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economy. Yet the actioos of neither are
forecast by laws. Their decisions are
essentially unpredictable.
lt is one thing to theorize that
lF
wages are kept stable,
IF
government
does not overspend,
IF
industry keeps
prices at a fixed and equitable leve!,
THEN
inflation can be avoided.
But governments
MAY
overspend;
unions
MAY
demand exorbitant wages;
industry
MAY
jack up prices out of sight.
And externa! catastrophes -
war,
drought, weather upset, political unrest
- may upset the best-laid economic
plans. AH are "legal"; all happen.
It
is, in fact, the very
absence of law
and authority
which leads to economic
chaos. The opposite condition - sound
financia! principies thoroughly applied,
with use of wise and just goveromental
authority to implement right laws -
would
gtt(ll'a1Ziee
sound economics.
Look at sorne of the factors which
can wreck any economy. Most of them
are
man-made.
Is it any wonder that no
government of men has been able to
keep a national economy healthy over a
long period of time?
The problem is simply one of people
- what they want and do. "Virtually
all people," writes economics professor
Leonard Silk, "still ardently desire the
higher incomes and greater supply of
material goods that economic growth
brings. They like much Iess, however,
sorne of the by-products of growth–
such as heavy urban concentrations of
population, smog, social tensions, long
journeys to work, and the 'rat cace.' "
(
ConJemporary Economics,
page
268.)
Can we changc the system? Professor
Silk is oot optimistic. "Only a small
minority would now prefer to give up
growth altogether in order to avoid its
unpleasant side effects." (
ibid.,
page
268).
In tbat case we will continue to suffer
the shattering "people problems" of
economics:
The "Big Two"- War
and Cities
Economists categorize the two major
"people problems" as either
external
(war, foreign aid, trade, space, atomic
energy, etc.) or
interna!
(
welfare,
educat ion, transportation, agriculture,
medica! care, and poverty programs).
The economic policies of nations are
almost solely determined by thcse vol–
atile social subjects.
Most
exlemal
economic upsets can be
traced to the
warring
selfish human
nature of nations - whether hot war,
cold war, trade war, or arms races. And
most
interna/
economic headaches can
be traced to the dislocating population
implosion
called 11rbanization.
The major cause of any sicge of
inflation
throughout history has been
overspending for armaments and war!
When a nation must print more
unbacked money to spend on arma–
ments, soldiers, war-planes, and veter–
ans' benefits, there is no way to avoid
inflation. More money is circulating, but
fewer
consmner
goods are being made.
Most wars in United $tates history
caused a
do11bling
of prices in about
f1ve years' time! The ravages of World
War
1
caused much more serious "hyper–
inflation" (prices multiplying by mil–
lions of times over)
in
Germany and
other European nations. The same fate
struck China and Hungary after World
War II. In the last five years, war-toco
Vietnam and Indonesia have suffered
similar fates. Serious inflation has
virtually
never
struck during peacetime.
War also saddles a nation with a
back-breaking
debt
to repay. The yearly
in/eres/
on the United States war debt is
greater than the entire U. S. national
debt was in
1930!
War also ruins the
industrial and agricultura! base of any
nation where the war is fought.
The Thirty Years' War, for instance,
retarded central European economic
growth by the equivalent of a century!
The American Civil War retarded the
South's whole economy for two gene–
rations, and New England's shipping
for a longer period.
The best-laid plans of economists
have consistently been ruined by unpre–
dictable wars and revolutions. The "air–
tight" theories of Adam Smith in
1776
(see following article,
T1uo
Cent~~ries
of
Economic Tho11ght)
were ruined by the
American and French revolutions, the
Napoleonic wars , and the equally
destructive Industrial Revolution.
The Industrial Revolution, in turn,