ABC of Full Employment

What amounts to a textbook for businessmen on the problem of full employment was issued last week by the National Planning Association (composed of repre sentatives of business, labor and agriculture). Its pamphlet, National Budgets for Full Employment, does not try to plot a course to that goal. But it does a clear and concise job of charting the problem so that those who try to navigate can see where different courses lead.

Its 55 pages of text and diagrams (documented by statistical appendices) do not make easy reading. They avoid economic technicalities but they are full of figures. They require about the same kind of careful study needed to understand an analysis of a corporate statement.

For the Whole. The "National Budgets" that N.P.A. has drawn are not for the U.S. Government. They are for the whole U.S. economy--budgets that balance total income received by the economy against the total market for the goods and services it produces.

The full employment which N.P.A. talks of is the opportunity for the profitable employment (real jobs, not made work) of as much labor and capital as wants to be employed. This desire may be greater or less, but on the basis of past experience N.P.A. makes a fair estimate of what it is likely to be and measures this against the probable market for goods and services.

Since Government, business and individual consumers all frequently tend to buy less than they would like to sell, it is easy for the national budget to be out of balance at the desired condition of full employment. This is exactly what N.P.A. finds, when it sets up its first budget on the basis of a simple projection of the present habits of government, business and individuals into the postwar period. Against an estimate that $170 billions (1941 prices) of gross national product are needed for full employment, the market for this product is estimated (at wartime tax rates and prewar savings habits) to fall short by $20.8 billions.

The Gap. The biggest part of this deficit is traceable to the fact that under present tax schedules the Government would be sopping up $17.9 billions more purchasing power than it was paying out. But if taxes are cut to a point where the Government would have about a $2 billion surplus, there would still be a deficit of $8.5 billions--I.e., the foreseeable market for goods & services would not be big enough to sustain full employment.

N.P.A. then sets up budgets for three ways of doing away with this deficit: 1) by Government spending, 2) by new investment in business, 3) by greater consumer expenditure.

Each has its difficulties and drawbacks. If the Government tried to do the job singlehanded it could never balance its own budget and would have to spend on a scale that would bring socialism with a bang. If business tried to do the job by expansion, it could do so only temporarily, on the basis of a huge boom, reminiscent of 1929. If consumers tried to do the job, their habits and the distribution of wealth would have to be very much changed--probably a better solution than huge Government spending but one that also might run into difficulties.

Full employment, as N.P.A. charts it, becomes an interesting problem of working out a combination in which the three elements work together--a complicated problem, but one in which there are recognizable tools for bringing the national budget closer & closer to balance.

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