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THE _POUND SINKS, INFLAnON RAGES,
.AND BRITAIN TRIES MORE OF THE SAME
DESPERATE MEASURE: An·
nouncing a new government
cl11mp down on skyrocketing
w11ge incre11ses
liS ··,
plan to
-
out
counlly •
..
BlitBin
·s
Prime
Minister Haro/d Wílson told thtt
Britáh public:
' 'lf
we
do not
,..,. the
next
12
montlls
6ChitwtJ
11
drastic redvction in the
p<estJnt
dis11strous rate of infl11tion
...
!htt British p80ple wi/1
be
en–
gu/fed in 11 general economic
CIIIIUtrophe of incalculable pro·
porrions. ••
While
.lb
e rest of !he modero
industrialized world looks for–
ward to declliúng inHation and
unen:~ployment
cates, Oreat
Britain stands out as the one
glaring ex.oeption. ILS inflation
cate
Í$
twenty-live pereent aod
aoeelerating while unemploy·
ment
is
heading for !he sym–
bolic
one
million marlc.
These
facts have not
escape<!
the at–
tention of tbe international
money marlcets where the
pound experienced a disastrous
run in early July.
"GettingTough»- Bul Not
on
t!W
Uruons
Paced wilh wbat be tenns
"economic catastropbe," British
Prime Minister Harold Wilson
has unveiled "tough" anti·
inflation mcasures.
.
Tbe Labour government's
package includes a ten pera:nt
limit on pay hikes,
a
freeze oo
the salary of aoyooe earning
$19,550
a year
oc
more, aod
"tightening~
ofexisting oontrols
on pric:es.
Evcr wary of olfending tbe
trade unions, tbe goverrunent
bas. inaedibly, put !he burden
of enforcing !he pay curbs on
employers. Wilson warns that if
"recalcitran! employers" yield
to un.ion wage demaods, they
(the employcrs] will face legal
sanctions. Yet
many
employers
will face bankrupting strikes
if
tbey don't yield. ·
Earlier tbis year, Chancell«
of Exchequer Dennis Healey
anoounced S3 billion in
new
WEEK ENDil'IG AUGUST 2, 1975
taxcs, closing many former "tax uúking about 100 percent pay
loopholcs." Now Mr. Healey
is
bikes, bave agreed 10 tbe ten
calling for a ten pero:nt cut in perceot gutdeline - for tbe mo–
public spending.
- ment. The fact rcmains, how-
Unfortunately, the various ever. tbat the militan! len-wing
new policics do liule 10 touch of tbe trade unions in Britaio
tbe root causes of Britain's
eoo-
views itself as the protagooist in
oomic malaise. And principie an open-dass struggle with Brit·
among lhese is the simple fact isb capitalism, and one would
tbat British industry does oot be extremely naYve to expect
produce enough goods and ser· any restraint to last for very
vices. Output per man-bour of long.
work conunues to limp along at
The only mcasure which
oue of the lowest efficiency ra· could have sorne positive irn·
tíos
in tbe industrial world.
pact on Britain's economic
Yet, lronkally, if tbey have beahh is thc ten percent cut in
any clfect at all, the govem- goverrunent spending. Yet pub–
ment's new measures will hin· lic spending already gobbles up
der British outpuL The recent
60%
of tbe
gross
national prod–
closure of tax loopholes and tbe uct - the equivalen! in America
freeu on higher inoomes may of a
$900
bilhon budget. So
completely kili wbatever in- tbere
is
shU
a
long way to go to
centtve to produce tbat Britisb reacb fiscal sanity.
industry has ten.
Anolher reason for Bntain's
The
PieStays the
Same
laggard production is its out-
"Bntain" has already beoome
dated industrial plant and low an international byword. Amer·
eoonomic investment in general. ican officials (lilce Roy Ash) cite
Britisb taxes oo invesl.ment in· Britain as an examplc of what
oome are sorne of !he most se- happcns
10
a country which
vere in thc .world - far more tries
lO
redistribute wcallh with·
stringent than socialist Sweden. . out producing it - in elfeét,
for example. As
a
result; invest· continually dividing the pie into
ment in British iodustry is smaller picces without inereas–
drying up. Yet recen! Labou.r ing tbe si2e of the pie iLSelf. Tbe
eoonomic moves bave had tbe resuh
Í$
double-digit intlation
efl'ect of raising taxes on an al· assuming Latin American pro-
ready overuuted eoonomy.
portions.
Furthermore, tbe wage re·
As the
Wa/1
Strnt
Journal
strainLS are, at best, only a
~m-
sums up the British scene:
porary inllation expedient. The "Good·bye Oreat Britain.
1t
natioo's ooal miners, who were
was
nice knowing you."
O
RERUNOFTHE
GREAT GRAIN ROBBEÁY?
This year's annual crop short·
faU in the Soviet Union has
rabed the specter of another
round of mammotb Russiao
grain purchases from tbe U.S.
and Caoada.
Acxording to one report, the
Soviets are eurrently in tbe pro–
cess
of negotiating for
30
mil·
lion 10ns of American wbeat
over the next three years. The
U.S.S.R. also has a contrae!
with Canada tbat
calls
for tbe
delivery of an estimated two
million toos anoually, which
Soviet buyers are now trying to
increasc.·
The reports are given cre–
dence by U.S. Agrieulture Sec–
retary Earl Butz wbo notes that
recent dry weather
has
taken iLS
toll, with lhe· Soviet grain pro–
duction probably com.ing in
coosiderably under the
200
10ns
previously cstimated.
The news breaks on the third
anniversary o_f the famous
1972
dealthat has come to be known
as "!he great grain robbery." At
lhat time the U.S.S.R bad se–
erctly negotiated the purchase
of one fourlh of tbat year's
American wbeat crop - at tbe
bar~ain
basement price of
S1
bill10n, part of whtch was
fi..
nanced by
a $750
miWoo eredit
arnngement at subsidized in·
tercst cates. In wake of the deal.
U.S. food and livestoclc prices
soared and American
grain
re–
serves were depleted.
Wbile this year's Russian
grain purchases probably won't
be as extcnsive as those of
1972,
tbe Russians, ever the shrewd
capitalisLS despite their ideal·
ogy, are buying at a time of
comparatively low prices and
slack demand. Even witb pro–
jected U.S. reoord wbeat and
com harvests, any new pur'
(Continu~d
on
pag~
4,
coL /)
""'
DEFIANT GESTURE: lndie's Prime Minisier lndira G6ndhi wavss
to supporters following her lower court conviction of corrupt/on
in the 1971 election campsign.
INDIA-
Falling Under
a
Soviet Spell?
Rtgid
press ceosorshtp. sus–
peosioo of civil liberties. and
tbe arrest and imprisonment of
the political opposition now
pervade what was, until June
26,
"the world's largcst democ–
racy."
lnvoking images of a "deep
and widespread conspira,cy"
against her government, lndian
Prime Minister lndira Oandhi
bas declared a state of emer–
gency, ordering the middle-of–
the-night arrcsLS of
600
política!
opponents. The opponentS were
protestiog Mrs. Oandbi's oon–
tinued rule in view of
an
eleo–
tion violation oonvietion.
lronically, the govemment
clampdown, ostensibly aimed at
preventing outbreaks of wide·
spread disobedience, is the
same too! by wbich Mahatma
Oandhi gained lndian indepen–
dence from Britain in
1947.
Only
Moscow Approves
While Mrs. Gandhi's swin
and severe crackdown drew
near worldwide condemnation.
tbe importantuception was tbe
Soviet Union wbich openly pro–
claimed iLS approval. This un–
derscores the degree to which
India aod the Soviet Union
have beoome close allies. l)le
U.S.S.R. has beoome lndia's
main supplier of w.onomic and
military
aid.
Furthermore, in terms of in·
terna! Indian poUlics, 'the only
beoetlciaries of the emergency
deerees are the len wing
ot
Mrs.
Gandhi's Labor party and the
party's alües, !he pro-Moscow
Communist party of India .
(Tbere
are
even rumors of di·
rect
Soviet involvement. The
spced and untypical efficieney
with wbich Mrs. Oandhi's de–
crees were carried out has
raised .suspicioos tbat th_e KGB
- tbe Soviet spy agency -
helped the lndian govemment
in orchestrating thc squelcb on
theopposition.)
Surprisingly, a number of
parallels may be found between
India and tbe curren! situation
in Portugal. As in Portugal,
all
opposiüon parties
uc~pt
t/11
pro-Moscow Communists
bave
been suppressed. As in Portu·
gal, !he rules are bent for lef\ist
demonstrations:
ISO
persons
re–
cently violated tbe emergency
decree 10 bold. predictably, an
.Anti-American demonstration in
New Delhi while tbe pobce dtd
nothing.
And,
as in Portugal,
!he
ruling
party
IS
using its
power to push tbrough sweep–
ing socialist "reforms" tbrough·
out tbe eoonomy.
The elfect of these moves is 10
produce
an
India eveo more
closely aligned with the
U.S.S.R. tban ever before, an
event which has
its
most omi·
nous implications for Japan,
which must depend on oil
sbipped through tbe lndian
Ocean sealanes. Over thirty
So–
viet sbips now prowl simuha·
neously in the lndiao Ocean -
tbe lirst Russian fteet lhere in
seventy years.
Severa! oorrespoodeots claim
the growing Soviet fteet already
has
aoeess
to facilities
at
!he
lndiao naval bases of Vis–
halchapatnam and Viztana·
gram, as weU as tbe lodtan·
provided facilities in the Anda–
roan and Nioobar lslan\ls.
The most recent evcnts io In·
día promise to !ocle the lndian
Ocean even more into Soviet
control.
The emergency powers as'
sumed by
Mrs.
Oandhi serve as
oonlirmation that New Delhi is
drifting under the caoopy
o(
Russian hegemooy.
o
3