Productive Capacity

These illustrations are typical of industries which are faced with competition from foreign products and which seek special favors-under the guise of national defense -at the expense of consumers generally. In granting such special favors, we lose sight of the fact that con sumption is the sole end and purpose of all production, and we place the emphasis on the industry as such. Once the door is opened to the granting of special favors, there is no logical point at which to stop. What industry is not, in this same sense, essential to national defense? In two global wars, we have discovered that more than men and guns and tanks and planes are essential. Yes, even peanuts! If such reasoning is followed, the logical end is to close our borders to the importation of everything. And this means closing them to the exportation of everything. Productive Capacity The fact of the matter is that, more often than not, a war is started with little or no idea as to what weapons will be 66 used before the war's end. Political leaders, usually lack ing in business experience, do not seem to understand that a major war is primarily a test of the productive capacity of the respective contestants. They try to stock pile war goods and withhold military supplies from the enemy. They frequently act as though the goods on hand when the war starts were all that each side would ever have. They underestimate the power of resistance and the capacity for production of a relatively free people who are not subject to· absolute governmental control.

With increasing governmental control, our own po litical leaders are tending more· and more in that same fallacious direction as the years go by. At the beginning of World War II, the government began to worry about our supply of natural rubber. It ordered American in dustry to build factories and produce synthetic rubber, regardless of the cost as compared with the cost of natural rubber. True, this synthetic rubber was needed to fight the war. But what is not generally recognized is that American private industry-individuals-had ex perimented and learned how to produce synthetic rub ber at least 18 months before Pearl Harbor. All that the government actually accomplished was to declare war. The people, as always, had to produce the tools of war and furnish the manpower to use them. We should al ways remember that the governmentcan only withhold ideas and information and materials from its citizenry; it cannot give them anything beyond what they them selves are capable of producing.

As a war measure, a government is inclined to stop 67 the international flow of information and goods and services, in the belief that this is a way of injuring the actual or potential enemy. But the greater injury, more dangerous because it is unseen, is to the productive ca pacity of the workers of the country. To stop their voluntary trading is to deprive them of the gains from such trade-gains which may be greater than any advan tages that might have accrued to the enemy nation. Let the Enemy Pay If American citizens were allowed to conduct them selves according to sound economic principles rather than political controls, a startling thing would happen. People of other nations, instead of the American taxpay ers, would be paying for our current preparedness pro gram. The cost of our war plants and experimentation in the development of war tools would be financed by sales of war materials-planes, guns, tanks, and other weapons-to our potential enemies. We can pro duce these things more efficiently than they, for we have the capital and the skill. And if our potential enemies could be induced to become dependent upon us for their armaments, they could easily be defeated if they were ever so stupid as to declare war on us. Since they would have developed no armament factories of their own, they would be doomed as soon as their stock piles were exhausted or became obsolete. Would any people be so misguided as to attempt to destroy the source of their supplies?