$2500 a Year
A Guide to NEW BOOKS ABOUT BUSINESS
SIXTY per cent of the people of the United States have less than $1000 annual income. The many factors involved in stepping that figure up to $2500, as outlined below, deserve the careful consideration of all who recognize the necessity for long-range planning in this country.
[Hareourt, Brace, $2.30]
$2500 a Year is a title which ought to ring the cash registers in the bookshops. It competes with other Economic Slogans of the Day, such as ‘ Pensions of Two Hundred Dollars a Month,’‘Every Man a King,’ ‘Dividends for All,’‘End Poverty in California,’ ‘Soak the Rich,’ and ‘Share the Wealth.’ It is a dull month which does not bring us a new solution of the ’Paradox of Poverty in the Midst of Plenty.’
Henry George pictured that paradox in Progress and Poverty with such dramatic appeal that more than a million readers bought his book. Men, money, machines, and materials We have in superabundance. Every day we discover new ways of increasing the man-hour output of labor, new ways of making one job grow where two jobs grew before. If we could only find out how to use our productive powers, we could supply enough commodities and services to provide every family with at least $2500 a year of purchasing power at current prices. Yet, even in the wealthiest country in the world, millions suffer from want. That diagnosis was so convincingly stated by Henry George three generations ago that his opening chapter might well serve as the opening chapter of all the economic-paradox books, including the new one by Mordecai Ezekiel, Economic Adviser to the Secretary of Agriculture.
But the agreement of the economic doctors ends with the diagnosis. Their cures range all the way from the single tax of Henry George to the proposal to abolish all taxes and meet the budget with printing-press money.
On only one major issue of the paradox problem, since the time of the heterodox Henry George and the orthodox John Stuart Mill, has there been a notable movement toward agreement, and that movement has come chiefly in the last ten years. Nowadays it is commonplace to say that we waste our productive resources chiefly because of a limited market; that, the workers are not allowed to work chiefly because they do not buy the products of their own labor; and that they do not buy chiefly because they lack the money. Slowly and painfully we have come to see that the paramount need is adequate, sustained consumer purchasing power. The problem, in short, is distribution, not production; and distribution, apart from temporary expansions of consumer credit, rises and falls in almost exact proportion to the rise and full of the money incomes of the 98 per cent of the families who want to buy more. The needed flow of consumer income does not result from natural laws. Leaving things alone merely makes more intolerable, with each depression, the paradox of poverty in the midst of plenty. A return to laissez-faire is not the answer. He must try — what we have never tried — long-range planning for the avowed purpose of providing a consumer demand which will induce producers steadily to increase their output.
That, in meagre outline, is what the author of $2500 a Year says, and rightly says, about the need and the objectives of collective economic planning. In all this, as the author is well aware, there is nothing new of any consequence; and at least a dozen other writers have done the job with far greater literary skill. Nevertheless, Dr. Ezekiel deserves the gratitude of mankind. General acceptance of even the most patent of economic truths comes only after years and years of patient ham mering away by many men. The ‘natural law’ leaderof polities and finance still ignore the fact, expounded by Bagehot many years ago, that money does not manage itself.
Dr. Ezekiel, both in his diagnosis and in his proposed cure, treats ‘monetary mechanisms and policies’ and ‘financial institutions’ as minor factors. These ‘supplementary problems,’according to his Preface, he leaves aside because they are outside the author’s competence. He then proceeds to a discussion of ’demand,’‘payrolls, ‘limited markets,’ ‘price control,’and ‘ability to consume’ which is almost meaningless except in relation to monetary mechanisms and policies and financial institutions.
To solve the paradox problem, Dr. Ezekiel proposes an Industrial Adjustment Board, composed of representatives of all industries, of labor, of government, and of the consuming public. The Board would balance the programmes of the various industries and see that they dovetailed. It would figure out the selling prices of the goods to be produced and the payrolls, and thus see that consumers could buy the increased output. If they could n’t, the Board would change prices and wages, in consultation with voluntary committees of the various industries. Each producer would receive payments from the Federal Government in return for voluntary agreement to increase output and maintain wages according to prescribed schedules. Thus the Industrial Adjustment Plan is a kind of reverse AAA. Producers are to be rewarded for increasing instead of decreasing output.
The plan is far too complicated to be explained in a few words. It deserves study. However impractical it may seem to many men, the plan should be considered with an open mind by everyone who is seeking a solution of the paradox problem. The solution will be found, not by those who hastily discard every constructive proposal, but by those who, like Dr. Ezekiel, struggle with the arduous and thankless task of devising some plan. Out of many such attacks progress will be made, unless, indeed, the do-nothing people have their way and some sort of revolution follows the next depression.
WILLIAM TRUFANT FOSTER
City Government, by
[Harcourt, Brace, $2.50]
IN the light of city government, Milwaukee attracts outside attention on at least three scores. First, it has a reputation for successful administration in terms of physical and financial plans and of well-organized, effective services — and all within reasonable tax rates and a low debt structure. Second, its game of municipal politics has been warmly waged on lines of a nonpartisan fusionism versus what is called, in Milwaukee, Socialism, with the nonpartisans usually controlling the council and some independent boards and with a highly organized, disciplined Socialist Party capturing the office of mayor for a continuous stretch since 1910. The party rule has been extended, by vote of April 1936, to 1940. And third, Milwaukee has had Daniel W. Hoan, himself the Socialist mayor, as chief executive during the entire twenty-year period with reëlection for the four years to come.
It is the personality of Daniel W. Hoan which makes his book fascinating. Here he records his philosophy of local government and observes its application to the city over which he has had considerable command. There is something fascinating in his ability to withstand the terrific shocks of his period and to retain the confidence of an energetic and vociferous plurality of the electorate during its changing moods.
As the book is laid aside for reflection, there comes a feeling that even in Milwaukee the conservatives have field ground. This is probably due in part to a charter which allows a strong council, some independent boards, and a scattering of responsibility independent of the mayor. It is also a result of a general consensus, recognized by fusionists and Socialists alike, which admits the stark necessity of maintaining regular city activities as satisfactorily as possible within the bounds of a restricted financial structure. And, too, Mayor Hoan’s own philosophy, while forcefully expressed and social in essence, is not unorthodox to persons of other political or economic complexions when it is stripped to bald statement and applied to city affairs. On practically every measure, the Mayor is even—almost conservative — in the advocacy of sound principles to which most students of municipal government will quickly agree.
One wonders whether it is advisable to sloganize municipal reforms under the name of Socialism, Republicanism, Democracy’, or any other label which has little real significance beyond rise as a party symbol. With very few exceptions, the platforms, when divorced from personalities, are probably acceptable in principle to most Republicans, Democrats, Farmer-Laborites, and Socialists, particularly if the application is consistent with sound financial planning as it is in Milwaukee. It would indeed be unfortunate if the splendid achievements of Milwaukee were prejudiced elsewhere merely because of an illusory attachment to any particular party name.
Mayor Hoan does not make any extreme claim for Socialism. He who happens to be a Socialist writes rather as a humanist and an observer of public affairs. Readers of his book may observe some of the best procedures in municipal government and incidentally become acquainted with a mayor who is propelled by a deep and genuine urge for service.
MORRIS B. LAMBIE
Labor Rotations Boards, byand
[Brookings Institution, $3.00]
THE studies of the Brookings Institution, beginning with America’s Capacity to Produce, and running through a multitude of problems arising under the New Deal, will provide, when completed, a library of encyclopædic character on American political and economic developments of the present period. In Labor Relations Boards, Mr. Lorwin and Mr. Wubnig have provided an impartial analysis of the subject under discussion.
The NIRA A forced upon President Roosevelt a public handling of labor problems before those problems came into existence. In a word, the act itself stimulated discord between employer and employee which the government was forced to deal with in anticipation of strikes. Because of President Roosevelt’s personal sympathy for the American Federation of Labor, the situation became particularly involved, for the vast majority of American workers refused to recognize the leadership of the A. F. of L. and most employers would have nothing to do with it.
Various devices were then entered upon to implement Section 7(A) of the NIRA to assure the workers not only collective bargaining, but representatives of their own choosing. In this volume the authors set forth all these efforts on the part of the government, the resistance on the part of employers, and the various devices for employee representation, with utter objectivity and fairness, and without ever lowering the tone of pure scholarship. In these days of violent opinionating and vituperative denunciation, a volume so ably done comes like the fresh breath of spring.
With regard to the Automobile Labor Board, the point is made that ‘the ALB sought, in essence, to introduce a new form of collective bargaining — the works council on the basis of proportional representation. It attempted to cut the Gordian knot of company union versus trade union by ignoring it. In some ways, the device was a reversion to the policy of the War Labor Board, which set up works councils in industries where no effective technique for collective negotiations had as yet been developed.’
Although the authors give the pros and cons with regard to this particular form of employee representation and collective bargaining, it would seem that in the formula which Dr. Leo Wolman and his associates adopted for their guidance in the Automobile Labor Board lies the fairest and most efficient method for handling labor problems in this country. Collective bargaining will remain a factor in American industry, and the government will remain as an arbitrator between the employer and employee.
GEORGE E. SOKOLSKY