WEBVTT

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<v ->Welcome once again as MIT Professor Paul Samuelson</v>

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discusses the current economic scene.

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This series is produced

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by Instructional Dynamics Incorporated.

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This program was recorded August 13th.

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<v ->This is the day after President Ford</v>

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addressed the joint sessions of Congress.

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So of course there's only one thing to talk about today.

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The new president's speech was well-received.

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He was returning to the chambers

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where his career was made.

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I was unable to recall

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whether Senator Johnson

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as was, President Johnson,

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who became the successor

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to John F. Kennedy on the assassination date in Dallas.

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Whether when in his first speech to the joint sessions

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the reception was any less cordial.

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But I think it was all that you could ask for in terms

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of the social amenities, a subject

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upon which I don't consider myself

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to be a particular expert.

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The economic topics were foremost

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in the new president's text,

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but there was really very little

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in the way of exciting news.

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What did we learn?

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Well we learned I think what one might have expected

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from a man whose 25 years in Congress is an open record.

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A man from a middle class

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Grand Rapids, Michigan district.

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As you would guess, he had no startling new ideas

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on what to do about the economy.

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If he has any such new startling ideas,

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they are being kept carefully under wraps.

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He has taken over

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from the conventional wisdom.

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He didn't require taking over any of the, his predecessors'

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economic advisors in order to do this.

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But for the conventional wisdom, he took over the notion

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widely shared that the main cause of inflation

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is the government.

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In fact, he quoted what some of you probably noticed

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in the newspaper that over half the American population,

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just over half, think that you can't blame the boll weevil,

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and you can't blame the king's enemies.

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But you can blame the government

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for the recent inflation.

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And so he quoted that with approval.

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He shared that particular view, and he said

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he was going to do something about it

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with respect to government.

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Now what was it that he was gonna do?

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His fundamental diagnosis seemed to be

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that there was somehow too much government spending

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and that next year

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(speaking foreign language)

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we would be balancing the budget.

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That's the fiscal 76 budget beginning next July 1st

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and ending on June 30th in 1976.

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To show however that he is really an even-handed,

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middle of the road man, he said that the bill,

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the law on his desk

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which the outgoing President Nixon

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did not act on, did not veto,

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which involves spending

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for aid to education that he, Ford, was signing that.

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He was signing it with some evident reluctance.

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Many of the commentators afterwards said well,

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he talks in global terms about balancing the budget.

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But he in fact goes ahead and spends.

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I would not take quite that interpretation

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at this stage.

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It may be right, but you could say

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that he's giving Congress one bite.

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After all, he does want to enter

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into a good marriage with Congress.

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But that doesn't preclude entering into a good honeymoon.

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In fact a good honeymoon is often a prelude

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to a good marriage.

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And so he's going along with this spending of Congress.

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But he did say something which really raised the ears

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of Constitutional lawyers.

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And namely he wasn't gonna spend the money very fast.

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And that conjured up in the minds of some people

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the problem which had been thrown up by the conflict

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between President Nixon and Congress,

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in which President Nixon was taking it upon himself

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to impound funds.

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That, by the way, is not a new innovation

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by President Nixon.

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Earlier presidents have done it.

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But like so many things in American Constitutional law,

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the unwritten law is very clear.

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And there is no written law in many points.

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Well, what we'll assume

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is that the middle of the road man

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from Grand Rapids, Michigan will take

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a middle of the road approach

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to the impounding of funds.

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Then to show himself,

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and I don't really mean to be ironical,

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but to show himself a man of action, he said yes.

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He will take up Senator Mansfield's suggestion

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that there be a summit meeting, a meeting well aware

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perhaps in the highest skyscraper in Washington

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of the best economists in the country.

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But more important, the representatives of labor,

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agriculture and industry.

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I suppose he doesn't really mean

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to exclude transportation and commerce.

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And he was going to have it meet

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not in the distant future

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like six months but within six weeks time.

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More than that to emphasize the importance

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which he attached to this meeting.

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He, the new president, was going to take time

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out of his busy schedule himself to preside

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over this meeting.

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So that any pearls of wisdom thrown up by that crew

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would immediately be pressed into the service of the nation

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in the important cause

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of lowering the rate of inflation.

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I think that pretty much sums up what he said.

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I guess I should have mentioned that the new president

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emphasized the continuity of his foreign policy.

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And in that connection,

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emphasized the importance in his mind,

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of not cutting defense expenditure.

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What I presume that means is that defense expenditure

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is going to be cut.

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There is a very considerable movement in that direction.

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But that the new president is going to resist that.

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So we're gonna have a moderate cut at best

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in defense expenditures.

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What do we do with think of this?

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What does it augur

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for the economic future

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or for the probabilities with respect

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to the economic future?

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I guess I'd have to say that another bit of news

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that came up yesterday in the afternoon

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was the release by the agriculture department

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of the state of the crop and the outlook for the harvest

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as of August 1st.

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Now I'm talking in the last part of August,

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middle of August, and we're now talking about how the crop

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was up to the end of July and August 1st.

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And as you know, there have been some rains

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finally at long last to relieve the situation a little bit

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in Iowa, Nebraska and the prime grain territory.

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The August 1st numbers, which were announced,

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which by the way were of course very discouraging,

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did not take into account that slight improvement.

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What did they show, well, what they showed

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was that the corn crop was not only going to be less

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than the earlier more optimistic estimates.

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But it actually was going to be down in all likelihood

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in comparison with last year.

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The same thing was true for the soy bean crop,

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and I believe that wheat,

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much of which is already in the barn,

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is not going to be down in comparison to last year.

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This does mean, however, that around the corner

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in 1975, the meat, the poultry, the eggs

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that are made out of these grains,

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they are going to be scarce, and their price is gonna rise.

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So the agriculture department had to change its earlier

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more sanguine forecast in the direction

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of higher food prices ahead.

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And I guess that as a observer

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of the passing economic scene

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and as a would-be appraiser of probabilities

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with respect to future scenarios of this economic scene,

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I would have to consider the disappointing crop news

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as a bigger bit of information for me as an investor

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to digest than anything that I was able to hear

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in the halls of Congress last night.

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What about the summit conference meeting?

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Certainly we can all benefit from the injunction

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in the Book of Isaiah of the scriptures

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which says let us sit down and reason together.

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But I think we have enough knowledge

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on what previous such conferences and sitting downs together

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have produced to be a little bit skeptical

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that somehow the synergism of that movement

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is going to create new, fresh, useful ideas

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for handling the present inflation.

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Out west, when the rains don't come,

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and you see your crops shriveling,

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and the ground dry, you are desperate.

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You become so desperate

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that you will actually go through the ceremony

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of getting a rain expert, who will beat his drums

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and call down on the heavens to send down the rain.

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And sometimes the heavens respond to that call.

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You even, if there's a local Indian tribe,

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will use the oldest residents

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of that territory

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in this very understandable human ritual.

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I suppose that we're to think of this summit conference

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realistically as a ceremonial rain dance.

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It shows our good faith.

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It shows that we have a genuine concern about inflation.

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It shows that it is a number one topic in our minds

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and that the government is not callous to it.

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However, whether the heavens

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will send down the rains

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in the form of inflation abatement,

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or failing that will send down some good ideas

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to the assembled people there,

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I'm inclined to doubt.

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In fact, not knowing

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about the president's projected summit meeting

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of an economics Congress,

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a soviet of concerned citizens about economics.

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I had to write at the request of Newsweek a column

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on what we might expect in economics

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from the transition to President Ford

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from President Nixon.

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And I predicted there,

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I was just going by a priori reasoning

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and Mr. Ford's previous record.

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I predicted that he would be pretty much following

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the counsel of people like Arthur Burns.

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And as a matter of fact, I hit the target on the nose.

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I say I hit the target on the nose

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because there was one element in the speech

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which I forgot to mention.

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It's fairly significant that I did forget to mention it.

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Namely that the new president's asked Congress

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within the next two weeks

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to reactivate the cost of living council.

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He assured them it was not for the purpose

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of controlling wages and prices

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but for the purposes of monitoring price and wage decisions.

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In other words, we're going to go swimming,

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but we're not to go near the water.

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Or rather, we're not quite get in the water.

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Well, and this is in line,

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and I don't mean to cast any scorn upon the suggestion.

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This is in line with the suggestions that have been made

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by almost all economists

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of both political parties

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who are not 100 percent

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free market men, persons,

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namely that although price and wage controls

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are not a good thing or won't wash politically

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or won't be effective.

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That nevertheless a hands-off policy

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is not the optimal alternative

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to direct price and wage controls.

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And what you do need is presidential leadership.

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What you do need is job boning.

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What you do need is informed job boning.

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What you need is informed job boning with the sanctions

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of government behind it.

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And I ought to mention that it's action like this

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which is likely to cause some consternation

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in the hearts of those who are against

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price and wage controls in any form.

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They will begin to realize what it is that they are missing

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with the going out of office of President Nixon.

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Because this is one of the things

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which he did on very rare occasions.

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Whereas the new president on really the first occasion,

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there was so much economic news yesterday

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that I didn't have a chance

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to mention this third bit of news.

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But the new president, in the morning,

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as one of his first acts,

272
00:15:48.350 --> 00:15:50.970
did take the occasion to deplore

273
00:15:50.970 --> 00:15:54.820
what seemed to be a rather massive increase in prices

274
00:15:54.820 --> 00:15:56.450
by General Motors.

275
00:15:56.450 --> 00:15:59.730
I believe that averaged out to be nine and a half percent.

276
00:15:59.730 --> 00:16:01.137
Let's call it 10 percent.

277
00:16:01.137 --> 00:16:02.290
And when you realize

278
00:16:02.290 --> 00:16:04.990
that the average car and truck these days

279
00:16:04.990 --> 00:16:06.870
has to be thought of as costing in the neighborhood

280
00:16:06.870 --> 00:16:11.650
of $5,000, not $2,000, not $3,000, not even $4,000.

281
00:16:11.650 --> 00:16:16.000
That means an average increase in price of about $500.

282
00:16:16.000 --> 00:16:20.530
Now General Motors has by repute

283
00:16:20.530 --> 00:16:23.600
long been the low cost producer.

284
00:16:23.600 --> 00:16:27.040
And if ever there is to be moderation

285
00:16:27.040 --> 00:16:29.170
in administered pricing,

286
00:16:29.170 --> 00:16:31.890
it's always to be expected from General Motors.

287
00:16:31.890 --> 00:16:36.270
Chrysler is one of the more leveraged, higher cost producers

288
00:16:36.270 --> 00:16:37.820
and they always want General Motors

289
00:16:37.820 --> 00:16:40.800
to be as high as possible so that they, Chrysler,

290
00:16:40.800 --> 00:16:43.310
can be as high as possible.

291
00:16:43.310 --> 00:16:46.040
And General Motors often does not accommodate them.

292
00:16:46.040 --> 00:16:49.290
Well this time they are accommodating

293
00:16:49.290 --> 00:16:50.340
to the two and a tenth percent.

294
00:16:50.340 --> 00:16:53.370
But that may just indicate that for Ford and Chrysler

295
00:16:53.370 --> 00:16:58.230
a 10 percent, $500 per car, per truck increase

296
00:16:59.280 --> 00:17:02.360
may not seem adequate to compensate

297
00:17:02.360 --> 00:17:05.870
for the cost of their raw materials.

298
00:17:05.870 --> 00:17:08.530
Since I talked on these tapes last,

299
00:17:08.530 --> 00:17:12.030
we did get the bad news we expect to wholesale prices

300
00:17:12.030 --> 00:17:15.570
for July and that was a monthly increase

301
00:17:15.570 --> 00:17:16.680
of more than three percent.

302
00:17:16.680 --> 00:17:20.070
I think it worked out to 44 percent on an annual basis,

303
00:17:20.070 --> 00:17:23.420
which was reported to be the highest

304
00:17:23.420 --> 00:17:26.890
single monthly increase since 1946.

305
00:17:30.930 --> 00:17:34.590
In consequence, we find that many raw materials

306
00:17:34.590 --> 00:17:35.423
are going up.

307
00:17:36.580 --> 00:17:41.540
So far, oil, a very important raw material,

308
00:17:41.540 --> 00:17:45.210
has not joined in the latest upswing.

309
00:17:45.210 --> 00:17:48.720
And there had been some hope that an oversupply

310
00:17:48.720 --> 00:17:53.710
of oil provided by the cartel was going to make the cartels'

311
00:17:53.710 --> 00:17:58.710
administered, posted price structure non-operative

312
00:17:58.760 --> 00:18:02.630
and bring down somewhat the price of oil.

313
00:18:02.630 --> 00:18:05.820
But that aside, there has been a increase

314
00:18:05.820 --> 00:18:09.890
in the price of raw materials.

315
00:18:09.890 --> 00:18:14.540
Moreover, as you know, the catch up after April 30th

316
00:18:14.540 --> 00:18:19.540
by the industry once out of price controls,

317
00:18:19.740 --> 00:18:21.580
which some economists

318
00:18:21.580 --> 00:18:26.560
thought would be a rather short, live thing,

319
00:18:26.560 --> 00:18:30.990
turns out to be going full blast.

320
00:18:30.990 --> 00:18:34.670
And then of course finally, the cost-push inflation

321
00:18:34.670 --> 00:18:37.420
which had been pretty much an advance,

322
00:18:37.420 --> 00:18:41.480
at least submerged by other even larger factors

323
00:18:41.480 --> 00:18:45.763
in 1973 and back in 1972.

324
00:18:46.600 --> 00:18:51.220
That cost-push inflation is now very much on us

325
00:18:51.220 --> 00:18:53.370
and any prudent observer

326
00:18:53.370 --> 00:18:58.140
of the industrial collective bargaining scene

327
00:18:58.140 --> 00:19:03.140
must be expecting a continuation of this.

328
00:19:03.350 --> 00:19:07.620
Electricians have been getting

329
00:19:07.620 --> 00:19:10.430
and asking for large wage increases.

330
00:19:10.430 --> 00:19:15.430
Carpenters and the end is not yet in sight.

331
00:19:17.400 --> 00:19:21.680
Well, how are we to appraise

332
00:19:21.680 --> 00:19:24.290
the relative merits

333
00:19:24.290 --> 00:19:27.960
of what it is that different presidents inherited?

334
00:19:27.960 --> 00:19:29.930
I don't think that President Ford

335
00:19:29.930 --> 00:19:32.460
is one of the luckier presidents

336
00:19:32.460 --> 00:19:36.863
in what the state of the economy is, what he inherits.

337
00:19:40.070 --> 00:19:44.360
President Eisenhower in 1953

338
00:19:44.360 --> 00:19:46.560
inherited the nearest thing

339
00:19:46.560 --> 00:19:50.090
to a full employment with stable prices economy

340
00:19:50.090 --> 00:19:53.800
that we've seen in, I was gonna say

341
00:19:53.800 --> 00:19:55.470
in the post-World War II period.

342
00:19:55.470 --> 00:19:57.700
But I think I could almost make it

343
00:19:57.700 --> 00:20:00.910
in the period

344
00:20:00.910 --> 00:20:03.793
since 1929.

345
00:20:08.090 --> 00:20:10.410
If it however paradoxically

346
00:20:10.410 --> 00:20:14.020
was right in the last year

347
00:20:14.020 --> 00:20:17.120
of the Korean War that that was the case.

348
00:20:17.120 --> 00:20:21.200
And of course it contrasted with what went before it,

349
00:20:21.200 --> 00:20:25.433
the 1950 period at the outbreak of the Korean War.

350
00:20:27.720 --> 00:20:32.433
President Eisenhower, when he was re-elected in 1956,

351
00:20:33.450 --> 00:20:38.450
really had an economy that was poised to go into recession.

352
00:20:38.810 --> 00:20:43.810
And when I made a little calculation on election economics

353
00:20:44.230 --> 00:20:45.660
or election arithmetic,

354
00:20:45.660 --> 00:20:48.510
I found that in some ways the toughest thing

355
00:20:48.510 --> 00:20:52.810
is to be re-elected, either a Republican or a Democrat.

356
00:20:52.810 --> 00:20:56.960
Roosevelt in 1932 was lucky because the economy

357
00:20:56.960 --> 00:20:57.880
was so far down

358
00:20:57.880 --> 00:21:01.030
that it could hardly do anything but go up.

359
00:21:01.030 --> 00:21:06.030
In 1936, he was poised for the 1937 recession.

360
00:21:06.890 --> 00:21:11.786
Well, President Kennedy

361
00:21:11.786 --> 00:21:14.860
was fairly lucky in this sense

362
00:21:14.860 --> 00:21:18.010
in that he inherited an economy

363
00:21:18.010 --> 00:21:22.910
which was in recession at the time of the election

364
00:21:22.910 --> 00:21:27.280
and prior to inauguration in January.

365
00:21:27.280 --> 00:21:32.170
But in a sense, he inherited at the trough of business

366
00:21:32.170 --> 00:21:35.630
and so conditions looked to improve.

367
00:21:35.630 --> 00:21:37.710
President Johnson, who was catapulted

368
00:21:37.710 --> 00:21:42.640
into office accidentally, tragically in 1963,

369
00:21:43.500 --> 00:21:48.500
inherited an economy that was nicely approaching

370
00:21:49.030 --> 00:21:50.870
the high employment level.

371
00:21:50.870 --> 00:21:52.830
Of course, in a modern mixed economy

372
00:21:52.830 --> 00:21:56.750
that tends to be a dangerous level.

373
00:21:56.750 --> 00:22:01.610
Finally President Nixon inherited an inflation

374
00:22:01.610 --> 00:22:06.610
in being with a fairly strong demand poll elements,

375
00:22:06.640 --> 00:22:08.660
which was an inflation bequeathed to him

376
00:22:08.660 --> 00:22:09.890
by President Johnson

377
00:22:09.890 --> 00:22:13.640
and President Johnson's fiscal policies,

378
00:22:13.640 --> 00:22:18.640
particularly President Johnson's crucial error

379
00:22:18.670 --> 00:22:22.520
in not increasing taxes in 1965

380
00:22:22.520 --> 00:22:25.660
when he accelerated the Indochina War.

381
00:22:25.660 --> 00:22:30.020
Well what is it that President Ford has inherited?

382
00:22:30.020 --> 00:22:31.700
What has he inherited, stagflation.

383
00:22:31.700 --> 00:22:34.520
I think that's the toughest ailment

384
00:22:34.520 --> 00:22:37.500
for the medicine men

385
00:22:37.500 --> 00:22:41.660
to prescribe for in the modern mixed economy.

386
00:22:41.660 --> 00:22:46.660
The downward impetus of real growth is just behind us,

387
00:22:48.120 --> 00:22:53.120
and actually the economy will be doing very badly indeed

388
00:22:53.360 --> 00:22:56.340
if for the first four quarters

389
00:22:56.340 --> 00:23:00.950
of President Ford's term

390
00:23:00.950 --> 00:23:05.530
we do not show growth.

391
00:23:05.530 --> 00:23:07.870
But I think all the signs are

392
00:23:07.870 --> 00:23:11.330
that it will be at best anemic growth.

393
00:23:11.330 --> 00:23:16.260
By that I mean growth that averages for those four quarters

394
00:23:16.260 --> 00:23:20.230
in the neighborhood of zero to two percent,

395
00:23:20.230 --> 00:23:21.530
two and a half percent,

396
00:23:21.530 --> 00:23:25.550
definitely below the three to four percent

397
00:23:25.550 --> 00:23:28.250
that's needed in order to keep up

398
00:23:28.250 --> 00:23:30.070
with the growing labor force

399
00:23:30.070 --> 00:23:34.840
and with the increases in productivity.

400
00:23:34.840 --> 00:23:38.640
But as far as the inflation is concerned,

401
00:23:38.640 --> 00:23:41.300
the inflation is as bad

402
00:23:41.300 --> 00:23:45.210
in this third quarter right now apparently

403
00:23:45.210 --> 00:23:49.250
as it was at the worst of the first quarter of the year.

404
00:23:49.250 --> 00:23:52.110
We are in two digit inflation,

405
00:23:52.110 --> 00:23:55.330
low two digit inflation to be sure.

406
00:23:55.330 --> 00:23:57.640
But there are no great signs

407
00:23:57.640 --> 00:24:01.520
that the natural force of the system

408
00:24:01.520 --> 00:24:04.450
will act powerfully

409
00:24:04.450 --> 00:24:07.100
to bring low two digit inflation

410
00:24:07.100 --> 00:24:12.100
down to the five or six percent rate of price inflation,

411
00:24:12.580 --> 00:24:15.170
which just a little while ago,

412
00:24:15.170 --> 00:24:17.420
the majority of the economists,

413
00:24:17.420 --> 00:24:19.860
whether they were non-monetarists or monetarists,

414
00:24:19.860 --> 00:24:23.510
were thinking was in the ballpark for the turn of the year

415
00:24:23.510 --> 00:24:27.320
into 1975 or at least in 1975.

416
00:24:27.320 --> 00:24:30.410
I notice as I read the various forecasters

417
00:24:30.410 --> 00:24:34.390
that they've been trading down their rates of year growth

418
00:24:34.390 --> 00:24:39.280
and trading up their rates of inflation.

419
00:24:39.280 --> 00:24:44.030
Although they have not abandoned the hope

420
00:24:44.030 --> 00:24:49.030
that as we move into 1975, we will be in one digit inflation

421
00:24:49.350 --> 00:24:53.283
but alas, it would be high one digit inflation.

422
00:24:57.550 --> 00:25:00.660
It may seem that in my description

423
00:25:00.660 --> 00:25:05.080
of the non-sensational middle of the road

424
00:25:07.700 --> 00:25:11.940
instincts and utterances of the new president

425
00:25:11.940 --> 00:25:14.640
that I'm being critical.

426
00:25:14.640 --> 00:25:17.150
I don't intend to be an (audio muffled) here

427
00:25:17.150 --> 00:25:18.950
looking at a Calvin Coolidge

428
00:25:18.950 --> 00:25:23.290
and laughing derisively at him as

429
00:25:24.126 --> 00:25:26.520
(speaking in foreign language)

430
00:25:26.520 --> 00:25:31.230
Quite the contrary, it seems to me that this is a good time

431
00:25:31.230 --> 00:25:36.100
for moderation, for non-sensational

432
00:25:38.110 --> 00:25:40.710
ideas and procedures.

433
00:25:40.710 --> 00:25:45.710
This is a time to proceed very cautiously.

434
00:25:46.240 --> 00:25:50.140
And I think it's a time to proceed

435
00:25:50.140 --> 00:25:53.690
on a unifying theme.

436
00:25:53.690 --> 00:25:56.640
I was struck with the fact,

437
00:25:56.640 --> 00:25:59.200
and I'm sure that many of you have too,

438
00:25:59.200 --> 00:26:04.200
that we're seeing something in the way around the world

439
00:26:05.010 --> 00:26:10.010
of some counter-movements to fascist governments.

440
00:26:11.070 --> 00:26:14.340
We have seen, for example,

441
00:26:14.340 --> 00:26:17.470
or totalitarian governments of the left.

442
00:26:17.470 --> 00:26:22.470
We've seen the restoration of a measure

443
00:26:22.810 --> 00:26:26.310
of Constitutional democracy to Greece.

444
00:26:26.310 --> 00:26:30.110
You recall that one set of colonels took over,

445
00:26:30.110 --> 00:26:33.830
but they were replaced, not for long though,

446
00:26:33.830 --> 00:26:37.660
by another set of officers, generals.

447
00:26:37.660 --> 00:26:41.380
And this last set seems to have been so inept

448
00:26:41.380 --> 00:26:45.480
that they got themselves into a wrangle over oil with Turkey

449
00:26:45.480 --> 00:26:48.980
and then of all things, they got themselves

450
00:26:48.980 --> 00:26:52.990
into a real shooting situation

451
00:26:52.990 --> 00:26:55.630
with respect to Cyprus.

452
00:26:55.630 --> 00:26:59.070
This is a time when they had to realize that Turkey

453
00:26:59.070 --> 00:27:03.470
was a military force equal or superior to theirs.

454
00:27:03.470 --> 00:27:06.180
They also had to realize, or they soon learned,

455
00:27:06.180 --> 00:27:10.170
that the Greek civilian population

456
00:27:10.170 --> 00:27:12.260
is not very good cannon fodder

457
00:27:12.260 --> 00:27:13.740
in its present state of mind

458
00:27:13.740 --> 00:27:17.090
and to mobilize them and to fight an enemy.

459
00:27:17.090 --> 00:27:19.530
And think they'd be an efficient army

460
00:27:19.530 --> 00:27:22.923
is of course very dubious.

461
00:27:26.847 --> 00:27:30.017
The Greek pattern gives you the problem

462
00:27:31.480 --> 00:27:32.630
that I'm talking about.

463
00:27:33.950 --> 00:27:37.680
If having had a restoration of Constitutional democracy

464
00:27:37.680 --> 00:27:40.130
in a measure, and by the way, the generals are still there

465
00:27:40.130 --> 00:27:41.690
behind the scenes.

466
00:27:41.690 --> 00:27:45.400
You immediately have a society which becomes polarized.

467
00:27:45.400 --> 00:27:47.123
With let's say,

468
00:27:50.149 --> 00:27:51.820
I would mention their names.

469
00:27:51.820 --> 00:27:54.130
Let's suppose that the left won't cooperate

470
00:27:54.130 --> 00:27:58.700
with the right of center government now.

471
00:27:58.700 --> 00:28:03.430
Then what you can do is bring upon that situation in return

472
00:28:03.430 --> 00:28:04.880
as a fascist rule.

473
00:28:04.880 --> 00:28:07.080
The same problem with respect to Portugal.

474
00:28:07.080 --> 00:28:10.580
Portugal after many, many years finally has had

475
00:28:10.580 --> 00:28:15.580
a measure of freedom, a measure of freedom of the press.

476
00:28:15.720 --> 00:28:19.560
And a long overdue decision

477
00:28:19.560 --> 00:28:22.290
to let her colonies go.

478
00:28:22.290 --> 00:28:26.290
But if the different classes

479
00:28:26.290 --> 00:28:27.910
engage in the class struggle,

480
00:28:27.910 --> 00:28:30.600
each seeking to get a bigger share

481
00:28:30.600 --> 00:28:34.960
of a rather limited social pie.

482
00:28:34.960 --> 00:28:38.730
Then you invite the disorder, the lack of law and order,

483
00:28:38.730 --> 00:28:40.470
which the citizenry really want.

484
00:28:40.470 --> 00:28:42.690
I'm not talking about larceny,

485
00:28:42.690 --> 00:28:45.770
but I'm talking about the ability to go about

486
00:28:45.770 --> 00:28:48.790
doing the business of the gross national product

487
00:28:48.790 --> 00:28:52.530
and earning a rising standard of living.

488
00:28:52.530 --> 00:28:54.020
Then you throw all that away.

489
00:28:54.020 --> 00:28:55.970
But now the question I'm asking

490
00:28:55.970 --> 00:29:00.970
is can we have all over the world, in Canada under Trudeau,

491
00:29:01.300 --> 00:29:05.220
in the United States under President Ford,

492
00:29:05.220 --> 00:29:09.820
hopefully in Spain and Portugal and perhaps in Greece

493
00:29:09.820 --> 00:29:14.820
and with implications for Brazil and Chile and Peru

494
00:29:15.450 --> 00:29:20.450
and other countries where ordinary forms of democracy

495
00:29:20.900 --> 00:29:23.380
have at least temporarily been suspended.

496
00:29:23.380 --> 00:29:26.460
Can we begin to have some popular fronts

497
00:29:26.460 --> 00:29:29.690
around a middle position?

498
00:29:29.690 --> 00:29:32.600
Now that means give and take.

499
00:29:32.600 --> 00:29:34.150
It means a lot of give.

500
00:29:34.150 --> 00:29:36.160
It means that people on the right

501
00:29:36.160 --> 00:29:41.160
have to sacrifice some of their most cherished notions

502
00:29:41.460 --> 00:29:46.460
with respect to business freedoms, market autonomy.

503
00:29:47.230 --> 00:29:52.230
On the left it means that the unions,

504
00:29:52.380 --> 00:29:54.950
the organized groups

505
00:29:54.950 --> 00:29:59.950
cannot roundly disrupt the economy

506
00:30:00.030 --> 00:30:03.393
for the purpose of increasing their share.

507
00:30:04.510 --> 00:30:09.080
I must confess that I am not overly optimistic

508
00:30:09.080 --> 00:30:14.080
that there exists the rationality and the consensus

509
00:30:14.220 --> 00:30:18.610
and the cohesion in modern nations

510
00:30:18.610 --> 00:30:22.950
to make this pattern of democracy work.

511
00:30:22.950 --> 00:30:26.540
But if I could say a prayer for the world,

512
00:30:26.540 --> 00:30:30.010
it seems to me that my prayers would be directed

513
00:30:30.010 --> 00:30:32.990
towards increasing the probability

514
00:30:32.990 --> 00:30:35.440
of some such movements being successful.

515
00:30:35.440 --> 00:30:38.700
And that I think is the real importance

516
00:30:38.700 --> 00:30:41.890
of having President Ford in the White House.

517
00:30:41.890 --> 00:30:43.790
<v ->If you have any comments or questions</v>

518
00:30:43.790 --> 00:30:45.690
for Professor Samuelson, address them

519
00:30:45.690 --> 00:30:48.460
to Instructional Dynamics Incorporated.

520
00:30:48.460 --> 00:30:52.693
450 East Ohio Street Chicago, Illinois 60611.