‘Planning’ for 1975

September 1, 1952

Several excellent comments—by The Wall Street Journal, by Lawrence Fertig in The World-Telegram & Sun, and by the Guaranty Trust Co. of New York in its August Survey—have already appeared on the massive five-volume report put out by the President’s Materials Policy Commission. But a good deal more than this will need to be done both by individuals and groups if we are to have any adequate analysis of what Fortune lyrically hails as “one of the greatest, most readable government documents of the century,” and if we are to have any chance of heading off a new network of government controls.

The technique of this report is familiar. It begins by fearing an alleged “crisis”; it ends by concluding that only more government power, more government controls, more government bureaucrats, can save us from it.

The crisis this time is a “deficit” of raw materials. It seems that in 1900 this country produced 15 percent more than it consumed of raw materials other than foods and gold; that by 1950 this surplus had been supplanted by a 9 percent “deficit,” and that without more government intervention this “deficit” may reach 20 percent by 1975.

Now even if this guess were right it wouldn’t necessarily be alarming. England built itself up to the greatest industrial nation in the world in the nineteenth century by importing raw materials to export finished goods. In a peaceful world of free trade we could play a similar role.

But there is no good reason for supposing the commission’s guesses to be right. They are based on dubious deductions from a set of arbitrary assumptions. Why should we take seriously, for example, the guess that by 1975 we will need only 18 percent more tin a year but 1,845 percent more magnesium? Anyone would be lucky today to make a good guess concerning the 1975 consumption of any one item. It is sheer presumption to try to guess with an air of authority the relative consumption by 1975 of thousands of different items. Who can foresee today the vast changes that may be brought about by new discoveries, conversions, and inventions? Yet a government that has persistently failed to guess even its own fiscal deficit a year ahead has no qualms about guessing every raw-material deficit twenty-three years ahead.

The report undertakes to rescue us by more of the same kind of government interventions that have already become depressingly familiar. It proposes to manipulate prices, production, and exports; to establish quotas, floor and ceiling prices on the model of the International Wheat Agreement; and to create “buffer stocks” to be bought and sold by international authority to offset free fluctuations in supply and demand.

Do government commissions ever learn anything from anything? Have they learned nothing whatever from a hundred dismal and disastrous failures of the past—from the British rubber restrictions scheme, the British African peanuts scheme, the Brazilian coffee “valorization,” our own potato controls, pig controls, cotton restriction, and “ever-normal granary” schemes? Must the world plunge into ever more grandiose international cartels, from the wheat pact to the Schuman plan to this latest proposal?

All these control schemes are the direct result of lack of faith in, and lack of understanding of, the free market. All this recent nonsense about each country’s getting its “just” share of raw materials can only result in endless international bickering. Price controls, combined with “allocations” of raw materials to each country, can only unbalance and distort world supply, increase consumptive wastes, result in allocations to individual firms within countries, and so undermine competition and the growth or shrinkage of individual firms in relation to their relative efficiency. All these schemes can only end by further “politicalizing” every economic transaction—by socializing, regimenting, and eventually totalitarianizing our economy at home and throughout the so-called “free” world.