One Message Too Many

January 28, 1952

At this time of year the conscientious congressman or editor, or for that matter any conscientious citizen anxious to “keep abreast of things,” has an enormous amount of homework to do. The President dumps in his lap three messages—on the State of the Union, on the Budget, and on the Economic Report. The first anyone can usually assimilate; it is comparatively short, and read by the President in person. The budget message is a necessary evil. But at least we could be spared the economic report. Its information is secondhand. Its chief recommendations are and ought to be found in the other two messages. And the rest consists mainly of giving “scientific” and “economic” reasons for what the President has done or wants to do for political reasons.

The economic report, in brief, is Administration propaganda paid for by the taxpayers, and it promulgates more fallacies than the rest of us have time to answer. The latest opens with the declaration that; “The past year has been marked by great gains in our basic economic strength.” The unwary reader might be led to suppose from this that the ideal way to increase our economic welfare is to have an immense diversion of men and resources to war and armament.

On the next page we learn that “Our total [1947] output, measured in 1951 prices, was more than $90,000,000,000 higher than in 1939.” Our curiosity piqued by this, we turn to tables in the rear, and find that our 1939 total output, measured in 1939 prices, was $91,000,000,000. But measured in 1951 prices it was $179,000,000,000. So we have increased the total output even of 1939 by $88,000,000,000, simply by changing the measuring rod! We can get our national income up to any figure merely by depreciating the dollar.

We are not surprised to learn a little later that “true economy” is something vastly different from economy. True economy means “the making of necessary outlays,” and all of Mr. Truman’s proposed $85,000,000,000 of outlays are of course necessary. And anyway, it is better “to run a deficit of limited size and duration in the Federal budget” than “to run a deficit in our national security effort.” And much more semantics of the same kind.

The truth is that all three messages are profoundly disheartening. They contain no acknowledgment anywhere that inflation is caused by the government’s own policies of reckless spending, deficit financing, low interest rates, using the Federal Reserve Banks as a dumping ground for government securities—in short, of increasing the supply of money and credit. Instead, on top of unparalleled armament and civilian spending, Mr. Truman can think only of still more spending—subsidized housing, socialized medicine, Federal aid to education, bigger social-security payments, bigger “public assistance,” bigger veterans benefits, the St. Lawrence Seaway and power project, bigger farm price supports, bigger handouts to Europe, bigger handouts to the “underdeveloped” countries.

And after asking for all these expenditures that increase inflation, he promises to “control” and “contain” inflation by the fraudulent, dangerous, and disruptive device of price control. He asks, in addition, for still more strait-jacket controls over the economy. Not once does he promise to halt inflation—by simply ceasing to create more money and credit.

Not only does Mr. Truman show no understanding of inflation. He shows no understanding of how and why wealth is created. His cure for the bottomless poverty of Asia, like his cure for everything else, is more handouts from the U.S. Treasury. This, he tells us, will avert “stomach Communism,” The phrase is revealing. It implies that Communism is a cure for empty stomachs rather than a cause of them. The real cure for empty stomachs is capitalism. It is economic freedom that brings maximum production of food and clothing and housing. And not until the “underdeveloped” nations understand and adopt a free market economy will they emerge from their misery.