Tape 198 - International economic picture-Britain, Switzerland, Italy, Japan; U.S. and expenditures for poor nations
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| - | Hello. | 0:01 |
| This is David Francis, | 0:02 | |
| Financial Editor of the Christian Science Monitor. | 0:04 | |
| I'd like you to welcome you once more | 0:06 | |
| on behalf of Instructional Dynamics Incorporated | 0:08 | |
| to a visit with MIT's Nobel Prize-winning economist, | 0:10 | |
| Paul Samuelson. | 0:14 | |
| We are recording this chat in mid-May. | 0:16 | |
| During our last visit, Dr. Samuelson, | 0:19 | |
| we examined the domestic economy. | 0:22 | |
| I thought today we might look at the international scene | 0:24 | |
| where there's been considerable excitement lately. | 0:27 | |
| Has the world entered another | 0:31 | |
| international financial crisis? | 0:33 | |
| - | No, I don't think so. | 0:36 |
| It is reassuring for an American | 0:37 | |
| who sometimes is troubled about | 0:39 | |
| what's going on around him in his own country | 0:42 | |
| to look abroad and to realize that | 0:44 | |
| it's the human condition to have trouble, | 0:47 | |
| but I don't think that we're now | 0:50 | |
| in the midst of a new crisis, | 0:54 | |
| a Great Depression. | 0:57 | |
| We have instability, but it's the kind of instability | 0:58 | |
| that we've become accustomed to. | 1:01 | |
| What you do see when you look abroad | 1:05 | |
| is a tremendous variety of different degrees of inflation. | 1:07 | |
| It makes you thankful that we now live in | 1:13 | |
| a regime of voting and flexible exchange rates. | 1:17 | |
| If you just look at the list put out by the OECD | 1:21 | |
| for the 12-month period ending this spring, | 1:25 | |
| you find that a country like Iceland, | 1:30 | |
| perhaps because of her fish and other problems, | 1:34 | |
| has had a 36% annual rate of inflation. | 1:37 | |
| I guess Iceland wins the booby prize in this competition. | 1:41 | |
| On the other hand, if you look at Germany, | 1:47 | |
| that's Western Germany, they've had only 5.5%, | 1:50 | |
| and we're very nearly as good as Western Germany | 1:54 | |
| with our 6%. | 1:57 | |
| But of course, it's the countries with | 2:00 | |
| larger than average world inflation. | 2:02 | |
| Well, by the way, Switzerland, I guess, | 2:05 | |
| I'd like to make some comments | 2:07 | |
| on the Swiss situation in a moment. | 2:09 | |
| Switzerland actually wins the absolute prize, | 2:11 | |
| 2.5% price inflation. | 2:15 | |
| But, let's do think that all this happiness | 2:17 | |
| in the land of yodeling actually, | 2:20 | |
| Switzerland was one of the hardest hit by the recession. | 2:24 | |
| - | Oh. | 2:28 |
| - | She had a 7.5% drop | |
| in her GNP. | 2:31 | |
| The trouble with Switzerland is, of course, her glory. | 2:33 | |
| She's a haven for hot money, for cool money, | 2:36 | |
| for scared money, | 2:40 | |
| and her banks have been doubling their deposits, | 2:43 | |
| where it's used to continue to double their deposits, | 2:47 | |
| they've been doubling them in three years recently. | 2:50 | |
| It shows that there still is a lot of money, | 2:54 | |
| which is frightened, and it's coming in to Switzerland. | 2:56 | |
| Well now, why wouldn't it be a blessing to a country | 3:00 | |
| to have all that cash flowing in? | 3:03 | |
| We always feel so sorry for countries | 3:06 | |
| that are having a run of the currency against them. | 3:07 | |
| Well, the trouble is, if it tends chronically to appreciate, | 3:10 | |
| the Swiss franc. | 3:16 | |
| And so, whereas, you used to get four and a half, | 3:18 | |
| four and a third Swiss francs to a dollar, | 3:25 | |
| it's now, or more like, two and a half. | 3:27 | |
| That makes it very tough for the Swiss watch industry, | 3:30 | |
| which is already in trouble with the crystal quartz | 3:33 | |
| and the various electronic competition | 3:40 | |
| from Japan and elsewhere to compete. | 3:43 | |
| So, except for the fact that Switzerland | 3:45 | |
| has a safety valve in the form of guest workers | 3:49 | |
| who can stop coming in, Italians and others, | 3:55 | |
| it is really | 4:00 | |
| for a Swiss suffering, we often think, | 4:04 | |
| I often think of Switzerland and Sweden as really, | 4:07 | |
| knocking on the door with respect to | 4:10 | |
| the American standard of living. | 4:12 | |
| But I've just seen some interesting figures | 4:13 | |
| that a typical American worker | 4:16 | |
| has to work three or four years to buy a house, | 4:18 | |
| house that he could live in. | 4:21 | |
| Well, a Swiss worker has to work 10 or a dozen years | 4:23 | |
| to buy a house that he can live in. | 4:27 | |
| It's all those foreigners who are bidding up the prices | 4:30 | |
| of property. | 4:32 | |
| So, it's no, | 4:35 | |
| it's no bed of roses. | 4:37 | |
| - | I understand that the Swiss | 4:39 |
| have seen a lot of their foreign workers depart, | 4:41 | |
| which has appeased a severe political problem | 4:44 | |
| in Switzerland. | 4:46 | |
| - | Yes, because as one perhaps could have expected | 4:47 |
| in a country that is so self-contained, | 4:51 | |
| they did grow up kind of a George Wallace, xenophobic, | 4:55 | |
| again, the foreigner, movement, political movement | 5:00 | |
| in Switzerland. | 5:03 | |
| It was voted down but the fact that there was a serious vote | 5:04 | |
| shows that it's very nice | 5:08 | |
| to have the foreign workers to do the dirty work. | 5:12 | |
| It's been said that a Swiss citizen | 5:15 | |
| is like a citizen of Athens. | 5:18 | |
| It's great for those who are on top of the heap in Athens. | 5:20 | |
| You just discuss literature, write it, | 5:24 | |
| look at statues and make them, | 5:25 | |
| but all this is the visible peak of an iceberg | 5:29 | |
| built on slavery. | 5:31 | |
| Well, the Swiss don't have slaves, | 5:33 | |
| but they do have relatively unskilled, inexpensive workers. | 5:34 | |
| So no Swiss does dirty work. | 5:40 | |
| If you look at the stock market, | 5:42 | |
| the quotations of all the different countries, | 5:47 | |
| and if you look at it as I will do, | 5:49 | |
| from the standpoint of an American, | 5:53 | |
| you want to convert the gains | 5:54 | |
| since the beginning of the year into dollars. | 5:58 | |
| That is, you wanna correct for | 6:01 | |
| any depreciation or appreciation of the exchange rate. | 6:03 | |
| And there, it's Hong Kong, the Hong Kong stock market, | 6:06 | |
| which leads the list. | 6:09 | |
| That's gone up through early May by 36%. | 6:12 | |
| Still, it's interesting to see that the Dow Jones averages | 6:17 | |
| come second in the list. | 6:20 | |
| And Canada, our neighbor in North America, | 6:22 | |
| the Dow Jones was 17% up at that time, | 6:24 | |
| perhaps a little more right now, | 6:29 | |
| and Canada's had a 15% increase. | 6:31 | |
| Interesting that Japan has had a 9.5% increase, | 6:35 | |
| and then you come to Switzerland, with its 8 2/3% increase. | 6:40 | |
| Now, it doesn't mean that | 6:47 | |
| Swiss stocks have risen 8 2/3%, | 6:49 | |
| but they've got a little lift from the exchange rate. | 6:51 | |
| - | Oh, yes. | 6:55 |
| - | An appreciation | |
| of the Swiss, | 6:57 | |
| that same appreciation which is such a load on their, | 6:58 | |
| on the competitiveness of their industries. | 7:02 | |
| The bottom of the list, of course, perhaps no surprise, | 7:06 | |
| is the Italian stock market, which has dropped 30%. | 7:10 | |
| But the UK has shown a 5% increase, | 7:16 | |
| and we have to remind ourselves that last year, | 7:21 | |
| which was a year of trouble and turmoil for the UK, | 7:23 | |
| it was the UK and Hong Kong | 7:26 | |
| which had the largest percentage increase in stocks | 7:29 | |
| even when you convert it back into dollars. | 7:33 | |
| - | Now that, that must be-- | 7:35 |
| - | It was almost 100%, | |
| if I remember it. | 7:37 | |
| - | That must be remarkable, | |
| because the pound has slipped so dramatically | 7:38 | |
| in the last month or two. | 7:40 | |
| - | Well, well I said last year. | 7:42 |
| - | Oh, oh. | 7:44 |
| - | I'm talking-- | |
| - | I'm sorry. | 7:46 |
| - | Before the plug was, | |
| (David laughs) | 7:47 | |
| the plug was pulled. | ||
| But also, the fact that the averages in London | 7:49 | |
| could rise so much in a miserable year like 1975 | 7:54 | |
| tells you how far those averages have fallen | 7:58 | |
| prior to that term. | 8:02 | |
| - | Could we turn to the British situation? | 8:05 |
| - | Yes. | 8:06 |
| - | Do you think Great Britain has a good chance now | 8:07 |
| of lifting itself out of its economic backslide? | 8:11 | |
| - | Well, first, they have a new prime minister. | 8:14 |
| That gives the government a little bit of | 8:17 | |
| bidding space time. | 8:21 | |
| He has succeeded in, | 8:23 | |
| in getting an agreement, | 8:28 | |
| and I must say that I thought that the 4.5% agreement | 8:29 | |
| he got-- | 8:34 | |
| - | You're talking about | |
| the wage agreement. | 8:35 | |
| - | The wage agreement | |
| was a pretty good one, and really, way better | 8:36 | |
| than the 3% agreement which was sought | 8:39 | |
| because you have to use a rule of reason here. | 8:41 | |
| And to get a agreement that's so low | 8:45 | |
| that you can't believe in it, and it can't be maintained, | 8:48 | |
| would that not be a good thing? | 8:53 | |
| 4.5% wage increase is just barely believable | 8:54 | |
| that it might work. | 9:00 | |
| And of course, that already involves a drop in real income | 9:03 | |
| because let's see what's been happening to British prices. | 9:08 | |
| Well, they've been growing at 20% a year. | 9:13 | |
| - | Yeah, I think more recently, | 9:16 |
| they've been growing between 8% and 9%, | 9:17 | |
| but still, that's only half. | 9:19 | |
| - | Yeah. | |
| So, we're talking then about a cut. | 9:19 | |
| I spoke to a journalist, | 9:22 | |
| financial journalist | 9:27 | |
| from one of the large London newspapers, | 9:28 | |
| and he predicted that the agreement would come through, | 9:32 | |
| about the way it seems to have come through, | 9:35 | |
| and he says it's 4.5%, but of course, it will be six. | 9:36 | |
| I mean, in other words-- | 9:40 | |
| - | Okay. | |
| - | They're, after the fact, you will find some slippage, | 9:41 |
| and no doubt, as in the case of the US, | 9:45 | |
| we find, for example, even for example, New York, | 9:51 | |
| that a promised productivity increase | 9:54 | |
| is used as an excuse to break the formula | 9:58 | |
| for the transport workers to avoid a strike | 10:01 | |
| or something like that. | 10:03 | |
| Well, the formula's broken, | 10:04 | |
| but when you get that promised productivity increased, | 10:05 | |
| that's, of course, in the lapse of providence. | 10:08 | |
| So, that the, | 10:13 | |
| the pound is certainly fallen. | 10:15 | |
| It went through $2 without looking back, | 10:19 | |
| which, we have to remind ourselves | 10:25 | |
| that it was not very long ago | 10:26 | |
| that the pound was $2.40. | 10:28 | |
| - | Yeah. | |
| - | And held between $2.30 and $2.40 for a long, long time. | 10:30 |
| Well, from $2.20 to $2.05, it seemed to hold there, | 10:34 | |
| and then suddenly, at $2.05, | 10:40 | |
| it's almost as if on a certain day, | 10:41 | |
| the Bank of England just gave up defending the indefensible. | 10:44 | |
| Having, I believe, spent the equivalent of | 10:50 | |
| several billions of pounds, that would be, say, | 10:54 | |
| 5 billions of dollars of international reserves | 10:59 | |
| in keeping the pound up just for another fortnight. | 11:02 | |
| That's what governments tend, it seems, so often to do. | 11:05 | |
| Well, now, the pound is down around $1.85. | 11:10 | |
| The forward pound, December, you might get for a $1.76 | 11:15 | |
| or something like that. | 11:20 | |
| - | Yeah. | |
| - | I find myself reading over British books again, | 11:22 |
| and this will certainly tend, | 11:26 | |
| unless it's frittered away with new wage increases, | 11:31 | |
| and mark-up of prices, | 11:36 | |
| it will tend to make the British exports more competitive. | 11:39 | |
| But, of course, by the same token that | 11:43 | |
| it is reducing their export price, | 11:47 | |
| it robs their import prices. | 11:50 | |
| It makes it very uncomfortable for people in Britain. | 11:51 | |
| No depreciation helps if every time you depreciate | 11:54 | |
| and start to get the medicine of, in collaboration going, | 11:57 | |
| you frustrate that medicine by having domestic prices rise | 12:03 | |
| by exactly the amount of the depreciation. | 12:08 | |
| In that case, you're at a one-way street, | 12:10 | |
| sort of one-way street that we've become so familiar with, | 12:12 | |
| in the case of many of the Latin American countries | 12:15 | |
| with their chronic inflation rates, 20, 30, | 12:18 | |
| even more percent per year. | 12:21 | |
| But now, why do I say that we're not in a national crisis? | 12:23 | |
| Well, the volume of the international trade | 12:27 | |
| seems to be holding up. | 12:32 | |
| It's true, if you see American stock market reports, | 12:33 | |
| company earnings, that there beginning to be a number of | 12:39 | |
| alibis about exchange depreciation losses. | 12:43 | |
| These were uncovered positions, | 12:46 | |
| but we have, for the banks, | 12:50 | |
| I would say more through the large banks | 12:53 | |
| than through the mercantile market in Chicago. | 12:55 | |
| The possibilities of hedging at a price, | 13:01 | |
| there is always some friendly speculator | 13:04 | |
| who is ready to share the risk with you. | 13:06 | |
| And so, I noticed as I look at these price figures, | 13:09 | |
| bad as they are, they are showing an improvement. | 13:13 | |
| Let's take Iceland for example. | 13:18 | |
| 36%, isn't that awful? | 13:19 | |
| But it was 49% in 1975. | 13:22 | |
| And if you take the United Kingdom, | 13:27 | |
| it, as you just mentioned, has come down. | 13:30 | |
| Now, another thing, you've probably noticed, | 13:35 | |
| I guess that you've reported about it yourself, | 13:39 | |
| that the Wall Street Journal, and the Journal of Commerce, | 13:42 | |
| had the pieces showing that | 13:44 | |
| the business expansions abroad which came after us, | 13:46 | |
| and which seemed to be just a bit on the anemic side | 13:51 | |
| in comparison with our own and with their hopes, | 13:53 | |
| that's now being quickened. | 13:57 | |
| They're beginning to get the stock building, | 13:59 | |
| inventory accumulation, | 14:01 | |
| and I think we can give ourselves a small pat on the back. | 14:02 | |
| Our expansion early, which has provided a good market. | 14:09 | |
| Perhaps you've noticed how the Japanese exports this year | 14:13 | |
| to the United States have leaped upward | 14:15 | |
| in comparison with a year ago. | 14:18 | |
| We have been a good neighbor. | 14:19 | |
| We have done our international duty. | 14:22 | |
| We've done perhaps even more, | 14:24 | |
| a bit more than our international duty, | 14:25 | |
| by virtue of doing our domestic duty, | 14:28 | |
| which is to end the recession. | 14:31 | |
| And so, our moral by recession | 14:33 | |
| of the last 13 months or so has meant good markets abroad. | 14:36 | |
| It's also meant, | 14:41 | |
| what most of the international trade experts had predicted | 14:42 | |
| at meetings I've attended in Washington, | 14:46 | |
| that our extremely favorable balance of trade, | 14:48 | |
| our excess of merchandise exports over imports, | 14:52 | |
| was not gonna last, | 14:56 | |
| and we've now begun to move into negative figures. | 14:58 | |
| We still have a comfortable, positive, current surplus | 15:00 | |
| counting in invisibles, | 15:05 | |
| counting in our earnings from abroad. | 15:07 | |
| But the trade balance has gone negative, | 15:10 | |
| and how much further negative it will go, | 15:13 | |
| I think will depend, on among other things, | 15:18 | |
| on how good the planting season is. | 15:20 | |
| It looks good at the moment. | 15:25 | |
| How good our crops are. | 15:26 | |
| And also, perhaps, how bad some of the crops may be abroad. | 15:28 | |
| What's the use of having a surplus | 15:36 | |
| if it isn't there to be used? | 15:37 | |
| And so it's been nice to have a little buffer, | 15:40 | |
| which has permitted us to go ahead on our expansion | 15:43 | |
| without a great preoccupation with, | 15:47 | |
| what did we do to our international position? | 15:51 | |
| This too is attributed to the fact that | 15:54 | |
| unlike the pre-1971 period, | 15:57 | |
| when we were always looking over our shoulder | 16:01 | |
| and beyond our shores | 16:03 | |
| because we were defending an over-valued dollar. | 16:04 | |
| We now know that even if our balance of payments | 16:07 | |
| turned rather bad because our recovery | 16:10 | |
| was going so much better than the rest. | 16:15 | |
| And then, what's a dollar, a floating dollar for | 16:17 | |
| if it isn't there for the purpose of | 16:20 | |
| being capable of being floating downward, | 16:23 | |
| just as it has been floating upward vis a vis, | 16:25 | |
| the, particularly, the British, | 16:29 | |
| but also the Italians? | 16:33 | |
| - | Yeah. | 16:36 |
| Let's turn to that problem child, Italy. | 16:37 | |
| What do you see is the main difficulty there? | 16:40 | |
| - | Well, Italy has the second potential, | 16:44 |
| third potential, | 16:52 | |
| of all the OECD countries for growth. | 16:53 | |
| She's at that stage of development | 16:56 | |
| where growth ought to be easy. | 17:00 | |
| Northern Italy is extremely industrialized. | 17:03 | |
| It's shown tremendous progress. | 17:07 | |
| Southern Italy is still very poor, | 17:11 | |
| but at the level of real per capita income | 17:13 | |
| where Italy now finds herself, | 17:17 | |
| she should be with France | 17:19 | |
| or perhaps, just a bit behind France, | 17:22 | |
| and both of them not with as good prospects as Japan. | 17:24 | |
| They should, according to the experts, over the next decade, | 17:29 | |
| have the greatest capacity for growth. | 17:32 | |
| As I remember, at the beginning of this decade of the 1970s, | 17:34 | |
| the OECD in Paris made the estimate | 17:38 | |
| that the Italian real GNP would grow by no less than 72% | 17:42 | |
| in the decade of the 1970s. | 17:51 | |
| That's real terms. | 17:53 | |
| - | Oh, yes. | |
| - | That's not per capita. | 17:54 |
| But that's better than the US | 17:56 | |
| and better than the estimate for Germany. | 17:58 | |
| But, what's happened is the political instability | 18:01 | |
| within the system. | 18:06 | |
| I think a lot of that money | 18:07 | |
| that's going into those Swiss banks | 18:08 | |
| has been frightened Italian money. | 18:10 | |
| And of course, that's shown itself | 18:13 | |
| in the drop in the stock market. | 18:14 | |
| It's shown itself also in the depreciation of the lira. | 18:17 | |
| Undoubtedly, although I don't hang out my shingle | 18:24 | |
| as an expert in politics, | 18:27 | |
| I can't really talk about political economy | 18:29 | |
| without bringing in politics. | 18:32 | |
| The fact that the Italian Communist Party | 18:34 | |
| is knocking at the door | 18:38 | |
| for at least coalition | 18:40 | |
| entrance into a new government, | 18:44 | |
| that has frightened lots of people. | 18:48 | |
| I dare say it's frightened a lot of people, | 18:50 | |
| lots of people in Washington, who think of our NATO alliance | 18:51 | |
| and don't especially like the files | 18:55 | |
| which we share with our NATO allies becoming open | 19:00 | |
| to the eyes of members of the Italian cabinet | 19:07 | |
| who are members of the Communist Party. | 19:12 | |
| Our secretary of state, who pronounces, | 19:17 | |
| if not the American position on every subject, | 19:21 | |
| his own position on most subjects | 19:23 | |
| has revived the domino theory. | 19:26 | |
| And it has more or less warned the Italians | 19:32 | |
| against playing footy footy with the Communists. | 19:38 | |
| I noticed that the Pope, much in sorrow, | 19:42 | |
| had chastised and reproached | 19:47 | |
| certain Catholics | 19:51 | |
| formerly connected with the Vatican | 19:56 | |
| who have been siding with the position that | 19:58 | |
| the Communists could be become a part of the government. | 20:02 | |
| Well now, the Italian Party, it has to be said, | 20:05 | |
| the Italian Communist Party, | 20:10 | |
| is an extremely independent communist party | 20:12 | |
| as communist parties go, | 20:15 | |
| unlike the Portuguese Communist Party, | 20:17 | |
| which has been a very faithful follower of the Moscow line. | 20:20 | |
| The Italian party has not hesitated to criticize Moscow, | 20:28 | |
| somewhat to the displeasure, no doubt, of the Soviet Union. | 20:32 | |
| But still, there's always the nagging doubt | 20:39 | |
| while a communist party is not in power, | 20:42 | |
| it is willing to behave not like a totalitarian party, | 20:47 | |
| but just like a party of protest, a party of the left. | 20:54 | |
| I recall that at the last international gathering | 21:00 | |
| of the Poles in this party conference in the Soviet Union, | 21:06 | |
| the third member of the French Communist Party | 21:11 | |
| said that the French Communist Party takes very seriously | 21:15 | |
| the respecting of the rights of other parties | 21:20 | |
| up to the moment we take over. | 21:25 | |
| - | Yes. | 21:26 |
| - | That was a frank statement. | 21:27 |
| Well, many people are saying you can't, | 21:31 | |
| you can't have stability and peace economically in Italy | 21:35 | |
| without the Communists getting in, | 21:40 | |
| so you'd better let them in. | 21:43 | |
| Besides, they're not all that bad | 21:46 | |
| because they're not Stalinists kinds of Communist. | 21:47 | |
| Well, I've talked to | 21:53 | |
| Italian intellectuals who are not themselves communist, | 21:59 | |
| and their opinions often are | 22:01 | |
| that this is an unusual communist party | 22:06 | |
| and that's it been rather reliable in its, | 22:10 | |
| in its deeds and in its statements, | 22:17 | |
| at least in the recent past. | 22:19 | |
| But I don't profess to having informed opinion | 22:23 | |
| whether a coalition government | 22:26 | |
| is a necessary, strategic price, | 22:30 | |
| or industrial recovery in Italy. | 22:33 | |
| And in any case, whatever what might be | 22:38 | |
| my recognition of the legitimacy of that situation, | 22:42 | |
| certainly, an awful lot of frightened capitalists | 22:48 | |
| have been trying to evade exchange controls. | 22:51 | |
| - | I see where the Swiss were forced to put exchange controls | 22:56 |
| on their side of the border to prevent Italian. | 23:00 | |
| - | Well, what is the rule? | 23:02 |
| You can't bring in more than $8,000 | 23:03 | |
| in cash in any one period? | 23:05 | |
| - | Yeah, yeah. | |
| - | That's in dirty currency. | 23:09 |
| Why do I say dirty currency? | 23:10 | |
| But, since the news item points out that you can buy check. | 23:13 | |
| But I'll, tell you a story. | 23:18 | |
| This is a story which happens to be as a true as | 23:20 | |
| a story told at a second and not third-hand can be, | 23:24 | |
| and it's not a story about Italy. | 23:28 | |
| It's a story about England. | 23:30 | |
| It's a story about a South African | 23:32 | |
| who's been living in England for many years, | 23:36 | |
| and who has a good deal of wealth, | 23:38 | |
| which he would like to get out of England. | 23:41 | |
| And he learned somehow that the manager of his branch | 23:44 | |
| of one of the large banks in England, | 23:52 | |
| one of the large big four, could help him in his regard. | 23:56 | |
| And he approached the manager and asked whether he could | 24:00 | |
| actually transfer to a Swiss bank account 35,000 pounds. | 24:05 | |
| That's at the time we're talking about, | 24:12 | |
| $80,000 to $90,000, perhaps. | 24:15 | |
| And the bank manager said, | 24:19 | |
| "Yes, if you bring it to me ten days from now, | 24:21 | |
| "then I will arrange to have it | 24:26 | |
| "transferred to your account." | 24:29 | |
| He brought the money. | 24:33 | |
| - | In cash? | 24:34 |
| - | In cash. | 24:35 |
| And his nerve failed him at the last moment. | 24:37 | |
| And he said to the bank manager, | 24:40 | |
| "Can you give me some kind of receipt?" | 24:45 | |
| And the man said, "Of course not." | 24:48 | |
| So then, it was up to him what to do, | 24:51 | |
| and he decided to go through with it. | 24:54 | |
| And he said he spent a most uncomfortable week, | 24:59 | |
| but a week later, | 25:04 | |
| he received a notice that it had duly arrived. | 25:05 | |
| Now, the point of my story is that | 25:08 | |
| it is now said that in England, | 25:11 | |
| gentlemen are beginning to cheat. | 25:14 | |
| - | Oh yeah. | 25:16 |
| - | And that there always | |
| have been spivs and people outside the pale. | 25:18 | |
| You know, a gentleman in England is quite a different thing. | 25:23 | |
| He can overdraw his bank account, | 25:27 | |
| pay a very small rate of interest, | 25:30 | |
| whereas the rest of the people pay a high rate of interest. | 25:31 | |
| He has a voluntary declaration of what his tax obligation is | 25:33 | |
| as against spivs who are checked up on. | 25:37 | |
| Oh well, we come a long way. | 25:39 | |
| A lot of things are floating these days. | 25:42 | |
| (David chuckles) | 25:44 | |
| And it looks like | ||
| codes of honor are also | 25:45 | |
| somewhat being vamped or are flexible. | 25:46 | |
| - | Yeah. | 25:49 |
| - | Oh well. | |
| Yeah. | 25:51 | |
| - | What's the | |
| situation in Japan? | 25:52 | |
| - | Japan is keen to have a recovery. | 25:54 |
| I mentioned their exports have gone up. | 26:00 | |
| An American professor, professor Rudolph Dornbusch, | 26:01 | |
| gave a talk in Tokyo which was listened to | 26:09 | |
| with great interest | 26:13 | |
| 'cause he said they should stop insisting upon | 26:14 | |
| an export-led boom. | 26:16 | |
| But they have the same philosophy that you so often find | 26:18 | |
| in people like Dr. Arthur Burns. | 26:21 | |
| If an actual recovery is very strong, | 26:24 | |
| even though it puts pressure on resources, | 26:28 | |
| somehow, it's not inflationary. | 26:29 | |
| It's not anything to worry about. | 26:31 | |
| But, if a recovery is strong | 26:33 | |
| because the government does something about it, | 26:35 | |
| that's a no good kind of strong recovery. | 26:37 | |
| So, what Japan has been doing as it's been, | 26:40 | |
| of course, large corporations running losses because | 26:44 | |
| you have to keep on the help | 26:46 | |
| all their lives. | 26:48 | |
| - | Yeah. | |
| - | They've been waiting for this export-led recovery | 26:49 |
| instead of doing what of course the Japanese government | 26:53 | |
| has a lot of power to do, to expand internally. | 26:56 | |
| But they have had a very good luck | 26:59 | |
| on the wage drive in the spring, | 27:02 | |
| instead of it going out of control, | 27:05 | |
| it's been really measured, | 27:07 | |
| and their rate of price inflation has improved tremendously. | 27:10 | |
| In fact, they're right down there near | 27:14 | |
| where those numbers I gave you | 27:15 | |
| for Canada and the United States. | 27:17 | |
| So I think that although Japan's days of | 27:18 | |
| 10% per year real recovery | 27:24 | |
| may be somewhat a thing of the historical past, | 27:28 | |
| I would expect that six months from now, | 27:35 | |
| we'll be talking about the very healthy, | 27:38 | |
| the bottom recovery of the Japanese. | 27:41 | |
| - | Well, we have time for one quick look at another topic. | 27:44 |
| - | Okay. | 27:48 |
| - | Earlier this month, | |
| United States Secretary of State Henry A. Kissinger | 27:49 | |
| made a major address to the United Nations Conference | 27:52 | |
| on Trade and Development, taking place in Nairobi, Africa. | 27:55 | |
| What do you think of his proposals, his speech? | 27:59 | |
| - | Well, I think that there's a lot of smoke | 28:03 |
| and very little fire | 28:06 | |
| because we talk about spending billions | 28:08 | |
| to reclaim the Sahara. | 28:12 | |
| This reminds me of our last president, | 28:14 | |
| who always spoke of generations of peace. | 28:17 | |
| Each little triumph, and the meeting was called | 28:19 | |
| the greatest thing since French fried potatoes were invented | 28:22 | |
| and-- | 28:25 | |
| (David chuckles) | ||
| but I don't really know whether this kind of smoke | 28:26 | |
| really fills the eyes of the developing countries | 28:29 | |
| and fools them at all. | 28:32 | |
| What you have is a demand on their part | 28:35 | |
| because they're the ones who still have not balanced | 28:38 | |
| their accounts with the OPEC oil industries, | 28:42 | |
| and they've been getting accommodation. | 28:47 | |
| They rang tremendous depths, which cannot last. | 28:49 | |
| So, I think that there's a long story there | 28:51 | |
| that would need to be told at length, | 28:54 | |
| and it's not as if the US is ready to pony up | 28:57 | |
| any sizable fraction, like 1% even, or 2% of our GNP | 29:01 | |
| in the form of unrequited aid | 29:06 | |
| as part of our contribution to the great dialogue | 29:08 | |
| between the north and the south. | 29:11 | |
| So, mostly, what we're contributing, I'm sorry to say, | 29:13 | |
| is rhetoric, and whether that's a good export or not, | 29:16 | |
| I don't know. | 29:18 | |
| - | Does that mean trouble? | 29:19 |
| - | No, because I don't think that those developing countries, | 29:20 |
| which have the need, really have the power, | 29:25 | |
| even to blackmail or to punish the rich man up north | 29:27 | |
| for not responding to the need. | 29:34 | |
| It's only when poor people are poor and rich people are rich | 29:38 | |
| and the poor have the power to do something about that, | 29:41 | |
| that that becomes trouble, I think, | 29:44 | |
| in the sense which you asked it, | 29:46 | |
| but I think for a person of humane feelings, there is a, | 29:47 | |
| we should feel troubled. | 29:53 | |
| - | Thank you very much. | 29:54 |
| If you subscribers would like to ask questions | 29:56 | |
| of Professor Paul Samuelson | 29:59 | |
| or suggest subjects for him to discuss, | 30:00 | |
| please write to Instructional Dynamics Incorporated, | 30:03 | |
| 450 East Ohio Street, Chicago, Illinois 60611. | 30:07 |
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