Is serious left criticism of government’s share of GDP possible? (13)
Continued from here.
On January 12, 1951, President Truman sent his economic recommendations based on the findings of NSC-68 to Congress.
The preamble spoke of a dire existential threat:
We face enormously greater economic problems, as I transmit this fifth annual Economic Report, than at any time since the end of World War II. Although our economic strength is now greater than ever before, very large new burdens of long duration are now being imposed upon it.
The United States is pledged and determined, along with other free peoples, to cheek aggression and to advance freedom. Arrayed against the free world are large and menacing forces. The great manpower under the control of Soviet communism is being driven with fanatic zeal to build up military and industrial strength. We invite disaster if we underestimate the forces working against us.
To respond to the alleged threat posed by the Soviet Union, Truman call for, “a large and very rapid increase in our armed strength, while helping to strengthen our allies. This means more trained men in uniform, and more planes, tanks, ships, and other military supplies.”
To support this massive expansion, Truman outlined an immediate plan to divert the nation’s economic output from increasing consumer goods, to building “as rapidly as possible, an expansion of our capacity for producing military supplies. This must be substantially greater than would be required to achieve our present targets for armed strength; it must be large enough to enable us to swing rapidly into full-scale war production if necessity should require.”
Truman pushed to permanently enshrine “growth” as the fundamental economic policy of the nation. Such growth would be essential if the United States were to sustain a high rate of military expansion for a indefinite period of time, yet, continue to improve the living standards of Americans.
Truman demanded that Americans be required work a forty hours week, indefinitely, to sustain an equally indefinite military cordon around the Soviet Union.
But, given the requirements of the containment effort Truman proposed, even with an unnecessarily long 40 hour workweek the projected labor force in 1950 would be unequal to the task. The pool of available workers had to be expanded:
In terms of manpower, our present defense targets will require an increase of nearly one million men and women in the armed forces within a few months, and probably not less than four million more in defense production by the end of the year. This means that an additional 8 percent of our labor force, and possibly much more, will be required by direct defense needs by the end of the year.
These manpower needs will call both for increasing our labor force by reducing unemployment and drawing in women and older workers, and for lengthening hours of work in essential industries. These manpower requirements can be met. There will be manpower shortages, but they can be solved.
Although, in his own words, the economic strength of the nation had never been stronger – this coming on the heels of World War II when the United States had been able to divert 50 percent of its GDP to the war effort, causing what amounted to an inconvenience to American’s consumption standards – by the standards of what was being proposed by Truman even this massive economic power was insufficient! The nation would be required to maintain a similar, though substantially less intense, effort for decades if necessary.
Domestically, under the Truman Doctrine, the economy was no longer the means by which Americans satisfied their basic needs, it was being converted to the mere logistical tail of a newly emerging military empire.
For the fiscal years 1951 and 1952 combined, new obligational authority enacted or anticipated for our primary national security programs–for our military forces, for economic and military aid to other free nations, for atomic energy and stockpiling, and for related purposes–will probably total more than 140 billion dollars. Actual expenditures on these programs in the fiscal year 1950, the last full year before the Korean outbreak, totaled about 18 billion dollars. At the present time, they are running at an annual rate of somewhat more than 20 billion dollars. By the end of this calendar year, they should attain an annual rate between 45 and 55 billion dollars, or from 25 to 35 billion dollars above the present rate. The actions we are taking should enable us within twelve months, to expand this rate of expenditure very rapidly if necessity should require.
Current expenditures for these now represent about 7 percent of our total national output. By the end of this year, this proportion may rise to as much as 18 percent. This compares with the roughly 45 percent of our total output that we were devoting to defense during the peak year of World War II. While the present program is thus very substantially short of the requirements imposed by full-scale war, it nonetheless requires a major diversion of effort. Furthermore, there will be a much more severe drain on some particular supply lines. By the end of the year, our expanding defense programs, including stockpiling, may be absorbing up to a third or more of the total supply of some of our basic commodities, such as copper, aluminum, and natural rubber. While direct defense requirements for steel may not total more than 10 percent of total output, the needed expansion of our essential industrial capacity will require a much greater diversion of steel from ordinary civilian uses.
Longer term, Truman envisioned sufficient excess industrial capacity to produce 50,000 planes and 35,000 tanks a year. Diversion of civilian industrial capacity would be replaced by facilities devoted primarily to military output, such as was built during World War II. Additional capacity would be needed to ramp up production of steel, copper, power, and other basic material, without, “the necessity for irksome controls extending over a long period.”
Domestic supplies of the material were not enough, so the United States had to rely on and secure, “imported supplies. Expansion of domestic plants for treating low-grade ores, and of ore production facilities in Labrador and Venezuela, together with related transportation facilities…”
Unlike World War II, Truman’s Cordon Militaire would not be a crash effort, so building in the necessary production capacity could be stretched over decades:
If we were now engaged in full-scale war, we could not afford to devote manpower and materials to these longer-range programs. But to fall to do so under present circumstances would be short-sighted and potentially costly. Action now is essential, to make us stronger year by year in all of the components which enter into any military strength that we may need in future.
As Truman envisioned it, the steady and substantial involuntary contribution of unnecessary working time by tens of millions in the labor force, and ten of millions more identified to be drawn into the labor force over the succeeding decades, would be essential.
Truman’s economic recommendations were the poignant moment in the flowering of the Gospel of Full Employment – a full employment which aimed not at making sure every worker had a job, but at ensuring the productive capacity of the nation could be fully employed by successive administration in the task of building and maintaining the Empire.
To be continued