The KANSAN Comments...
PAGE SIX
SUNDAY, MARCH 30, 1941.
Guns versus Butter
Defense to the utmost seems to have been accepted as a common goal in this country. Yet there continues to be much democratic discussion and vagueness as to how and when it can be paid for. Should these vast expenditures be met through borrowing or taxation? Is inflation inevitable? Must we face lower living standards now; or will the burden perhaps fall on our children?
BY FINN B. JENSEN Instructor of Economics
The first essential is to calculate in terms of productive resources rather than money expenses. Defense materials can take shape only through the combination of land, labor, and capital. To the extent that the defense production utilizes human and material resources that would otherwise have turned out goods for consumers, there must result lower living standards right now. But we must not forget in the confusion of the moment, that our paramount economic problem prior to the war was that of unemployment—idle men and idle machinery. We have a vast store of otherwise unutilized resources that have not been contributing to our standards of consumption. Hence as long as this unemployment slack is still being taken up we can in general quantitative terms have our guns and our butter too. Likewise any improvement in productive efficiency will, in this sense, enable the "costless" production of armaments.
Specifically, we still have labor unemployment of perhaps between six and seven million at a time when the estimated eighty billion dollar national income for 1941 represents a ten billion dollar increase over 1940. Thus it is not unlikely that full utilization of our resources will achieve a national income, at present prices, of over ninety billion dollars. Now as long as that level of national income can support armaments on top of existing living standards, it is not necessary to reduce total consumption. It is only when full employment has been reached that resources in general will have to be diverted from the production of consumer goods to that of defense goods.
Bottlenecks Increasing
Meanwhile, however, there are conspicuous and growing "bottlenecks," or scarcities at specific points, in our productive capacity. Certain consumer goods' industries compete with the armament industry for scarce raw materials and labor skills. Also some plants now used for durable consumers' goods, like automobiles, might be utilized for defense purposes. And there are glaring cases, as with machine tools, where the turnout of producers' goods is scarcely adequate for peacetime requirements, and hence becomes a serious bottleneck in the defense program. In cases of this type specific selective controls are required right now to limit civilian consumption. This means curtailing the consumption of certain products, but not of goods in general.
We cannot keep money out of the discussion indefinitely. Whatever the burden is in terms of resources, the defense program must be financed now, and there is always the potential danger of inflation. Inflation emerges when the stream o fdollar expenditures is growing faster than the quantity of goods produced. Now so long as previously idle resources are being utilized, the amount of consumers' goods can grow in response to the growing income, and prices need not rise. But when the point is reached where the production of armaments can proceed only at the expense of consumption goods, the way is open for inflation with all its disruptive influences on the economic system. Expanding production, whether for guns or butter, expands consumer money income; and this income will be spent regardless of the amount of available consumer goods, unless part of it is taken away by the government. Hence much depends upon whether the defense program is financed from new money or from money taken from consumers through taxes or borrowing.
Public Should Pay
At the present time there is general agreement that defense should be paid for by a combination of borrowing and taxation. The printing of paper money has been rejected because it would lead to ruinously high prices. Likewise it is agreed that as we approach full employment, governmental borrowing should be directly from real savings of the consuming public, rather than from the banks in the form of credit expansion.
Meanwhile there continues to be disagreement over the most desirable proportion of taxation to borrowing. We should be careful not to restrict production while still expanding toward full employment, either through undue restriction of credit creation or taxes discouraging either to enterprise or consumers. It is possible, for example, that the payroll tax recently advocated might curtail consumption to a degree not necessary at the present time. The social justice of the proposal, moreover, cannot be appraised without reference to the adequacy of existing excess profits taxes and taxes on higher incomes. The level of income tax rates has already been materially increased. Also as long as the national income is still rising, there will be an automatic increase in government revenue under the present tax rates.
Although the threat of general inflation is mitigated by the existence of unemployment, the numerous bottlenecks mentioned above may at any time develop runaway price tendencies. In a highly sensitive and interrelated economy these could, if uncontrolled, easily lead to widespread inflation. Hence the necessity of immediate selective price controls, which can assume a variety of forms such as priorities, rations, maximum prices, and specialized purchase taxes aimed at curtailing the consumption of particular goods.
Burden On Us
The actual size of the debt is not important either for the attainment of maximum production now, or as a burden to future generations. To the extent that we tax now the ultimate distribution of the defense sacrifice as between classes of people will be determined now; to the extent that we borrow, that decision will be postponed. But in either event the sacrifices of war in terms of guns rather than butter is being levied on all of us now, irrespective of the size of the debt, and cannot be shifted to a future generation.
Thus it is essential that a clear cut distinction be drawn between types of inflation. Price control refers, on the one hand, to the methods by which the government chooses to finance the defense program, and thus to influence the whole stream of consumer expenditures. It is related on the other hand to those specific shortages which tend to develop irrespective of the general level of prices.
OFFICIAL BULLETIN
UNIVERSITY OF KANSAS
Vol. 38 Sunday, March 30, 1941 No.117
Notices due at Chancellor's office at 3 p.m. on day before publication during the week, and at 11 a.m. on Saturday for Sunday issue.
CHRISTIAN SCIENCE ORGANIZATION: Christion Science Organization will hold a regular meeting Tuesday afternoon at 4:30 in the Pine Room of the Union Building. All students, graduates, and faculty members are welcome.-Betty Charles, secretary.
GRADUATE WOMENS CLUB: Graduate Womens Club will meet on Tuesday, at 6 o'clock in the Old English Room for a supper meeting. Helen Huffman will talk about Porta Rico. Members please consider this announcement your invitation—Dorothy Pollock, president.
NOTICE TO ALL STUDENTS: Dr. E. T. Gibson will be available for personal conferences at Watkins Memorial Hospital on Tuesday afternoons from 2 to 5. Appointments should be made at the Watkins Memorial Hospital.—Dr. R. I. Cauteson.
HATTIE ELIZABETH LEWIS PRIZE ESSAY CONTEST: Entrants in this year's contest are expected to hand in outlines of their essays at the Chancellor's Office by Tuesday, April 1. See bulletin boards for detailed directions.
PRACTICE TEACHING: Students interested in teaching for the fall semester of 1941 should make application in the office of the School of Education, 103 Fraser, at once—R. A. Schwegler, dean.
M. S.C.: There will be a council meeting Monday at 8 o'clock in the Pine Room-, Jim Burdge, secretary.
W. S.G.A.: W.S.G.A. Council will meet at 7 o'clock in the Pine Room on Tuesday—Doris Twente.
Student Paper of THE UNIVERSITY OF KANSAS Lawrence, Kansas
UNIVERSITY DAILY KANSAN
Subscription rates, in advance, $3.00 per year, $1.75 per semester. Published at Lawrence, Kansas, daily during the school year and held on Monday and Tuesday, second semester September 17, 1910; the post office at Lawrence, Kansas, under the act of March 3, 1879.
You Said It
The editor of the Kansan welcomes letters of opinion from students and faculty members to be published in the letters column. If the writer wishes, his name will be withheld, but the Kansan must have the names of all writers of letters—
To the Editor of the Daily Kansan:
I am frankly confused about the relative importance of two problems of student concern on the campus.
On one hand I see Charles Wright and Chancellor Mallott feverishly planning for a big celebration picking dandelions, carnivalizing, and street dancing. Teams are being organized (Chuck hopes). Fox Movietone (or somebodies tones) are being invited, and everybody has a big day with no classes to worry about. Maybe the Saturday classes will make up for the lack of April 2nd lessons!
On the other hand for the past two weeks, Paul Gilles, Sue Johnston, and John Moore have been trying to get two people, a student and a faculty member, to cooperate in heading up a committee for the World Student Service Fund drive that should be held on the campus before very long. The WSSF is similar to the drive of last year for the Chinese students, with the exception it concerns students in war-torn countries throughout the world. Apparently no one is at all interested in helping feed and clothes fellow-students in less fortunate countries.-Signed, Lloyd Estes.
Pan Chung Hsiang---
If you saw a young man at the first midweek last fall eyeing the dancers with wondering glances, you probably weren't watching just another "green freshman" but Pan Chung Hsiang of Honan, China.
Chinese Student Prefers Midweeks To Bandits
In China, Pan's father was a great land owner before the Japanese occupation of the region. Now all the farmers are forced to live in the cities or villages to protect themselves from the bandits. Yes, we said bandits, but not bandits-a-la-American. The bandits of China live as roving bands in the hills surrounding the farming regions, but they have no high powered automobiles equipped with machine guns. Bandits Kidnap Men
It is not surprising that Pan—in the United States his name is written as C. H. Pan—should be curious about the whole proceedings of a typical midweek, because before he arrived in Lawrence last September he had never seen two people dance American fashion. in China great importance is attack ed to any r
These bandits do their work on foot, stealing cattle in broad daylight and kidnapping men by night. A two- or three-thousand dollar ransom is demanded from the family of the kidnapped man if he is to be returned safely. Few Chinese families have such a large amount in the household coffer, but because
In Caliofnia, Pan went first to Stanford University, but President Blackwelder sent him to K. U. with the recommendation that "it was the best place in the United States to (continued to page eight)
Fan came to the United States on a scholarship from the China Foundation, a fund set up from the indemnity money that China paid the United States after the Boxer Rebellion. The money was returned to China with the stipulation that it be used to send Chinese students to this country for advanced study. "Go to K. U."-Blackwelder.
in China great importance is attached to any relative, the family must raise the money ro bear the wrath of the gods upon themselves as well as the loss of the kidnapped member. There is no civil law to be exercised against these bandits and the natives are unarmed and entirely unorganized.
ROCK CHALK TALK
George Bonebreak, Rock Chalk Co-op, has a money-making plan for spring. He is working on a device to be sold to every picnic-lover. The invention is, essentially, a cross between a St. Bernard dog and a portable radio, the finished product being a four-legged receiving set which can follow along behind pionicking couples.
By HEIDI VIETS
At the Delta Chi house Charles Wright is becoming known as "Feature Man" because of the publicity he has gotten on the dandelion drive and county club work. Latest reports are that he will soon engage in a scrapbook weighing contest with Hitler.
At the Jayhawk Co-op John Anderson is doing his best to see that the dandelion team of Eugene Nininger wins the contest, April 23. In his acetylene welding class he is going to make enough dandelion-digging tools for the entire team. He makes the blades from strap iron, sharpens them, then welds on a section of a half inch pipe for a handle.
Another Co-op tricky joe is Eugene Dix at Rock Chalk, who sent in some Wheaties box-tops to get Jack Armstrong a pedometer. The gadget fastens on his belt to measure how far he walks.
While housecleaning yesterday, Don Atchison found that the task requires one-fourth mile of walking.