pstau001078001.wav / Tape 78 - The future of the affluent state / Duke Digital Repository

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Welcome once again, as MIT professor,

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Paul Samuelson discusses the current economic scene.

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This bi-weekly series is produced

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by Instructional Dynamics Incorporated,

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and was recorded June 14th, 1971.

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Today I would like to lift my glance

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from the immediate business cycle situation,

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to take a longer look at

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where our American society is going.

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I was led to think about this subject

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by a request from a Swedish journal,

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asking if I would

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predict for Sweden what some of the trends and tendencies

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will be in the welfare state of Scandinavia

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in the decades to come.

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It was a strange request for me to receive,

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because I am not an expert on Scandinavia.

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Perhaps it was felt that my innocence and ignorance

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uniquely qualified me for the task.

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It's interesting, perhaps, for me to put down

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some of my thoughts about the future of the welfare state,

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because although the discussion originally was about Sweden,

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I decided the best way to make guesses about Sweden

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was to make guesses about what was

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going to happen in America.

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We have very similar societies,

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in some ways the United States is ahead of the Scandinavian

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society, and American patterns therefore,

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can be usefully used in order to make predictions

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about the Scandinavian society.

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As I mentioned on an early tape,

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the way that the automobile has penetrated

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modern Swedish life,

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could have been predicted, and was predicted,

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by people who used as their pattern

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what happened to the Ford, to the Chevrolet,

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and to American life in the decades of the 1920s

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and the 1930s.

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This just gave a lead time on what was going to happen

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in Sweden in the 1950s.

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In another way, the Swedes are ahead of us,

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as a welfare state,

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they reached that position before we did.

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Prior to 1929, America was a business civilization.

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"The business of America is business,"

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said Calvin Coolidge in those days,

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and I think that that was a correct representation

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of the national mood.

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Then along came the stock market crash,

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and what is much, much more important

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than anything that happened in the months

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of the autumn of 1929,

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along came the collapse of our banking system,

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along came the Great Depression.

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Sinclair Lewis could not have written the novel Babbitt,

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he could not have written the novel Main Street,

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whose principal character, after all,

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is Doctor Kennicott, a MD.

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If he had been writing after 1929,

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our self-image was drastically changed,

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and I think irreversibly changed.

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I think it's uncomfortable for a nation

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to remain in a state of identity crisis,

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in a state of nervous breakdown,

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and nature has a way of filling any vacuum,

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so that gradually, there was worked out a new self-image

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of the American people.

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This did not develop until after World War Two.

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It was extremely exhilarating to the American people,

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one must report,

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that we were so successful in World War Two,

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in a way that Doctor Spear,

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the economics are of the Hitler regime,

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would not have dared to hope for.

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We had more women in the labor force

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than the police state of Germany did.

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I was just talking to a young German professor of economics,

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his mother kept her maids all through

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the worst of World War Two for the defeated nation.

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Well, America, by and large,

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lost its domestic servants in the first years

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of war time prosperity, for the most part,

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never to get them again.

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We came out of the war top dog,

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we had even saved the Russians.

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Our Marshall Plan, this is the time of the year

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when we remind ourselves of commencement speeches,

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in 1947 George Marshall came to Harvard

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to pick up that degree,

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which he had been offered during the war itself,

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and which he, as a conscientious soldier,

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felt he could not accept while men were being killed abroad.

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He came to the Harvard yard,

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and there unleashed the Marshall Plan

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for the reconstruction of Europe.

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This succeeded beyond,

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I think it's fair to say,

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the wildest expectations of anyone.

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If somebody says to you,

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can you find a single instance of successful governmental

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planning subsidy intervention?

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You have only to mention the Marshall Plan,

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you have only to mention the MacArthur Occupation of Japan.

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One visits Japan and realizes that even after this

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long interval of time,

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the MacArthur Occupation days are remembered.

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Most of the reforms which were grafted

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onto the Japanese system are long since gone,

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but some of the fundamental reforms of

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land, tenancy, of taxation, the principle,

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not the degree of progression of the

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MacArthur Occupation authorities,

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those still are parts of Japanese life.

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And so, despite the stagnation of our own growth rate

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in the 1950s,

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Americans felt pretty good about their new mixed economy.

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Moreover, we were envied abroad.

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We have been an example to the Japanese.

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One has to say that the Japanese have been too much enamored

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by the American pattern.

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Something of the same thing can be said

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with respect to the German economy.

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The German people, having tired of state controls,

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went into a veritable orgy of tending their own gardens,

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sometimes, by the way, the Germans overshot,

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and in their own ideology went back to the pre-mixed economy

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of the 1920s.

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This new synthesis, then,

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perhaps reached its peak in Camelot.

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In the early 1960s,

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we even succeeded under President Kennedy

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in facing up to the Khrushchev threat of missiles in Cuba.

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And up to the time of the tragic assassination

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of John F. Kennedy in Dallas in 1963,

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and for at least part of the first term

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and part of the second term of President Johnson,

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until America became enmeshed in the Vietnam

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and Indochina War,

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we had what was called a new consensus,

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the Great Society, we were riding high.

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I come to my point now,

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this new consciousness has been undergoing

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a very searching reexamination,

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most notably, by our young people,

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by the people in the universities.

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The civil rights movement must be given some of the credit,

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or if you look with disapproval upon everything

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that's been happening, must be given something of the blame

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for this development.

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Already back in the 1950s,

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before Supreme Court decisions

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and after Supreme Court decisions,

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we became alerted to the fact that we were a divided house.

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We were a divided house between black and white

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in a way that,

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once the point was elevated to our consciousness,

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our consciences could not tolerate and agree with.

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It was absolutely standard,

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and how little we noticed it,

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that a person with black skin

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had to move to the back of a bus

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in large parts of this country.

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It was absolutely standard in the armed services

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that a black person would be assigned to the Navy Mess.

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If you take the White House Mess in Washington itself,

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and if you look at the personnel

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in the armed services assigned to that duty,

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you saw, unmistakably, the signs of a cast society.

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So, underneath the veneer of our system,

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there were cracks, cracks which were not important

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from the standpoint of the dynamics and development

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of the system, so long as they remained underneath

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and were not recognized.

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But once they came to the surface,

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they became important for the dynamic development

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of our society.

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In order to change the civil rights picture,

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methods had to be used,

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which turned out to be imitate-able

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in connection with quite different matters.

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The events in Berkeley

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in the early days of the Berkeley Movement,

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had nothing to do, in my judgment,

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with the problems of the underprivileged,

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blacks, in the South.

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But once white students were no longer welcome

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as part of the movement for civil rights in the South,

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you had active people looking, so to speak,

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for a new cause, and also,

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newly cognizant of methods

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for expression of opinion or agitation.

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And so, the movement against the Vietnam War,

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which became such an important part of American life

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in the final years of the Johnson administration,

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the methods used, the sit-ins, the picketing,

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the non-violent and violent expressions of opinion,

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these were borrowed from the civil rights movement.

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And the borrowings, of course,

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were done in a creative way

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with lots of improvements

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and further perfections of methods.

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This is not something, however, which will go away,

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in my judgment, as soon as the Vietnam War is over,

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as soon as the spoiled college population no longer

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has the specter of the draft to haunt them.

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It would not meet the fundamental problem, I believe,

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merely to have a voluntary army

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and continue the Vietnam War.

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Or, merely to have a volunteer army and discontinue

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the Vietnam War.

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Or, merely to have a volunteer army

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and scale down greatly the share of the

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gross national product,

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which goes into Cold War security expenditures,

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defense expenditures, offense expenditures.

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Because coinciding with the civil rights movement,

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coinciding with the West Coast Berkeley

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anti-Vietnam movement, has come youth culture.

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Everything which any of my listeners will associate

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with the word marijuana, with hippiness,

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with the counter-culture.

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These are what I have in mind,

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but instead of these things being the property

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of a small, spoiled group of the children of affluence,

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in Greenwich Village in New York,

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possibly in the Berkeley underground,

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possibly in Madison, Wisconsin underground,

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possibly not far from where I'm speaking,

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Harvard Square, Cambridge fun city,

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this is a movement which is now very pervasive

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throughout American life.

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And it is characterized by a new rejection

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of that new second synthesis, which I mentioned,

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namely the post-Franklin Delano Roosevelt

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mixed economy synthesis.

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We see it most acutely at our elite universities.

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Yale, I offer to you as an outstanding example.

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How many of the graduates of Yale

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of the class of 1971 will go into business?

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How many of the graduates of the class of 1951 from Yale

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went into business?

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How many of the graduates at our elite universities,

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who are not going into law school,

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and who are not going into medical school,

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will go to any graduate school at all?

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How many of them, rather than donning a gray flannel suit,

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a neck tie, prefer, and will prefer to live in Levis,

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to drive taxi cabs, to become plumbers,

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revert to a life of work with their hands?

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In the largest number, of course,

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this cannot be expected to happen in our society.

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But what's very significant,

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is to see what the changes in numbers are.

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Three years ago, if you had gone into a working-class

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district, a lower-income district of a suburb of Boston,

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you would have seen a length of hairstyle

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very different from that

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in the affluent districts around Boston.

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That is not true today.

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The children of the working classes have long hair.

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If you go into the Gary steel mills,

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if you go into the River Rouge Ford mills,

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you will find the returning veterans

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have brought their pot,

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in many cases harder drugs than that, into the factory.

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It is said now in Detroit,

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try to avoid a Monday car or a Friday car,

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because the degree of absenteeism

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and the degree of discipline on the job on those days

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is of a different order of magnitude

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from that on the other days of the week.

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Of course the answer one must give is,

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well, how does one avoid that?

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We just get a car by punch card order.

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Something very deep is happening in American life,

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it is not peculiar to American life,

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but, in my judgment, it is somewhat related to affluence.

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I would like to call your attention to a book,

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it is a best seller,

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it is called The Greening of America, Charles A. Reich.

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Notably, it's interesting how often Yale appears

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in these matters, I say this in some admiration,

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not in condemnation.

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Professor Reich, R-E-I-C-H,

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is a professor at the Yale Law School,

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his book is a best seller,

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it has been a best seller in hard cover,

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it is a best seller now in paperback.

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Let me say very succinctly, it is a silly book.

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It is full of assertions

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for which evidence is not given.

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It is full of assertions which are self-contradictory.

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Nevertheless, I believe that in the vulgar popularizations

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of ideology, you pragmatically encounter the importance

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of ideology, and you cannot laugh off the fact

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that it is a best seller.

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It is a mixture of Galbraith, of Herbert Marcuse,

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of zen, I could even say that in the mixture

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there is something of Professor Frank Knight,

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or Hayek, or Professor Milton Freedman.

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If you actually go through the credits,

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you will see that The Road to Serfdom

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is one of the books there nestled right in with

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Marcuse, right in with Malcolm X, is The Road to Serfdom.

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Despite its silliness,

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and not putting things the author's way,

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the diagnosis which I have just given,

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and which I had constructed prior to even reading the book,

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of the pre-1929 synthesis, the nervous breakdown,

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the new mixed economy synthesis,

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the present identity crisis,

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all of that is mirrored almost precisely,

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by consciousness one, consciousness two,

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consciousness three of Reich.

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You may say, and I will agree,

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how could the book help but be a best seller?

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It is flattering to its readers.

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What it says in effect is,

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you kid, there in the junior common room,

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smoking your pot, you are the salt of the earth.

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You are right to be reading astrology,

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to be interested in organic food culture,

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to be interested in zen.

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You are right to be organic, to be non-rational.

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Throw away your calculus book,

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throw away your symbolic logic,

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throw away your econometrics,

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and light up, and feel.

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Now, my time is up,

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let me simply say that there are some extremely interesting

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implications of this for Ralph Nader's movement,

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there are some extremely interesting implications of this

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for the behavior of the corporation in the decades ahead.

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One of the most important things

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that that junior executive who's being groomed to

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become the Executive Vice President eight years from now,

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and to become the President 15 years from now,

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and the Chairman of the Board 20 years from now,

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that he could do, is to steep himself in,

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if you wanna put it this way,

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what the opposition is like,

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what the opposition is cooking up,

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because I think that the ideology,

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the consciousness reflected here

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runs very deep in the mainstream of modern American life.

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If you have any comments or questions

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for Professor Samuelson,

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address them to Instructional Dynamics Incorporated,

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166 East Superior Street, Chicago, Illinois, 60611.

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