WHILE striving to overcome the inflation of today, we cannot safely neglect the problems of tomorrow. No great nation lives for the moment alone. In restraining the excessive demand which is now apparent, we must not cripple the market for an expanding output of American industry and agriculture. Our whole history shows that unless we go forward we shall slip backward. Our economy should be stable, but nonetheless it must continue to grow.
We cannot set aside long-range considerations while we deal with the immediate task of combating inflation. The Employment Act requires that we set objectives for the needed levels of employment, production, and purchasing power. Such objectives require that we look ahead and appraise our economic potentials in the perspective of long-range economic growth.
The best way to realize the growth that we can achieve is to look at what we have recently done. The Nation’s Economic Budget has already been used in this Report as a summary device to depict the present state of our economy. In table 11, it is used to show the enormous strides that we have made since just before World War II, with the figures adjusted to allow for price changes.
No one can fail to be impressed by the fact that, within 8 years, our annual national product has increased by about 53 percent measured in constant prices. Some part of this increase is explained by the fact that our economy in 1939 was not running at maximum employment or production. The relentless pressure of the war speeded up certain economic developments. The American people hold a profound conviction that our war-time production record furnishes a significant demonstration of what we can do with maximum employment and effective economic policies.
In recent years, a number of attempts have been made by private and public research agencies to measure the growth that lies ahead if we are successful in maintaining maximum levels of economic activity. These studies recognize that foresight is not perfect and that our knowledge of technological trends and economic relationships is still limited. Further improvements in these measurements are needed. But even now, they can serve to furnish us at least with some broad outlines of our prospects and problems.
Ten years from now, if we maintain maximum employment, we should reach a level of nearly 64 million jobs. This allows for population growth. It also allows for withdrawal from the labor force of some women to their homes and for longer school attendance of some of our young people.
Output per man-hour for our economy as a whole has increased by approximately 2 percent annually in recent decades. The war brought many technological advances which have not yet been adopted fully by peacetime industry. Assuming even the very conservative estimate of 2 percent annual increase in productivity, and allowing for population growth, maximum production 10 years hence would mean an increase of about 35 percent in our total output of goods and services if average weekly hours of work re main unchanged. This would mean per capita disposable income about 80 percent above the level of 1937 and 27 percent above the level of 1947 in terms of constant dollars. Some part of this possible increase may, of course, be taken in the form of increased leisure.
We have within our reach an economic environment that would make it unnecessary for masses of people to be undernourished or ill-housed, to work in obsolete plants and shops, or to lack essential medical care, social security or education. No one would need to go without adequate rest and vacation after hard work. Attainment of these economic objectives would afford ever-increasing opportunities for individual initiative and greatly strengthen the cherished free institutions of American life.
But these gains will not come by accident. They would not be registered in an economy characterized by a period of idle or wasted resources after any period when for a few years we attain full utilization of our plant and labor force, or in an economy running at only three-quarter capacity even in “fairly good times.” The attainment of our objectives will depend upon the best efforts of industry, agriculture, and labor, working with sympathetic understanding of one another’s problems and of the common good. It will depend on a clear appreciation of maladjustments in the relationships among production, prices, and purchasing power; it will depend upon the willingness of all concerned to make necessary adjustments, and upon vigorous and forward-looking government.