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A Public Service Message from the American Income Life Insurance CompanyExecutive offices, Waco, TexasBernard Rapoport, Pres. are in themselves inconsistent with our free enterprise system of economics. We will thus be faced with the anomalous situation of losing our free economy because of the problems created by the malignant growth of the needs of government programs and bureaucracies which are themselves inconsistent with our free enterprise system. Thus the absurdity of watching capitalism fail because it is blamed for the shortcomings caused by policies capitalists have opposed. The other reason for the failure of our system is the vast drain of resources we have suffered as a result of the wars we have fought since the end of World War II and the military policies we have followed, because of our unreasoning fear of communism. Let me add here that it must be obvious by this point in my talk that I am not very sympathetic to the communist theory of economic organization. Similarly, I am not one of those who takes the possibility of Russian military aggression lightly. I view the Russian government as a dangerous fascist organization which has no interest whatsoever in the preservation of personal freedoms or the right of a people to free self-determination. As a result, I have always felt that we should in no way allow our nuclear capabilities to fall below those of the Russians. Having said this, .I go on to conclude that the foreign policies of almost every Administration since the end of World War II relative to ground containment of communists wherever they might be found was a case of insanity. In attempting to prevent communist take-overs of other lands we have gone to the opposite extreme of trying to impose our theories of political and economic organization on countries all over the globe. We have squandered our national and international assets including our esteem in the eyes of the rest of the world at a suicidal rate. Thus those capitalists and others who supported the anti-communist politics of our government in Southeast Asia and many other areas of the world have done as much to bring about the downfall of our capitalist system as have the politicians and bureaucrats who have squandered our national treasure domestically. What can we do it we are to avoid the next sequence of runaway inflation and massive recession? To begin with, we should seriously question the premise that the government can resurrect our economy by spending money on give-away programs and other types of non-productive spending. I am convinced that every dollar the government has spent to pump up the economy could have been better spent by the private sector of our economy if the money that was taken out of our private markets by the government to finance these expenditures had been left in the private markets. For example, politicians and economists are beginning to wonder why the real estate industry has not yet begun a vigorous anticipated recovery. As one whose company is involved in real estate construction, I have had a large number of instances in which good prospective projects have been turned down because of the high cost of available financing. If massive government borrowing were not now occurring, long-term interest rates would be substantially lower than at present and there would have been a far more vigorous recovery in the real estate industry. If long-term capital were more readily available to industry at lower rates, many companies, including my own, would be installing new types of higher speed equipment to increase productivity and absorb some of the constant increases in labor rates because, although unemployment is extremely high, labor rates have continued to climb; and if companies are to survive they must find a way to increase their productivity in a ratio reasonably consistent with increased labor rates. These purchases of new capital equipment would trigger a build-up of production and hiring in the capital goods industry. Many utility companies have massive needs for new capital equipment which are being postponed because of either the unavailability of capital or its high cost. The cumulative effect of all of these decisions by the private sector prevents the rehiring of large numbers of people on productive long-term jobs. Instead, the government claims to be solving our problems of unemployment by creating “make-work” temporary jobs that produce little, if anything, that is of value to anyone. In this year in which the United States is finally at peace in the world, we have approved a massive increase in the military budget; we have hundreds of thousands of American troops guarding Europeans who are unwilling to pay for their own defense; we approved hundreds of millions of dollars for new nuclear-powered ships for the Navy which even the Defense Department recommended against; we are willing to prove to the world by spending ourselves into the loss of our freedoms that we can still be counted on to continue our interventionist foreign policy. The Congress which was prepared to seriously cut military spending in this year backed down immediately when they saw that the American people responded favorably when President Ford used force in the Mayaguez incident. As a result, the military budget is billions of dollars higher than it otherwise would have been. I remember as a youngster knowing instinctively that most extremely powerful playmates had enough physical security so they didn’t have to bully people to impress anyone with how tough they were. It is always a wonderment to me to see the representatives of our, the most powerful nation on earth, continually feeling it necessary to flex their muscles to prove how powerful we really are. No one doubts our true strength; but many people will doubt our will if it is not backed up by a strong domestic base. For years I have personally worked in a number of social improvement programs and I have always been prepared to see us be a less efficient society in order to be a basically humane society. I have constantly supported many government programs that provide assistance to those who are unable to support themselves. In fact, for over ten years I have publicly advocated a guaranteed annual income plan for providing a basic standard of income in the form of direct cash payments to those who cannot provide for themselves. But I see no reason for that income to be provided through the overhead of a massive federal, state, and local bureaucracy. I see no reason for huge numbers of government planners in federal housing agencies telling people what type of housing to build or buy. I see no need whatsoever for government make-work projects at a time when there isn’t sufficient capital for industry to build new facilities which would put those people to work in productive jobs. I see no need for a massive core of federal, state, and local social workers prying into the lives of welfare recipients and attempting to do for people what people ought to do for themselves. I am convinced that we can rebuild America on a strong and realistic foothold while avoiding a renewal of inflation and the inevitability of future recession. We can do so by implementing a program which is designed to gradually eliminate tens of billions of dollars of federal government expenditures and to develop policies which require that, like the rest of us, the government must learn to live within its means. In the calendar year 1976 if we are to avoid a renewal of inflation we should cut government expenditures by whatever amount is necessary to balance the Federal full-employment budget. In this way private individuals and firms will be able to obtain at reasonable interest rates the funds they need to expand their inventories, their capital facilities, and their employment base. If there are ample funds to meet the legitimate needs of private borrowers there will be no runaway in interest rates, there will be sufficient new capital and expanded inventories to meet the needs of increasing levels of consumption without inflation, and we will have developed a stable economy without having to give up our liberties to the government planners.