Special of the week; Issue 4-70 "Trans-Atlantic Forum"

The British Broadcasting Corporation in collaboration with the national educational radio network presents transatlantic forum in this edition. Vietnam and the world economy. The program is introduced by Terence Kelly. How Vietnam is a tiny country. But the war there has greatly affected the world economy of the United States of four men arms and money in the fighting. Today we look at the way in which the economic system everywhere has been affected by the United States activities in Southeast Asia. We look to with a possible effect on economic progress of a sudden reduction in United States government spending as a result of a cutback in our military efforts in Vietnam. In the studio in Boston is Professor John Kenneth Galbraith well known as economist and author and also a former United States ambassador to India. In London Reginald Moore playing member of parliament the deputy leader of the conservative opposition in the House of Commons at Westminster and Dr. Malcolm Caldwell an expert in Southeast Asian affairs at the School of Oriental and African Studies in London. I think our bright festival can we get

from the American and how big an effect the Vietnam War has had on the United States economy. Well you know this is a curious thing the stock market always goes up here. Peace new on this war I think invariably and my own impression is that they cut back in Vietnam as distinct from say a cut back or the ABM or for a nuclear aircraft carriers or for highly technical things. This set of cut facts on Vietnam. But I must say I devoutly hope for would not have an especially adverse effect on this economy it's an old fashioned war making use of the world's most reluctant as well as generally on skilled labor and I think problems of conversion would be relatively easy. And of course there's great pressure on the budget. So the alternative opportunities for spending would not be hard to come by. And that's why as I say I make a great a great distinction between a cutback here and a cutback in

the in the more technical kinds of expenditure which which would involve some problems of transfer there's no question about it. I would think that if there were a 25 percent reduction in the main military budget and in the expenditures for weapon systems the stock market would have a rather different effect. Well Reginald how about the effect so far in your top off the American involvement in Vietnam do you see it as hamstringing for example United States business expansion in Europe. I did the effect that Europe is in very much quite frankly amazing to us. America's been able to finance the war in Vietnam and the space program and an enormous domestic expansion of consumption. I think that the professor got Please say he didn't think the Stations of the war would lead to a recession except that they got to confirm it. I think there's anyway no democratic government is ever short of ways of spending money if they want to call about how you want do you think affected Asia economically.

Well of course as with previous large scale conflicts in the area it has had an effect of stimulating local sales and therefore like the Korean war before it producing some of the side effects for the local economy. But not of course one that are immediately beneficial to the problems of economic development for the peoples in the area has had not mitigated political disaster. When you say that they affect on the economies of South Vietnam as well as Laos Thailand it has been in general corrupting rather than developmental. What's the point of trying to meet that. You know the fate of the Vietnam War in the price of what it didn't say he gave us only benefit did they limited groups of people and not the people who live under you could do something to Vietnam was a lousy way to spend money.

The 70s was one beneficial effect that we had a you know in the last few months a quite remarkable improvement in the world currency situation. I suspect that part of that is the result of the general expectation that the is that we're getting out of this miserable war. And of course if we're able to cut down on these expenditures it will buy a billionaire to further ease about the payment strain in the United States. So this is one of the rather strongly affirmative effect. And of course this in turn means that we'll have less of the impulse to restriction as I'm less empowered to take measures to control the flow of international investment commodities trade and so forth. We'll be able to to sustain the slight movement toward liberalization that the British government has already taken in these last weeks. I'm not going to put it a little differently. I don't want to give the Labor Government that much credit.

Well that's an automatic but I mean I was going I was going to give America's credit deficit because really you know for the last five or seven years it's been the American deficit alone the guy that provided the finance necessary for the expansion of trade. Yeah yeah. In the last two years people realize that if you run out of deficit the world ran out of cash and now with the FDR for example just coming in with the rationalization of the packages in Europe I think the world has taken the opportunity and now if you did put your balance of payments right it'd be a good thing but if you've done it five years ago when a bad thing. Former British chancellor of the Exchequer do you lay any of the blame. High interest rates around the wiles on the family. Yes it's a fact that clearly I know the world inflation of some folks is cost inflation I think is effective for one country to another. It also demand inflation. American markets still set that throughout the world and the

combination of Vietnam War and the space program and the other demands the American consumer created together have forced up interest rates coupled with the determination of the present administration to rely very heavily on the amount of DU weapons to deal with and put in inflation I don't know if you can kill what I think is the cost inflation by these monetary means that we will see I note in 1970 so I completely agree with that much for the next administration that I would have thought this is a great attorney of conservative thinking that we really have a thoroughly bad economic policy. A lot worse really than one would have thought it possible that missed in a design that shows any any real reaction to the very large wage settlements forcing up prices and then bringing up wages. And this in turn of course puts the whole burden of inflation control over on monetary policy and fiscal policy. But they carry

very ineffectually and we have the high interest rates partly as a defensive measure and partly of course because in that interest rate is the allowance for the for what is becoming a kind of ability an inflationary factor. So I would attribute a great deal more what I would attribute a great deal Mark to bad economic policy than I would go to Vietnam or not be called on to really defending back to the way we did. In the United States the Chamber of Commerce produced estimates for the impact of the cutback and if you would be some in 1968 there estimated that the direct employment to face of the escalation of the Vietnam War in 66 and 67 was something between 1 million and 1.4 million jobs. That is a fair number of jobs even in an economy as big as the American one.

That's the point. The second point is that I don't get a lot of talk about cutting back in the Vietnam War but I don't see any evidence for that yet. If your pronouncements seem to me to have had a markedly psychological cut rather than to be a practical reflection of what the Americans intend to do. If you look at the actual deployment of American troops inside it's only a few hundred below what it was at the time of the February 1968 Tet offensive. And at the present rate of withdraw. I do want to point you don't you take something like three centuries for the Americans to go to Vietnam. I'm going to come back for the count right. No I wouldn't quite agree with that. Here I would find myself a little bit more sympathetic to the administration. I have stone figures there's a certain dramatic factor in his calculations there because they're influenced by the time it took for the two to make the turn around. And in fact the reduction is

now going on. I don't take seriously the notion of Vietnamization I don't think many of us do. But it has become the formula or the excuse for getting out. And I think that the administration is so is politically so retarded that it doesn't see that the American people have given up on this war they certainly have. So I think that I think this can within reason be assume that there is an intention to pull out and to pull out at a fairly steady rate. Yes but some time this is the consequence is that this so-called government in Vietnam cannot take over that it finds itself too weak it will just I think to the general view is that it will have to go down the drain. If it in any case if the American pledges only surely to get over to actual combat forces and this still leaves a quarter million

men who are going to be there if Assad is one can detect it even if it mediation is completely success got to be there to support forces or I would be very sorry to see that happen. I wouldn't be assessment because that would mean that the ground forces that combat forces or support forces are both parents have to be read to them that public opinion will not settle for anything less. I can see the dilemma. But that is just one other point and that is that is the possibility of from the American point of view events in the rest of society turning out badly because of American withdrawal from Vietnam. Then the Americans are going to be in a terrible dilemma because they might very well shed say good night itself if they're good enough to think they had to but because the implications for their position in Laos and Thailand and in the rest of me I'd say he is right.

But I think the dilemma will almost certainly be resolved in such fashion as not to involve us in another Vietnam. There are two possible view here one is that that we are still continuing the old policy that we're only hoping that the next domino doesn't fall. You know another view is that we have learned the limits of the superpower that we have learned that our capacity to interfere and in countries like South Vietnam is much more limited than seemed 10 or 20 years ago. And indeed my conviction is that the situation. However it may be denied in Washington. The situation is very much closer to this view of the world than it is to the notion that we are still carrying on you know it's some kind of police role but hoping that we won't have to perform. But that would be which would be your definition of matters I would think.

Rational nothing are you afraid. That's with the wall simply spilling over into pylons. Perhaps even Malaysia. Yes I am frankly I still believe in the Domingo the Great Depression will be the next level and I can tell feeling very depressed by the very realistic 9 that event to go places taking. I see exactly what you say on the stand the weight of these words I feel the combination of the two propositions you putting forward bode very well for the future of Southeast Asia. I want to thank him. It's quite clear that there is a difference of opinion here. I am much I am now prepared and I think most of my countrymen are. So I say hey that there's very little that we can do to affect the course of history in rural Thailand. Second there is little that we should do to affect the course of history in the world. This being felt. Well I sure hope that we would view it somewhat the same

detachment that one notices in Westminster. I don't know but if you want it you are the people with the only conceivable people with your decision and no one to criticize you who decide when we are caught I would leave saying the consequences of that decision. A little depressing in the long term picture. Yes and I think that also need to settle a depressing. If one looks at the America's interests inside the stage admittedly not by any means not by any means the biggest media interested in it can have economically but it happens to be important. What's important there that that's absolute nonsense our intervention in that part of the world has been an unmitigated disaster that can be nothing on the rubber trees that lead to an account for the costs of this for this appalling political tragedy. You could just make one point. I think it's very important you know I mean I want to press you on this.

Look at it this way that the cost of the war on the whole by the general tax if it would be of course I don't know what what what what what would justify the expenditure of 35 billions of dollars thousands of millions of dollars. In your view is this is the thing that makes me curious you know if it's not a question of justifying it I'm not defending it just like it when I'm trying to point out is that the cost of the waterborne to the general text vs the benefits of holding the greatest possible the world economy open to American economic activity is good. Naturally it is a substantial benefit to important American economic interests and Vietnam happened to be the funkiest this very extensive impious. Now I know I don't agree with that of Tom nor do I think as a matter fact that most American businessmen do. I've been very closely affected my wife a couple of years with a interesting organization here a very influential one called The Business Executive

Council. Yeah they have been in some ways the most influential single group against the Vietnam War President. Their reaction is partly based on self-interest and couldn't a definition of safety yes. Indonesia is Willard demeanor in front of safety because the hipness shortage keenly substantial interest is to do it or let it back in after the fall of 1965 66. Yes but the thing is it's interesting to note that at the time prior to that time we've had a largely written Indonesia off and with no great glee no great sorrow. It was supposed to end in the Chinese or the communist orbit with supposed to have taken the country there. Nobody was grieving particularly seems to me that this is a measure of how slight our economic interest is and certainly nothing that would justify the Politico this esteem that we have won from these unhappy adventures.

Let's turn into the more general economic issue the effect of peace on moves toward peace in Vietnam. If anything in the fear that war is necessary if you're going to have high military spending and that high military spending is necessary if an economy like United States economy is going to maintain economic expansion and account right. Well you know I think this is a point for many of my liberal friends many of my liberal in our sense of the term many of my friends on the left have indeed been wrong say the Keynesian development the development you know economics in the United States in these last 20 years has depended fundamentally on a very large military expenditure underwritten by progressive taxation underwritten by the personal income tax and the corporation tax has been a stabilizing element in our expenditures clinging to guns liberals in general have rather swept this under the rug and said well if

we if we didn't have the military expenditures we do wonderful things for the cities we do wonderful things for the poor. We'd have a guaranteed income and all that sort of thing. I do quite frankly think that the right of all of our military expenditures not for Vietnam but the as I said at the beginning they are much more hopefully spend it seriously to say in this very large technical apparatus that they have a deeply our kind of role in the economy and this is a very alarming feature of regional modeling and I'm afraid I don't agree that I agree with the liberals that want to be in the short of the transition from a cave alleviations based economy to a peace based economy will be difficult but surely in the long run there's a difficulty for the Florida Democratic government in creating adequate to my own career we might have modeling over here to join the American establishment better than most of our establishment agrees with about all of this going to be any democratic country has any difficulty about inadequate democracy these days only a really obvious question about that right

now is it. When it comes up for some expenditures such as the ABM a new fleet of nuclear aircraft carriers we have no problem getting expenditures but we have one hell of a time getting expenditures for the poverty program that came down last year with quite an imaginative program for guaranteed income. Nothing if they're not out of housing it's very hard to come by and we have we have much much harder for quality than getting civilian expenditures civilian welfare expenditures. Then you do the point you're going to have a conflict between expenditure and taxation. People will take high taxes to pay for defense. They will take high Thank you to favor civilian it's not uncommon to see 101 deleted points which I think a one not to lose sight of and that is that one talks we are talking as if in fact is that is it an option for cutting military expenditure. Let's see you are full of the policy of

increasing continue to consume expenditure perhaps about adjusting taxation to high standards of living that is typical of a country like United States America can be seen in real care of people surviving themselves out of a high conflict. Consumption of steel under the material this is only one way of looking at it but it's a very important way of looking at it because since the Second World War the United States economy had become more dependent upon imported supply the real resources and in defending really come from the United States military has created a very important and crucial rule. But again right now I don't I don't really agree with that thing. CM parts of few things have gone up no question. But I for example would become much more dependent on non-ferrous metals come in the main from Latin America and Canada. Not

areas of any great U.S. military activity. If anything of the oil situation well requirements that become rather less in the area of military concern than they were 10 years ago. And of course the shift to the Alaskan oil well makes us even much less so. So I would not I would not agree that as a practical matter. That's the military imparts that the raw material imports are themselves an excuse for this military deployment. There's also there's also a very important thing which one must bear in mind we have a great deal of military goal placing the United States we have a huge fleet of cycle fleet of nuclear aircraft carriers. We're the only country that has that. Now these are not really related to any useful concept of Defense. They're related to the really great joys that the Navy has in these vehicles.

And it's I think it's a grave mistake for any of us and I was particularly one a former pastor of a checker who as is notable for his credit you know for the crude I heap on bogus claims for spending. We should we should take the present size of the military budget for like the real one of the ring on military really urgent military move that's not true. I promise but this is the point I was trying to me was that it performs a double function in this respect that it absorbs the simplist in the form of military equipment immediately related to the need to defend the American empire and at the same time it provides the peculiarly adapted at war with very limited wars where the client you think us off in any way any world

objective economic fact preventing expansion. I mean I think it's quite clear that your country didn't station safety DIJO began to use the Dorne real resources for their own national economic development. Then the American economy would unquestionably feel the pinch and trying to maintain the reach of influence that United has to maintain to keep other living standards and I thought they sent this matter and something somewhat different way might that take them to 30 seconds to do it. Yeah I would say the last ten years is a period when we have. When we have greatly changed our view of what a superpower can do in the United States we have seen that there is very much less need for there is very much possibility for influencing the internal development of the Congo or the internal development of Vietnam and very much less need for doing so. This means that we have inevitably a very

different view of the military establishment. I'm not in favor of unilateral disarmament. I'm very much and I republish great hope in the SALT talks and reaching some sort of a strategic agreement with the Soviets. But I'm not for disarming until we do so. But a great deal of our military expenditure is related it seems to me to this earlier view of this earlier and rather grim grandiose view of the role of a superpower which I must say I'm We haven't admitted it. But the truth is we are retreating from it and secondly a great deal of it is related to the very great power that the military establishment the parson the Navy and the army came to enjoy in the Americans. American seen in the U.S. government during the time when this in a large few of our role its health consequences. They have a great deal of gadgetry from the perspective manned bombers for the nuclear aircraft carriers a mess and so they overkill even in the in the misfiled

which is related not to defense. Nobody should imagine that it is. It's related of bureaucratic ambition today. Original modeling I think I see the simple answer to all these. Soon as there's a cessation of the fighting in Vietnam. Drunk old illiterate unable to offer dating with a positive program in effect will get the money for an adult that is separate is what I would feel some of that staff would be a little bit hard on the poor. I provided it and I'm prepared to accept that recommendation. Do you think Professor Galbraith that if the United States did suddenly find itself with free resource of these would be used to augment private affluence. I mean by tax cuts do you think you liberals would be able to persuade the government to spend it on relieving public squalor. Well I must say you know you find me in a pessimistic mood because my liberal friends in the Senate didn't behave very well on this recent tax bill

after talking or talking in the gloomiest possible fashion here about priorities. When the opportunity came to reduce taxes as distinct from meet the urgent needs of the city. But I feel many of them are on the side of tax reduction. It's evident that it's evident that we still have some problems even in the liberal wing of the Democratic Party. Social modeling. Well those problems always exist in the portion of the national economy has been the public's bandage on the forces of them privately that we can always argue about. I'll be somewhere within the bracket of the right position it can be to have the force of taxation it can be too but it is the main argue the politics of economic democracy for fear that we're on the low side here. Prior to that an extended sit and study it's about reaching that conclusion. I think I suspect you would we could compromise something but if I meet any money the family can call well do you think that the United States will feel obliged to pour a great deal of it into

reconstruction in Southeast Asia after a long long period of one of fright Indeed I should be very surprised because up until the present the American aid program in my opinion the simplicity of this there is the economics which in the end have benefited the rich country to the expense of the poor and I think that if you look at any goings of capital from the from the Western countries to the puter countries being helpful to them in the long run is just nonsense. Right. Briefly I want to look at it all too well I think that proper a slight overstatement I'm writing out a defense of American policy for the first time about a third of our foreign aid for example is going to India and Pakistan. What I would say that it has redounded the halls of the benefit of the national community. Right remodeling a final word to me of well it's hard to believe that the capital was the effort we put it it was a program that really made things worse for people I believe it made it a lot better for them. And often Reginald modeling and Malcolm Caldwell Amanda thank you all very much.

Transatlantic forum was produced in London by the British Broadcasting Corporation in collaboration with the national educational radio network taking part in the program we're in Boston Professor John Kenneth Galbraith and the speakers in London were Reginald Ling deputy leader of the opposition together with Dr. Malcolm Caldwell your chairman in London with Terrence Kelly this is the national educational radio network.