Tape 142 - More on the energy crisis
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- | Welcome once again as MIT Professor Paul Samuelson | 0:02 |
discusses the current economic scene. | 0:05 | |
This series is produced | 0:07 | |
by Instructional Dynamics Incorporated. | 0:08 | |
This program was recorded November 29th. | 0:10 | |
- | The only possible economic topic | 0:13 |
that I could take up today | 0:16 | |
would be a continuation of the discussions | 0:19 | |
concerned with the energy situation | 0:22 | |
and with what that implies for the way of comfort, | 0:26 | |
the way of life of the typical American family, | 0:31 | |
and also of what it implies | 0:35 | |
for the forecasters of business activity in 1974. | 0:37 | |
And of course, more than that, | 0:43 | |
going below the aggregate level, | 0:45 | |
just what it implies for different industries. | 0:48 | |
This is not a topic that will go away. | 0:53 | |
On the contrary with each passing week, | 0:59 | |
the numbers which are coming out of Washington | 1:04 | |
and from across the seas and from the oil industry itself, | 1:10 | |
are becoming more disturbing | 1:16 | |
to the even tenor of business activity. | 1:21 | |
It was just a little while ago that I was quoting to you, | 1:26 | |
the first of the new computer runs made | 1:29 | |
on what's going to happen to business activity in 1974 | 1:33 | |
based upon certain control run assumptions | 1:37 | |
having to do with the fuel crisis. | 1:42 | |
Now, let's roughly get the magnitudes in mind. | 1:45 | |
The US economy uses about 18 million barrels of oil a day. | 1:50 | |
That's a rough figure. | 1:59 | |
It's also in normal years a growing figure. | 2:01 | |
If we were to take other energy sources | 2:06 | |
and put them into oil barrel equivalents, | 2:10 | |
we're talking about at least as much again, | 2:12 | |
so I think of 36 million. | 2:15 | |
Well, out of the 18 million daily barrels, | 2:19 | |
the first computer runs like those of the Wharton School, | 2:23 | |
began to redo the picture, | 2:27 | |
assuming there would be a shortfall | 2:29 | |
of one million barrels per day for a certain period of time. | 2:31 | |
Now, much of this, perhaps most of it, | 2:36 | |
is related to the boycott | 2:40 | |
by the Arab nations in particular, Saudi Arabia and Kuwait. | 2:44 | |
And on that basis you'll recall, | 2:51 | |
the typical macro economic model run | 2:53 | |
comes out with reduction of the growth rate | 2:57 | |
from 2.5% near to 1% in real terms | 2:59 | |
for the four quarters of 1973. | 3:06 | |
We have converted a growth recession | 3:10 | |
into a quite stagnant growth recession, | 3:14 | |
but we still haven't converted the situation | 3:19 | |
into a full fledged recession. | 3:23 | |
We also have somewhat worsened the outlook for inflation. | 3:27 | |
And so if previously, the model thought | 3:32 | |
that inflation was going to proceed | 3:35 | |
on an overall aggregate basis at 5.5 to 6%, | 3:38 | |
we're now talking about 6.5 to 7%. | 3:43 | |
Then the new model runs began to come in | 3:48 | |
with a two million shortfall. | 3:52 | |
We've gone from about a 5% shortfall of the oil to 10% | 3:55 | |
and so long as these changes stay small, | 4:03 | |
you can almost just double the first effect | 4:06 | |
to get the second effect. | 4:11 | |
Now, the computer is more exact than my crude arithmetic | 4:12 | |
and the results are not as simple as that. | 4:15 | |
But you're in the ballpark if you use such rough methods. | 4:20 | |
I should have said by the way that of course, | 4:26 | |
unemployment goes up on this assumption | 4:28 | |
from the last recorded level of 4.5%. | 4:31 | |
Already we're getting reports from all over the country | 4:35 | |
of layoffs, which must be sending | 4:37 | |
those unemployment figures up. | 4:40 | |
But paradoxically, I think as I mentioned, | 4:43 | |
at least in some of the models, the amount of money profits | 4:45 | |
does not go down. | 4:49 | |
Well, when you cut off two million though, | 4:50 | |
we're now beginning to go below 1% in real growth | 4:54 | |
and we're getting quite near to the no growth dividing line | 4:57 | |
between old fashioned bear recession | 5:03 | |
and the growth recession. | 5:07 | |
When the president spoke on TV, just a week or so ago, | 5:10 | |
he had increased the estimate. | 5:16 | |
He didn't give it in terms, | 5:21 | |
I think of the millions of barrels per day, | 5:22 | |
but I think he spoke of 17% | 5:24 | |
and so it looks as if we're talking there | 5:27 | |
about three million barrels a day | 5:29 | |
and again, the computer has to make a new a run | 5:32 | |
and again, this kills off something of real growth, | 5:36 | |
add something to inflation | 5:41 | |
and I would say, you shouldn't quite so blithely | 5:43 | |
go on tripling the amount of increase in money profits | 5:48 | |
that the earlier models had | 5:52 | |
because although if you could charge | 5:53 | |
what the traffic would bear, you could send up profits | 5:57 | |
very handily in the oil industry. | 6:01 | |
It's politically unthinkable, I would suppose | 6:04 | |
that the oil industry will be able to charge | 6:08 | |
what the market will bear in each region. | 6:11 | |
The market could bear a lot in this New England region | 6:15 | |
where I am and therefore, I think that you're likely to find | 6:17 | |
something of a squeeze on the profit margins | 6:23 | |
in comparison with what genuinely, | 6:26 | |
competitive conditions would create | 6:29 | |
in a time of scarcity like this. | 6:31 | |
Well, what is the upshot? | 6:34 | |
The upshot it seems to me must be | 6:35 | |
that to the degree | 6:39 | |
that the earlier assumptions were correct, | 6:41 | |
that we were only going to have a growth recession | 6:44 | |
and that the odds for a genuine, full fledged recession, | 6:47 | |
even though in bare terms, couple of quarters of declines | 6:52 | |
say in the real GNP in 1974, | 6:55 | |
those odds previously were no more | 7:01 | |
than perhaps 30%, 35%. | 7:03 | |
Well, I think that the rational betting man | 7:06 | |
has to begin to shade the odds towards the even money | 7:11 | |
that we will have a genuine recession by that bear test. | 7:15 | |
Now, I wanna make clear, I wanna reiterate | 7:21 | |
what has been said before that it's an exaggeration | 7:24 | |
to say as Senator Jackson once said on television | 7:30 | |
that we're heading towards a great depression | 7:36 | |
or something like the Great Depression. | 7:40 | |
If you mean those words in their literal sense, | 7:42 | |
then I have seen no estimates | 7:44 | |
which suggests that we're in for that | 7:48 | |
and I think that can be sad even if the boycott of oil | 7:49 | |
from the Arabian part of the Middle East goes on forever. | 7:56 | |
George Shultz, Secretary Shultz said at one point, | 8:01 | |
perhaps we should be making all our plans | 8:06 | |
and acting as if we expect the boycott never to end. | 8:08 | |
And that's not a bad strategy, although of course, | 8:13 | |
that's at the pessimistic range of expectations. | 8:18 | |
On the other hand, you hear talk | 8:23 | |
that the boycott could end very soon. | 8:25 | |
All it will take is a little progress | 8:28 | |
with respect to the peace negotiations in the Mid East | 8:32 | |
and that we mustn't take at face value | 8:39 | |
the demands, let's say that King Faisel made at some point | 8:42 | |
that the boundaries have to go back | 8:48 | |
to the pre 1967 boundaries. | 8:50 | |
What we have to do is so to speak show willing. | 8:52 | |
We have to show that there is pressure | 8:56 | |
being put on all the parties in the Mid East | 9:01 | |
toward some kind of a more tolerable settlement. | 9:05 | |
And then the spigot will be opened up of oil | 9:09 | |
from the Mid East. | 9:14 | |
I think that we probably ought to distinguish | 9:18 | |
in our thinking now between OPEC, | 9:20 | |
which is the oil monopoly | 9:24 | |
of the countries in the Persian Gulf, | 9:26 | |
but includes quite a number of other countries | 9:28 | |
outside of the Persian Gulf like Venezuela and Nigeria | 9:31 | |
and O-P-E-A-C, OPEAC which is a subset | 9:34 | |
of those countries in OPEC, | 9:42 | |
which are entering into the Arabian boycott, | 9:45 | |
it isn't even the subset | 9:48 | |
consisting of all the Arabian people | 9:50 | |
because I believe that as I speak now, | 9:51 | |
Iraq is not part of the agreement, | 9:55 | |
although it seems to be the general impression | 9:57 | |
that the Iraqi oil is not going in large amounts | 10:00 | |
to western Europe, but rather is going to eastern Europe. | 10:05 | |
But Iran, which I think is a | 10:12 | |
(mumbles) | 10:16 | |
but not an Arabian country, is not part of OPEAC, | 10:17 | |
although it's a very leading figure in OPEC. | 10:21 | |
So, the big pinch comes from the OPEAC part of the problem. | 10:25 | |
Now, as I've said, that pinch is much more severe | 10:33 | |
on Japan and on western Europe | 10:38 | |
than it is on the United States. | 10:42 | |
And so, it's worthy of note that they would have | 10:44 | |
a much more serious physical setback in their growth rates | 10:49 | |
if the OPEAC countries were to be as tough on them | 10:55 | |
as they say they're going to be on the United States. | 10:59 | |
Perhaps they to ought make at least a point of terminology. | 11:05 | |
We say that a short fall of oil if well handled, | 11:10 | |
and there is only three million out of 18 million, | 11:15 | |
will convert a growth recession into a bear recession | 11:21 | |
with pretty good probability. | 11:27 | |
It's not clear that a purist | 11:30 | |
would want to use the words recession. | 11:32 | |
I'm not thinking of how a person might weasel | 11:36 | |
out of a bet, but I am thinking of the fact | 11:39 | |
that usually we associate the word recession | 11:43 | |
with a shortfall of our actual performance | 11:46 | |
in a mixed economy in comparison | 11:50 | |
with our full employment potential of performance. | 11:52 | |
And since a decline in the available amount | 11:57 | |
of necessary fuel, like oil | 12:02 | |
represents a decline in the productivity | 12:05 | |
of the American economy when fully employed | 12:08 | |
and the decline in the rate of growth | 12:11 | |
of the American economy, then the so-called | 12:12 | |
recession of which we are speaking | 12:18 | |
may be a misnomer because we may be in 1974 | 12:21 | |
as fully utilizing our reduced productivity as earlier. | 12:25 | |
Now, I don't think we will be as fully utilizing it | 12:33 | |
because the short run impact will certainly result | 12:37 | |
in unevenness and the inefficiencies. | 12:40 | |
We know that particular workers will be thrown out of work. | 12:44 | |
We know that even with the reduced flow of oil, | 12:48 | |
the system could adjust itself and provide them with work, | 12:50 | |
not necessarily at as high real wages | 12:53 | |
as would otherwise have been the case, in other industries. | 12:55 | |
But that rearrangement takes a lot of time. | 12:59 | |
And so, let's consider a particular example | 13:02 | |
which we've read about in the newspapers | 13:05 | |
and you're gonna read more | 13:06 | |
of such examples in the newspapers. | 13:08 | |
The larger cars of the American automobile manufacturers | 13:10 | |
are not selling a very well. | 13:15 | |
It's possible the Cadillac is an exception to that. | 13:18 | |
But, you may have noticed that the advertisements | 13:20 | |
for Buick, for Oldsmobile, in a degree for Pontiac, | 13:23 | |
those are the General Motors cars, | 13:30 | |
but you could add to this the Mercury | 13:32 | |
and maybe continental in the Ford Line, | 13:35 | |
and you could add the various Chrysler lines | 13:37 | |
and the Imperial to that aren't selling all that well | 13:40 | |
because people frankly, don't want a big gasoline consumer | 13:43 | |
as they're moving into a period | 13:49 | |
when they think they're gonna be rationed | 13:51 | |
very severely for gasoline. | 13:52 | |
So they're trading down. | 13:54 | |
This means that when they turn in that old big car, | 13:57 | |
they get almost nothing for it. | 13:59 | |
It means that the showrooms | 14:02 | |
in the big car agencies are empty. | 14:07 | |
It means that there's depressive orders | 14:11 | |
for the compact cars. | 14:14 | |
Vegas, Pintos, Maverick, | 14:16 | |
American Motors happens to be in a better position | 14:19 | |
because the larger fraction of their line | 14:22 | |
is in the small car area. | 14:24 | |
However, just as you can't overnight | 14:27 | |
convert swords into plows and prune shares, | 14:30 | |
so you cannot in one model year | 14:37 | |
and maybe not even in a two or three | 14:40 | |
convert the capacity for producing an Oldsmobile | 14:42 | |
to the capacity for producing a Nova Chevrolet' | 14:45 | |
or the capacity to produce a Mercury | 14:49 | |
into the capacity to produce a new Mustang II | 14:51 | |
with a smaller motor and a shorter wheel base. | 14:55 | |
The result is that you're getting congestion rationing. | 15:01 | |
That's a technical expression in this small car area. | 15:06 | |
It means you have to wait six weeks, nine weeks, | 15:11 | |
12 weeks for a small car | 15:15 | |
and that press could become more severe. | 15:18 | |
Now, of course, under those circumstances, | 15:23 | |
some of the demand will go abroad, | 15:26 | |
because the European cars, Fiat for example | 15:28 | |
is being an advertise more in our market. | 15:32 | |
It has a very economical gasoline consuming car | 15:35 | |
to offer the American public. | 15:40 | |
The Toyota, the Datsun. | 15:43 | |
We're beginning to get interested | 15:45 | |
in the mileage performance of cars. | 15:48 | |
The Volvo, the Saab and so forth. | 15:50 | |
And so some of the business is going abroad. | 15:52 | |
Well, what's gonna happen to the production lines | 15:55 | |
of Oldsmobiles and Mercury's? | 15:59 | |
Obviously there isn't storage space in Detroit | 16:02 | |
to stack these finished goods up to any degree. | 16:05 | |
Moreover, there is no desire on the part of anybody | 16:09 | |
to keep producing in order to add to inventories | 16:12 | |
of things which can't be sold | 16:15 | |
and which if they had to be sold at a sacrifice later, | 16:18 | |
would entail a considerable drop in price. | 16:22 | |
The result is under the way we run our system | 16:25 | |
that the assembly line stops. | 16:28 | |
And so there's been a furloughing of workers | 16:32 | |
from General Motors plants | 16:36 | |
producing number of the larger cars. | 16:38 | |
Now, that's not such a bad thing for those workers | 16:41 | |
in the very short run, although it does send | 16:43 | |
a chill of apprehension down their backs. | 16:45 | |
Under the union contract, they have a quite favorable | 16:48 | |
income maintenance scheme for a certain period of time | 16:53 | |
provided that you're a worker with some seniority. | 16:57 | |
Let's say, you've worked over a year | 17:01 | |
and you were going to have a take home pay of $200 a week, | 17:05 | |
then I'm quoting from very vague memory. | 17:08 | |
Maybe you'd get the under this contract | 17:11 | |
as much as $160 a week. | 17:14 | |
Well, that's not too bad. | 17:17 | |
You're getting a little vacation, | 17:19 | |
you aren't working as hard. | 17:20 | |
You can even now begin since you're getting worried | 17:21 | |
to look around for some other employment opportunity, | 17:23 | |
maybe with the American Motors | 17:26 | |
or somebody who's producing a smaller car. | 17:28 | |
But what about the fellow | 17:31 | |
who hasn't a year of solid seniority? | 17:32 | |
He goes off to unemployment compensation. | 17:36 | |
Well, that's not so very bad in the very short run for him, | 17:39 | |
because maybe that's $85 or something like that a week, | 17:43 | |
so long as it keeps reporting as being available for work. | 17:47 | |
But all those things run out. | 17:50 | |
And so this is what the computer is picking up. | 17:53 | |
In fact, this is what the computer can pick up very well. | 17:56 | |
The displacement effects upon the flow of income | 17:59 | |
of interruptions in job opportunity. | 18:03 | |
What an aggregate model computer | 18:08 | |
of a macroeconomic type cannot pick up well | 18:11 | |
is the exact micro economic interruptions in production, | 18:14 | |
which are occasioned by not having sufficient fuel | 18:19 | |
or sufficient fuel of the right kind | 18:23 | |
or sufficient fuel at the right place in the right region. | 18:25 | |
And so, if you're going to have for example, | 18:29 | |
a shortfall of employment in the Texas plastics industry, | 18:33 | |
because they depend upon certain petrochemicals | 18:38 | |
for their raw materials, the computer model builder | 18:41 | |
can only guess at what those will be. | 18:47 | |
Now it's true. | 18:50 | |
He could use Professor Leon's input output Tableau | 18:51 | |
and to make a more refined guess if he has the data, | 18:55 | |
but you have to remember that Professor Leon's Tableau | 18:59 | |
is based upon the assumption | 19:03 | |
for the purposes of approximation for statistical estimation | 19:05 | |
just to make the system manageable of fixed proportions, | 19:09 | |
and that underestimates the amount of ingenuity, | 19:13 | |
which is available in the longer run | 19:17 | |
in readjusting the patterns of production | 19:19 | |
to the now scarcer, usually more expensive raw materials. | 19:25 | |
Well, we're getting a rash of such cases | 19:33 | |
and what would be very crucial | 19:37 | |
and here we're beginning now | 19:40 | |
to turn to towards the policy area. | 19:41 | |
What will be very crucial | 19:44 | |
is exactly how the government handles the shortage. | 19:45 | |
If you take some of the more optimistic estimates, | 19:50 | |
which still lean towards the only a growth recession side, | 19:53 | |
I'm thinking of Dr. Otto Eckstein | 19:58 | |
of Data Resources Incorporated. | 20:01 | |
His group has made out a new run on the GMP | 20:03 | |
and they still aren't ready to throw in | 20:08 | |
the sponge and speak as a chase econometrics is | 20:10 | |
of a full fledged, a couple of quarters | 20:15 | |
at least have a real decline. | 20:18 | |
When I mention these numbers, | 20:21 | |
don't take them too seriously | 20:24 | |
because it may be that my mail next week, | 20:25 | |
will reverse some of these assumptions. | 20:28 | |
It's just indicative of what the trend is. | 20:32 | |
Well, Dr. Eckstein who is a young, | 20:36 | |
bubbling, enthusiastic, able fellow is an optimist. | 20:41 | |
And although he's not a member of the administration | 20:47 | |
and has been a member of some previous administrations, | 20:51 | |
he's fairly optimistic | 20:54 | |
that Washington will handle this well. | 20:56 | |
I think there are a lot of people in Las Vegas | 20:59 | |
are ready to give me money | 21:01 | |
that that's not a safe assumption. | 21:02 | |
And I have to say, being as dispassionate as I can, | 21:04 | |
that so far the way the problem has been handled, | 21:11 | |
the way information seems to have been gathered | 21:16 | |
in Washington, the way it seems to have been processed, | 21:18 | |
the way it's been released to us | 21:21 | |
does not make me sanguine that we're going to have | 21:23 | |
all this good handling. | 21:28 | |
Now, let me illustrate some of the examples | 21:30 | |
what I have in mind. | 21:33 | |
When President Nixon went on TV | 21:35 | |
for his evening chat with all of us, | 21:39 | |
he said he's giving instructions | 21:43 | |
for a six-points program, or was it five or was it seven? | 21:46 | |
And part of that, was quasi voluntaristic. | 21:50 | |
You can't call it completely voluntaristic | 21:57 | |
because when he said to us, | 21:59 | |
to be good civic citizens | 22:01 | |
and keep our thermostats down by six degrees | 22:06 | |
and six degrees in the climate where I live | 22:11 | |
is beginning to be appreciable, | 22:14 | |
it isn't completely voluntary because he said | 22:17 | |
he was giving instructions to the oil companies | 22:19 | |
to space out the deliveries to householders | 22:23 | |
so that we really will have to do that | 22:28 | |
or else before the oil truck comes back | 22:31 | |
to replenish our depleted supply, | 22:34 | |
we won't have any fuel at all. | 22:36 | |
Now, I don't think the president | 22:39 | |
had to give such instructions in New England, | 22:40 | |
because they really wouldn't have enough | 22:44 | |
just following the natural forces | 22:45 | |
of our quasi mixed economy, | 22:48 | |
to permit us to go along in the previous way | 22:52 | |
at the higher temperatures. | 22:55 | |
But in other parts of the country, this will be important. | 22:58 | |
I now come to my point. | 23:00 | |
Another part of his program | 23:02 | |
was he's instructed the oil industry | 23:03 | |
to do what seems to be technologically feasible. | 23:06 | |
Namely, take the raw crude, | 23:09 | |
and as you put it through the refining process | 23:11 | |
with all the catalysts that are involved | 23:14 | |
and you making a lot of joint products, | 23:16 | |
he said you wanna shift the mix of output | 23:17 | |
away from gasoline. | 23:21 | |
This is during the winter, towards fuel, residual fuel oil, | 23:22 | |
energy burning stuff and the number he gave | 23:29 | |
was that there could be about a 15% shift of that kind. | 23:34 | |
Now, I think that is probably getting near | 23:39 | |
to the short run substitutability of the system. | 23:42 | |
But let's now think of a part of the country | 23:47 | |
like Louisiana or Texas or California, | 23:51 | |
but not a part of the country like New England | 23:55 | |
or the midwest or the northwest. | 23:57 | |
These instructions go out. | 24:01 | |
This is done. | 24:03 | |
As a result, there is an increase in fuel oil there. | 24:06 | |
How does that fuel oil come to New England? | 24:11 | |
How does it get to the northwest? | 24:14 | |
How does it get to the middle west, | 24:16 | |
the places which are very much short | 24:18 | |
because of their past reliance to put it very crudely, | 24:20 | |
the Arabian oil imports. | 24:26 | |
Well, we weren't told and since that message | 24:29 | |
Congress has forced upon the president | 24:36 | |
because it was put in a bill | 24:38 | |
which he didn't feel he could veto. | 24:39 | |
The powers to exercise allocations and rationing. | 24:42 | |
Perhaps we're lucky that we have large oil companies, | 24:49 | |
so few in number that their executives | 24:51 | |
can be brought into one small room | 24:55 | |
and perhaps a word to the wise is sufficient. | 24:58 | |
They can be told, you move this stuff. | 25:00 | |
Now, it's not quite that simple | 25:03 | |
because there has to be a pipeline capacity. | 25:04 | |
There have to be tankers and perhaps, | 25:08 | |
some of those tankers, which no longer will be engaged | 25:09 | |
in moving Arabian oil, | 25:12 | |
maybe if they're suited for inland waters, put to this task. | 25:14 | |
So there's a technological feasibility problem. | 25:19 | |
Now mind you, if we ran the system a different way, | 25:22 | |
the way the system would have been run 100 years ago, | 25:26 | |
let's say at the time of the Irish potato famine, | 25:30 | |
when the fungus killed off the potato crop | 25:34 | |
and when you had a Victorian, | 25:37 | |
capitalistically oriented government | 25:39 | |
sitting in Whitehall in England, | 25:42 | |
and they insisted that the price of wheat | 25:44 | |
be permitted just to rise | 25:46 | |
to whatever level would be necessary to clear the market | 25:48 | |
and to coax out a little wheat, | 25:50 | |
only little Alaska be coaxed out | 25:52 | |
in the short run for the new world. | 25:54 | |
If the system were run that way, | 25:58 | |
England, New England would suck the surplus of oil | 26:00 | |
without any presidential orders | 26:05 | |
from Louisiana and Texas and California. | 26:07 | |
What is this process of capillary attraction | 26:11 | |
or osmosis which would suck it? | 26:13 | |
It would of course be, the fact of sky high prices here. | 26:15 | |
So that like Rhett Butler running the blockade | 26:19 | |
and gone with the wind when the food was scarce | 26:22 | |
in the south, the carrot dangled very high profits, | 26:25 | |
which of course would make the profiteer, so-called, | 26:35 | |
the Rhett Butler unpopular would move this stuff. | 26:37 | |
The incidents would be very uneven as regions. | 26:41 | |
Now, I hardly have to describe that process to you | 26:43 | |
for any personal sophistication | 26:47 | |
about the modern populist, pluralistic democracy | 26:50 | |
to say nothing of the modern mixed economy | 26:56 | |
will know that all hell would break loose politically, | 26:59 | |
in Congress, in the elections which are going to come up | 27:05 | |
if that route were followed. | 27:10 | |
So, we're going to find ourselves | 27:13 | |
unless the boycott ends very soon, | 27:16 | |
even then, there's a certain number of days | 27:20 | |
before the oil can be really brought on stream | 27:23 | |
down here in the United States. | 27:26 | |
We're gonna find ourselves | 27:29 | |
with increasing need for allocations | 27:30 | |
and I think most informed people | 27:33 | |
think that some kinds of rationing will be inevitable. | 27:35 | |
Now the question is whether the beleaguered president, | 27:41 | |
has the time, the energy and the capacity | 27:44 | |
to be on top of that situation. | 27:52 | |
Because there are decisions which have to be made | 27:54 | |
at the very top. | 27:56 | |
You cannot have your Secretary of Interior | 27:57 | |
quarreling forever with your Secretary of Treasury | 28:00 | |
about the way that this is to be handled. | 28:02 | |
And here, I'm afraid that those who know | 28:06 | |
the working habits of President Nixon | 28:10 | |
and his desire to deal with only very few people | 28:13 | |
in the course of any one day, | 28:17 | |
are of the opinion that he's handicapped | 28:19 | |
in providing that kind of leadership. | 28:21 | |
Doesn't help of course to have the sideshow | 28:24 | |
if you regard it as that of missing tapes | 28:29 | |
and the need to defend oneself in front of grand juries | 28:33 | |
and the courts even at the second or third hand. | 28:39 | |
Well, it would be very easy | 28:45 | |
to become an over reactor to this situation. | 28:49 | |
A lot of people are raising the question | 28:56 | |
whether the stock market which has been going down | 28:57 | |
in jumps that are closer to 10 points | 29:01 | |
on the Dow Jones average per day, | 29:06 | |
than the old familiar two or three points | 29:09 | |
on the Dow Jones average. | 29:12 | |
There can be raised the question as to whether | 29:15 | |
given the long run outlook for the American economy | 29:19 | |
for the profitability of plant and equipment in America, | 29:23 | |
which stocks represents a title to, | 29:26 | |
whether this is overdoing the situation. | 29:29 | |
And I think the art of investment judgment | 29:33 | |
will come in trying to decide | 29:37 | |
just where that dividing line would be. | 29:40 | |
I would hesitate to offer any words of advice on that topic. | 29:42 | |
- | If you have any comments or questions | 29:46 |
for Professor Samuelson, | 29:48 | |
address them to Instructional Dynamics Incorporated. | 29:49 | |
166 East Superior Street, Chicago, Illinois, 60611. | 29:52 |
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