transition, a general attitude of confidence prevails that new consumption
patterns will take up the slack. What is less clear is the nature of these patterns.
One school of economists has it that these patterns will develop on their own. It
envisages the equivalent of the arms budget being returned, under careful
control, to the consumer, in the form of tax cuts. Another, recognizing the
undeniable need for increased "consumption" in what is generally considered
the public sector of the economy, stresses vastly increased government spending
in such areas of national concern as health, education, mass transportation, low-
cost housing, water supply, control of the physical environment, and, stated
generally, "poverty."
The mechanisms proposed for controlling the transition to an arms-free
economy are also traditional--changes in both sides of the federal budget,
manipulation of interest rates, etc. We acknowledge the undeniable value of
fiscal tools in a normal cyclical economy, where they provide leverage to
accelerate or brake an existing trend. Their more committed proponents,
however, tend to lose sight of the fact that there is a limit to the power of these
devices to influence fundamental economic forces. They can provide new
incentives in the economy, but they cannot in themselves transform the
production of a billion dollars' worth of missiles a year to the equivalent in food,
clothing, prefabricated houses, or television sets. At bottom, they reflect the
economy; they do not motivate it.
More sophisticated, and less sanguine, analysts contemplate the diversion of the
arms budget to a non-military system equally remote from the market economy.
What the "pyramid-builders" frequently suggest is the expansion of space-
research programs to the dollar level of current expenditures. This approach has
the superficial merit of reducing the size of the problem of transferability of
resources, but introduces other difficulties, which we will take up in section 6.
Without singling out any one of the several major studies of the expected
impact of disarmament on the economy for special criticism, we can summarize
our objections to them in general terms as follows:
No proposed program for economic conversion to disarmament sufficiently
takes into account the unique magnitude of the required adjustments it would
entail.
patterns will take up the slack. What is less clear is the nature of these patterns.
One school of economists has it that these patterns will develop on their own. It
envisages the equivalent of the arms budget being returned, under careful
control, to the consumer, in the form of tax cuts. Another, recognizing the
undeniable need for increased "consumption" in what is generally considered
the public sector of the economy, stresses vastly increased government spending
in such areas of national concern as health, education, mass transportation, low-
cost housing, water supply, control of the physical environment, and, stated
generally, "poverty."
The mechanisms proposed for controlling the transition to an arms-free
economy are also traditional--changes in both sides of the federal budget,
manipulation of interest rates, etc. We acknowledge the undeniable value of
fiscal tools in a normal cyclical economy, where they provide leverage to
accelerate or brake an existing trend. Their more committed proponents,
however, tend to lose sight of the fact that there is a limit to the power of these
devices to influence fundamental economic forces. They can provide new
incentives in the economy, but they cannot in themselves transform the
production of a billion dollars' worth of missiles a year to the equivalent in food,
clothing, prefabricated houses, or television sets. At bottom, they reflect the
economy; they do not motivate it.
More sophisticated, and less sanguine, analysts contemplate the diversion of the
arms budget to a non-military system equally remote from the market economy.
What the "pyramid-builders" frequently suggest is the expansion of space-
research programs to the dollar level of current expenditures. This approach has
the superficial merit of reducing the size of the problem of transferability of
resources, but introduces other difficulties, which we will take up in section 6.
Without singling out any one of the several major studies of the expected
impact of disarmament on the economy for special criticism, we can summarize
our objections to them in general terms as follows:
No proposed program for economic conversion to disarmament sufficiently
takes into account the unique magnitude of the required adjustments it would
entail.
