Speech by the Vice President Before the Association of Business Economists, Vanderbilt Auditorium, New York University, New York, NY

Mr. Chairman and ladies and gentlemen: I first want to express my appreciation to the National Association of Business Economists for giving me the opportunity to speak to this audience, and particularly during the course of a political campaign. I know that this is a nonpolitical organization. I would like to say that my speech is nonpolitical, but I can only say this: That any speech made by a candidate in the course of a campaign cannot really and truly be described as nonpolitical.

I will say this, however, that any political comments that I make today will be solely for the purpose of distinguishing my own economic philosophy and program and describing it for you, and oftentimes, as I know you learn, in attempting to describe one philosophy, it is necessary to compare it with another. Consequently, my political references will be limited to that, and I trust that will be in accord with the rules of the organization.

Secondly, I would like to say that I have the custom generally, a custom which my opponent for the Presidency also follows to a great extent, of speaking generally to audiences not from a prepared text. This, of course, we find not only the most effective way to present views, particularly where we have huge rallies and the like, but also, depending on the individual, some people read better, some people talk better.

On this particular occasion, I welcome the opportunity to read from a prepared text. I do so (1) because of the character of the audience; (2) because of what I consider the importance of the statement.

When I say importance, I speak not of the fact that I expect you to agree with all the ideas I will present, not that I expect you to conclude that the ideas are necessarily novel or new or imaginative or bold - these are the terms we often hear during the course of a campaign - but because I think it is vitally important before an election that, as a matter of record the candidate's views on all major economic problems particularly be laid before the people, just as his views on foreign policy problems.

While I consider this to be not a definitive study in depth of all economic problems, some of the things I say today, I am sure, to an audience as sophisticated as this will seem to be perhaps not as exploratory as they should be, but it will represent my own economic thinking. It will give to you and it will give through the medium of the press who are covering this meeting an opportunity to see what one candidate for the Presidency would do, in the event he were elected, in the field of economic policy.

I begin by relating this whole discussion to the competition we're in in the world. There is no question but if there were no communism in the world, we would still want a strong economy in America. However, we are not alone in the world, as we know it, militarily, economically, or ideologically. We are in a desperate race with fanatic and ruthless people running against us, people who are behind, but people who are determined to catch up, and, therefore, in order to win this race, America must not only do well in its economy; it must do as well as it can, and that is the theme of the first part of my remarks today.

To meet the Communist threat to our way of life, we must begin by being strong in our national resolve. We must be strong, too, in the means to carry out our national will.

Now, what are these means? They can be generated, in my opinion, only by a healthy, vigorously growing, free economy. Now, that kind of an economy will not only provide the resources to secure freedom in the world; it will also demonstrate that freedom works to meet the national needs of our people and to provide the economic base for deepening our cultural and our spiritual life. Let us begin by agreeing - I trust you will agree - that we Americans have developed the most remarkable and productive economic system in the world, and that fact cannot be obscured by the calculated campaign how underway to develop what I would call a national inferiority complex about our economy and other aspects of life in America.

Needless to say, as I have indicated, we must be keenly alert to the economic challenge of the Soviets. Because the Soviets are in a much earlier stage of economic development, they are now showing a faster growth rate than we are, though not as fast as Russian propaganda would like us to believe. Also, as a totalitarian state, the Soviet Union is in a better position to allocate more of its output to state purposes; but as the Soviet economy increases in size in maturity, the rate of growth will, of course, be expected to diminish.

We should also keep in perspective and not forget this fact: The American economy today is producing, by any standard, I think, that we would take, more than twice what the Soviet economy is producing. We do face a serious challenge, but we are ahead, well ahead, and we can stay ahead if we are energetic, if we are imaginative, and if we are wise.

Now, what about the charge that for the last 8 years we have been standing still? Well, my answer to that is that anyone who says America has been standing still for the last 8 years has not been traveling in America. Today almost 68 million Americans are at work in this $500 billion economy. They're earning more; they're consuming more, saving more, investing more, providing more support for science, education, and health than ever before in our history.

Just consider for a moment, if you will, the progress America has made during these past 8 years, as compared with the previous 8 years, or, should I say, 7½ years, to be exact. Take rate of growth. The rate of growth in gross national product, measured in dollars of constant purchasing power, has almost doubled under this administration, compared to the rate of growth in the previous 7 years - 20 percent over these 7 years; 11 percent in the previous 7 years.

Take the share of national income going to wage earners, to employees. It has gone up under this administration. It went down under the previous administration.

Take weekly industrial earnings in constant dollars. They've gone up five times as much in this administration as in the previous one. The consumer price level another index - it's gone up only one-fifth as much in this administration as in the previous one.

Expenditures for education - twice as much for them. Expenditures for scientific research and development - more than doubled. Expenditures for the support of health - sharply increased. We could go on. What I am trying to say is that this has been a record of moving forward, of stepping up progress everywhere, from what we found when we assumed responsibility for affairs in 1953 - and it definitely has not been a period of stagnation. It has not been a period of standing still.

Now, the temptation here would be to say, as we say in the political game, we will stand on the record, but, as I have often said, a record is never something to stand on; it's something to build on. This is particularly true in view of what I said at the outset. We're in a race. We cannot be satisfied with our record, good as it may be, at home, and we are not satisfied. We must do better. We can do better. The challenges facing us abroad and at home require that we quicken our advance and utilize our resources more fully to that end.

We approach this task with an economic program that springs from faith in and concern for Americans as individuals. The purpose of our program is to release to the full the greatest productive force in human affairs, and that is the spirit of individual enterprise in 180 million Americans.

The purpose of our program is to provide equal opportunity for every American to better himself, to free life more and more from the stunting effect of economic need, and we seek to make it possible for every individual in this Nation to be somebody, to have something.

Now, going along with this faith in the individual as an abiding concern, a concern for his problems as a human being - the possible loss of a job and livelihood through no fault of his own when the economy changes; the fear that the end of his working years may mean poverty, that the loss of a breadwinner may mean destitution for the widow and children; the cost of medical care in old age: These are some of the searing human concerns that our program aims to minimize through effective private and public measures.

Such efforts toward personal security, first, are right - not only from the humanitarian viewpoint, which all of us will understand; they are mandatory if our complex modern society is to work at its best, at its fullest. They are essential to our purpose. And what is that purpose? I think, summed up in a sentence, it is this: We must lift the ceiling over personal opportunity. We must strengthen the floor over the pit of personal disaster. Public policy therefore, should seek to put right what is wrong in our America, but it should also seek to strengthen what is right. It should recognize the plain fact that Americans are proud and self-reliant individuals. Programs that encourage individuals to depend on government are wrong, for increasing dependence by a people upon government is not a sign of strength; it is a sign of weakness, and in this day of competition with the Communists, Americans must be sturdy and strong.

Our strength, in other words, as compared with the Soviet Union, is in our individuals, in our people. Theirs is primarily in their Government. Therefore, in this vital task, Government's role should be to carry out those functions which the private sector cannot or could not or will not do as well. Government should try to make the enterprise system work better. It should not try to supplant it with centralization. The rule should be as much freedom as possible; as little intervention by Government as needed.

The reason: While the power of every other group in our society is secondary and can be controlled by checks and balances, the power of Central Government tends to be absolute. It tends to be ultimate, and that is why we insist on a clear showing of need for the extension of power in the Central Federal Government.

Now, guided by these general guidelines of philosophy, we can build the action programs that will bring about the mobilization - and this is what we need; nothing less - the total mobilization - of America's human and natural resources in order to speed our economic progress in the battle for peace and freedom in the world.

I have proposed programs in many fields during the course of this campaign. I will propose others. I should like to list those programs, all of them, for you here today.

First, to mobilize all our human resources, we must make equality of opportunity a living reality for our Negro citizens, and those of other minority groups. Tremendous untapped resources for the economy can be released by eliminating the barriers of racial discrimination that now deny these citizens full opportunity to develop and use their talents.

Second, we must stimulate our national scientific effort so we can open new vistas for economic activity, for the scientific revolution that is exploding all about us. That is why the next Congress, as I have indicated in my paper on science, should authorize the National Science Foundation to take the leadership in sponsoring a major new effort for basic research. I believe this program should be conducted through a group of basic research institutes spread throughout the country, but established cooperatively with our universities. A sound program can aid the basic research man who is, as all of you realize, one of the most precious national resources in his efforts to achieve the breakthroughs upon which the rest of our science and technology depend.

To find and develop talent in America and thus avoid the waste of a potentially superior scientist, engineer, teacher, minister, or doctor, we need also a program in the field of education, an intensified one. We must widen opportunities for all. We must improve the quality of educational effort. We must enhance the status of our teachers. To that end, I have proposed a national program in support of education, emphasizing such elements as college scholarships for those who cannot under any circumstances afford to borrow and to pay back, tax credits or deductions to cover tuition and other costs of higher education, aid in school construction to provide needed facilities, and thereby to release local funds for raising teachers' salaries - all of this, however, particularly at the secondary and primary level, to be accomplished without compromising local controls of our school system.

To stimulate the growth potential of our economy, I believe we should reform our tax system. We do this to enhance personal incentives, to speed the investment in new plants and equipment that makes jobs and spurs productivity.

In this time of challenge to the American economy, taxes designed in an earlier time and still in the law to punish success are now obsolescent. They hobble the Nation's advance. We need a tax system that will move toward some revision in personal and corporate rates, reform and depreciation allowances, a broader base for excises, at a rate well below those now in effect, protection of State and municipal revenues. These and other things would contribute substantially to a better environment for economic growth.

Next, to provide the base for rapid economic progress, we must develop to the full the land and power and water resources with which this Nation is so abundantly blessed. Now, this must be a maximum national effort. This does not mean a total Federal effort.

It must be a national maximum effort in which government at all levels and private enterprise, where it can or will do the job, work closely together as a team. It does not mean making of this challenging task of developing our resources a Federal monopoly.

Next, to supply the indispensable food and fiber needs of a growing economy, we must rebuild our farm programs, rebuild them to make them a national asset, make a national asset particularly of the matchless ability of our farmers to produce, and to do so in a way that fairly rewards them in providing this abundance.

We can have plenty of freedom on the farm, and I reject the appalling alternative offered by our opponents, which, in my opinion, is a comprehensive blueprint for planned scarcity that would require drastic cutbacks in farm marketing and production, unprecedented controls on the farmer, and sharply higher food costs in the cities and towns of America.

And now to permit our cities to serve as impulse centers and not choke points for economic growth, I believe we need a dynamic urban renewal program, motivated locally, but assisted federally. It should be based on a market-area approach that contemplates a long-range land-use and transportation plan. As a part of this effort, we must foster expansion of residential renewal and new housing. We also need improved criteria for Federal assistance in the whole renewal program. The purpose of my overall approach, which I have already stated in a paper, is to maximize private investment through prudent public action. To maximize our growth potential, we must attack the stubborn problems of depressed areas through sensible, co-operative Federal-local effort. This can be done. It can be done if the opposition will cease its pork-barrel approach to this vital matter that led to Presidential veto.

It can be done if we concentrate on a bill that will help those areas that really need help. To keep the economy fit, efficient, and competitive at home and abroad, and thus capable of healthy growth, we must attack featherbedding, featherbedding in all its forms, wherever it appears. That includes bureaucratic waste and inefficiency that obstructs orderly and efficient government at all levels. It includes the make-work mentality still surviving in some quarters of labor. It includes pricing practices by business which are not fully geared to maximize dollar values. It includes inflationary wage settlements in labor-management negotiations that involve overpaying ourselves for the work we do.

The dynamic quality of our economy can be further enhanced by vigorous, but fairminded enforcement of the antitrust laws.

It can be improved by an imaginative outward looking policy in international trade, especially in this day of growing common marketism throughout the world. Efficiency can be spurred by keeping the economy open and constantly renewing those stimuli to growth which come from new business and small business.

The productivity of our economy can be stepped up by full exploitation of the rapid technological developments being generated the Nation's outstanding and astounding progress in research and development. In order to deal with the problems created by automation, especially on their impact on the workers affected, we need special efforts. We all agree with this: The question is, What efforts would be most effective? I do not believe that an overall top-level meeting of all union and industrial and Government leaders, such as our opponents suggest, is the best approach. The problems posed by automation vary too much as between different industries to benefit by such general talkfests of this character.

I intend, instead, to convene working sessions for each major critical industry under the leadership of the Secretary of Labor and the Secretary of Commerce. These sessions will have as their purpose to analyze the problem in those industries as it is unique to them and to develop a program for action and assistance in dealing with the problem of automation.

Now, to help keep our money honest, we must practice rigorous economy. We must exercise strict control over the Federal budget. We must thwart attempts clearly foreshadowed in opposition discussion to undermine the independence of the Federal Reserve System in its efforts to pursue a flexible monetary policy geared to the Nation's changing needs. The crucial question here, I want to emphasize, is not one of tight money versus easy money. It's not one of high interest rates versus low interest rates, but it's whether monetary and credit conditions are such as to maintain prosperity in growth.

History has demonstrated clearly for anyone who wants to learn from history that monetary policy makes its largest contribution to prosperity when it is flexible enough to put a damper on speculative activity in boom periods and to spur expansion in slack periods.

Now, those who loudly demand easy credit and artificially low interest rates at all times and under all circumstances are practically inviting foreign banks and investors to pull out the billions of dollars that they now hold here on deposit or in short-term paper. If such a sequence of events should ever develop as a result of cheap money dogmatists coming to high public office, we would have a totally stupid and, in my opinion, unnecessary gold crisis which would be brought on, a crisis which could be disastrous not only for America, but for the entire free world. A prime requisite of the ability to govern is the ability of modern governments to keep their money straight. To protect economic growth against the threats of inflation and recession, Government must act in a timely and vigorous way under the mandate of the Employment Act of 1946.

We need an early warning economic intelligence system. Through flexible use of fiscal and credit policies, including tax adjustments, if necessary, we can do much to protect the economy against threats to stable growth caused by changes in the economic cycle.

Achieving this task would be greatly aided, in my opinion, if the Employment Act were amended to include reasonable price stability as a major or purpose of Federal policy under the act and if our unemployment insurance system were substantially strengthened.

To coordinate in a better fashion the various Government efforts bearing on the promotion of a healthy economic growth, I believe that the time has come for the establishment of new machinery in the executive branch. I state this based on my experience as Chairman of the President's Committee on Price Stability and Economic Growth. I believe now that we need a National Economic Council to advise the President on economic matters at the same level and with the same stature as the National Security Council presently advises him on national security matters, recognizing, of course, that national economic matters are related to national security matters, and there will be some overlap.

I want to make it clear, however, that this Council will, under no circumstances, infringe on the independence of the Federal Reserve System, something apparently which the opposition seems bent on doing, and which is already causing concern in responsible circles both here and abroad.

Now, let's look at this program. It represents, in my opinion, a proper role for Government in fostering sustainable growth in our economy. It emphasizes that the Government undertake, not the least things or the most things, but the right things.

It does not speak of target growth rates, for if we pursue the right policies, if we pursue them imaginatively and vigorously, the resulting growth rate will be right.

This program reflects a confident outlook, too, as to what Americans can do. It's based on a conviction, a conviction that a nation's wealth can best be multiplied by the efforts of its individual citizens.

It seeks to invigorate the traditional strengths of our free economy - initiative and investment, productivity and efficiency. It seeks to strengthen, not weaken, the role of local and State governments. It rejects the false and simple theory that Americans somehow can be governed into perpetual prosperity.

It spurns the idea that the worth of a Government program is to be measured by how much and how many Federal dollars are to be spent on it. It repudiates the notion that we can meet the economic problems of the sixties with retreads of depression-born ideas of the thirties.

Americans cannot view the future by using a rear-view mirror. Our program calls, in other words, for a national economic policy that is forward looking, that is based on the energies and the hopes and the initiative of 180 million Americans, and one that evokes their best efforts.

I believe it is the best way to progress for America.

Speaking as a candidate for public office, it is not the easy way. It is not the easiest program to present. It may not be the most popular way at the moment. It's much easier to be for low interest rates at all times than for high and low, depending upon what the economy requires. It's much easier to say to the individual citizen where a problem is concerned: "Don't be concerned about this problem, the Federal Government will handle it." It's much easier to say whenever a problem is involved that my program is more and I care more for you because I will spend more money, your money, of course, to handle this particular program.

It's much easier certainly in the tax field to talk not about tax reform that will stimulate jobs and investment, that will move in the field of corporate tax and also individual taxes in the higher level. It's much easier to have a tax program which would simply be one that would reduce the rates in the lower brackets and would not stimulate the economy to the extent that the other would.

What I am really trying to say is this: That the program that I have outlined - not the easiest; not the simplest - it's much simpler, for example, as far as government is concerned, to bypass the States and the local governments. As a matter of fact, if we want a program that is simple, it would be easier if we had no Congress, because then whoever made the decisions at the executive level wouldn't have to bother to get it through the Congress.

What am I trying to say? What appears to be the simple way to progress in America, what appears to be the easiest way, is not necessarily the right way. The right way is to tap all the resources of America. The right way is for the Federal Government to stimulate rather than stump the creative activities of our citizens.

The right way is to put responsibility on individuals rather than take it off.

And I want to tell you finally why I feel so strongly on this particular issue. Needless to say, like my very able opponent, I would like to be elected. It would be much easier for me to make the promises that he does, but I am convinced as I stand here, from having traveled through the world, that if America turns that way, if America turns toward federalization basically of these institutions in our economy, if we turn away from individual enterprise and turn more and more to Federal enterprise, that it will be the wrong way and that it will result in America falling behind in this great race for survival in which our economy plays a part. It's because I believe this, and I believe it strongly, that I take a position that I recognize could be much more popular politically if I were to follow the line that my opponent is taking.

And, so, here's the economic philosophy that I believe Americans should follow in the future. My final point is this: This is not a Republican philosophy. It's bigger than the Republican Party. I believe it's as big as America, itself. I believe that if you read Thomas Jefferson, Woodrow Wilson, the two philosophers who are looked upon as those who developed the great ideas of the Democratic Party, that these views that I have expressed are more in accord with their thinking than are the views expressed in the platform of our opponents. And, so, now, having delineated the problem, may I say finally: I have appreciated your attention. I have appreciated particularly the fact that you have listened while I have discussed some matters which I indicated at the moment that to a highly sophisticated audience would seem to be not those that would be at the level that you would expect, but it seems to me tremendously important that those of us who have responsibilities in the field of public affairs attempt to inform the public what we believe, that we attempt to put it in language that they can understand so that the American people

will not make the mistake of turning the wrong way, because they may not understand why America has grown as it has, why it is the most productive nation in the world, and how it can be even more productive if it remains true to the principles that have made us great

Thank you.