a rate eight times
higher than Sweden. and ap
proximately four times higher
than Germany and Japan.
But there remains a sense of
class consciousness and mis
trust of wealth in America that
has resulted in one of the most
steeply progressive tax sys
tems in the world. The result
ing low levels of\ savings and
investment contribute to a
chronic lag in real productiv
ity gains. Even the brightest
spot in America's business pic
ture. agriculture. suffers. The
latest economic review of the
Kansas City Federal Reserve
Bank warns that although la
bor productivity on farms con
tinues to grow at a rate in ex
cess of 6 percent a year. in
contrast to the output per
man-hour in the U.S. non-farm
economy which has actually
been shrinking for several
years. nevertheless the picture
is not so rosy. Labor is now a
far less significant factor in
American agriculture.
< Total
labor on farms declined from
24.7 billion hours in 1918 to
only 4.7 bl.Ilion hours in 1977l.
When all factors of production
are Included in the calculation
, land, machinery and · chem
icals) productivity has been
growing at only 1 percent to
1.5 percent annually for the
past five years.
Lower Standard of Living
The inevi taMe resul t of
10\ver productivity gains and
higher prices for energy is a
loweriilg in the C.S. standard
of
living.. Because · everyone
can see this handwrtting on
the wall. if they really have
the courage to look. you have
a very unsettling choice: make
fundamental changes in the ln
centive structures of Amer
ica's economy, seemingly un-