Job Name:2223250 Date:15-04-24 PDF Page:2223250cbc.p1.pdf Color: Black PANTONE 154 U PANTONE 872 U SENATOR PAUL H. DOUGLAS, chairman of the President's National Commission on Urban Problems, rep­ resented Illinois in the Senate from 1948 to 1967. He served on the Senate Finance Committee, Banking and Cur­ rency Committee, and the Joint Eco­ nomic Committee, of which he was chairman three times. He was the au­ thor of the Minimum Wage Act, the Area Redevelopment Act, and the Eco­ nomic Development Act among many other laws. He also was a leader in cam­ paigns to achieve a Medicare program, federal aid to education, civil rights legislation, highway beautification, and tax reform. He was a professor of eco­ nomics at the University of Chicago from 1925 to 1948. J. ENOCH POWELL has been chair­ man of the Conservative party's Parlia­ mentary Committee in Britain since 1959. More recently he has served as spokesman for the Conservative party on defense in the British Parliament. He was Minister of Health in the Brit­ ish cabinet from 1960 to 1963 and Financial Secretary to the Treasury from 1957 to 1958. After working on the Parliamentary Committee on Hous­ ing, Local Government and Works from 1954 to 1955, he became Parlia­ mentary Secretary to the Minister of Housing and Local Government in the Conservative government. He had end­ ed a promising career as a Greek scholar to join the British armed forces in World War II, then turned to politics after the war. HOW BIG SHOULD GOVERNMENT BE? Paul H. Douglas and J. Enoch Powell Published by American Enterprise Institute for Public Policy Research AEI's first Rational Debate of the 1967-68 academic year brought together two seasoned politicians skilled in sharp-tongued forensics. Former Senator Paul H. Doug­ las is one of this country's venerated liberals. His creden­ tials include authorship of the Federal Social Security Act, the Area Redevelopment Act, the Economic Devel­ opment Act, and many other laws throughout his 20 distinguished years in the United States Senate. He has been a leader in the fight for medicare, federal aid to education, civil rights, highway beautification, urban renewal, and tax reform. A war hero and an economist who has been president of the American Economic As­ sociation, Senator Douglas attained even more promi­ nence as a politician. J. Enoch Powell, a Greek scholar and a prolific author and poet, entered politics after an illustrious career in the British army during World War II. Like Senator Douglas, he quickly made a name for himself. But un­ like the Senator, he ascended on the conservative side. He was a member of the British Tory cabinet and now serves as spokesman on defense matters in the shadow cabinet. The British parliamentary system, in which polemics are well-developed, spawns great debaters, and Mr. Powell ranks with the best. Senator Douglas gave the first lecture. Anticipating an assault on large government expenditures, he analyzed government costs to demonstrate that reductions are not easy. Defense and its related costs, past and present, account for a major proportion of federal expenditures. The Senator also challenged what he called the Unaive and erroneous assumptions of so many foes of govern- ment activity that public expenditures are in their very nature inherently wasteful and unproductive." On the contrary, l1e said, 1110st governlnent expenditures furnish goods and services that are desired by the public and that, therefore, from an econolnic point of view, must be regarded as desired products. It is the conservatives, he counter-charged, who plun­ der the public treasury, \vhile venting their anger on ((welfare expenditures and on legislation designed to pro­ tect the weak and ignorant from the strollg and cunning." ((The American conservatives tend to ignore or defend the direct and indirect subsidies to the airlines and the owners of private planes, to newspapers, 111agazines, and direct advertisers," the Illinois liberal said. ((They are relatively oblivious to the big subsidies given to the ship­ building and ship operators. They will not \vish to cur­ tail the space progran1 or the supersonic air transport program. They will defend to the death the privilege granted to Congress by the Constitution, which we have nevertheless conferred upon the banks, of creating n1011­ etary purchasing power. COl1servatives will continue to welcome governmental expenditures on irrigation and flood control, sending up the value of the land benefited. They are pleased to have the government subsidize their research, provided they can retain the patent rigl1ts. Their representatives amongst the big farmers oppose any limitation on farm subsidies to individuals. The big farmers will pocket their subsidies, whicI1 frequently run over $25,000 a year and sOlnetimes over $1 million, and continue to beat down every effort to trim them." Mr. Powell took a different and more philosophical approach, arguing that the question of ((more or less government" was rcally a questiol1 about ((sorts and methods of government." He concel1trated 011 the nature of a society's decision-making process-on the charac­ teristics of prescribed (government) and spontaneous (free market) decision-making systems and tIle scope given to these two systems within a society. Decisions by specific government, he n1aintained, are arbitrary, lim- ited, and contain a strong element of national self-con­ sciousness. These characteristics are exemplified in the extreme, he said, by attempts to win the race to the moon, or achieve a faster rate of economic growth than one's neighbors, at the cost of other uses for the same bundle of resources that might have given greater satis­ faction. The closer a nation approaches the totalitarian model, he said, the bigger its drive to excel in the inter­ national «growthmanship" competition. The British Tory leader observed that the U. S. had decreed huge and continuing expenditures on space research and astronautics ((which may be in part, but are far from wholly, motivated by considerations of defense." Then he asked: ((Why does a government decide, like Pharaoh commanding the erection of a pyramid, that large slabs of the energy of its citizens shall be devoted to the specific end of putting a man on the moon or a probe on Venus?" The British MP also castigated the government­ planned economy as «immensely inferior" to a free market system in efficiency. Government economic de­ cisions are necessarily poor, he said, because they are centralized and because they have to be made pre­ maturely. ((Both these characteristics automatically exclude an enormous mass of information which the market is ca­ pable of digesting," he commented. «The market works continuously and receives impressions from any and every source: the processes of exploration, investigation, and decision are not separated but coincide. This is some­ thing which no system involving a centralized and con­ scious judgment can rival." And, he added, ((the market does not have to produce decisions too soon.... [It] does not have to decide in advance whether natural gas will be found in the North Sea, nor how much, nor what it will cost to exploit it." But a national economic plan for 1970 does, he pointed out, even though it cannot possibly know in advance what will happen. Mr. Powell, first in rebuttal, pointed to nationalized medical care and arbitrary wage-setting, whether through minimum wage laws or union power, as clumsy means of seeking social objectives. A national medical­ care system limits citizens to just that measure of at­ tention established by the government, even though they may have wanted more: UIn the absence of the [British] National Health Service more medical care, rather than less, would probably have got itself provided." Arbitrary wage-setting, he argued, unavoidably reduces the de­ mand for labor and therefore increases unemployment­ insofar' as it is effective in raising wages above market levels. uDeliberate redistribution-such as family allow­ ances-would be more efficient and would distort ... the market less." For his part, Senator Douglas thought his British ad­ versary had far too much faith in the ability of the market system to remedy social and economic ills. UI submit that if we have any concern for human values, we cannot take the market demands of the poor as an adequate measure of their basic human needs," Senator Douglas declared. UFor this group has very little market demand since it has very little income. Without advocating equality of income, which I do not, some marked reduction in this disparity is called for. But it will not be obtained by market decisions which must take the existing distribution of income for granted. This disparity will not be greatly reduced by private philanthrophy, excellent as that may be and is. It can only be appreciably redllced through government pol­ icies of taxation and expenditure." The arguments in the final session, with the seminar participants freely joining in, tended to center around two questions, whether the ballot box il~ fact corrects or reinforces the inequalities of the marketplace and whether the objective of income redistribution is served better by providing the poor with services or with in­ come supplements. The American Enterprise Institute for Public Policy Research was created in 1943 as a unique, nonprofit and non­ partisan research and educational orga­ nization. AEI's purpose is to assist the nation's policymakers, legislators, and edllcational leaders by providing them -and making available to the public­ factual analyses and studies of im­ portant current issues. Informed policymakers are vital to the maintenance of national policies which promote rather than impede a strong nation and a dynamic market economy. The growing volume and complexity of basic policy proposals to be decided each year makes most difficult the task of the sincere legislator, administrator, and thinking citizen to understand clearly the total significance and im­ plication of each major policy decision.