Tape 58 - Monetary and Economic Conditions, Commentary on Britain and Italy
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Transcript
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Woman | Hello, this is instructional dynamics | 0:02 |
inviting you to another of our biweekly interviews | 0:04 | |
with Dr. Milton Freedman, professor of economics | 0:07 | |
at the University of Chicago. | 0:09 | |
We are taping this interview on October 4th. | 0:11 | |
This is the first tape since August, | 0:15 | |
since Professor Freedman has been abroad. | 0:18 | |
Professor Freedman, have you had a chance to look at | 0:20 | |
the US economic figures since you got back? | 0:25 | |
- | [Professor Freedman] Well, even when you're abroad, | 0:28 |
it's not hard to keep up with the US economic figures. | 0:32 | |
The Time and Newsweek are distributed all over the world | 0:36 | |
and I'm enormously impressed with how much interest | 0:40 | |
people everywhere in the world at the moment | 0:42 | |
have in what goes on in the US. | 0:45 | |
The US is quite clearly the country which all eyes | 0:46 | |
are turned. | 0:50 | |
In addition, in Europe, there is available daily | 0:51 | |
the international edition of the Herald Tribune. | 0:55 | |
It's the only remnant of the Herald Tribune papers | 0:59 | |
which were published for so many years in New York. | 1:03 | |
That paper disappeared but the European edition | 1:05 | |
is still published. | 1:08 | |
However, it is published under the joint auspices | 1:10 | |
of the New York Times and the Washington Post. | 1:12 | |
And it carries a reasonably full summary | 1:14 | |
of economic materials. | 1:18 | |
In addition, I have gone over the major figures | 1:20 | |
since getting back to see whether there have been | 1:23 | |
any significant changes in the six weeks | 1:26 | |
since I last reported to you. | 1:29 | |
Let me start with the behavior of the money supply. | 1:33 | |
Here, the situation is not much changed | 1:36 | |
from what it was when I last reported. | 1:42 | |
We have continued to have a moderate | 1:46 | |
increase in monetary aggregates. | 1:50 | |
If anything, somewhat on the high side. | 1:54 | |
Not much changed from the earlier figures | 1:57 | |
but in so far as there is any change | 2:01 | |
they're slightly higher. | 2:03 | |
However, that may be misleading, because what happened | 2:05 | |
was that there was a very definite spurt | 2:07 | |
in the Monterey aggregates in late August, early September | 2:11 | |
and since then, there has been some retardation. | 2:17 | |
So it may be we are witnessing another one | 2:23 | |
of those episodes of ups and downs. | 2:26 | |
In any event, to summarize, the narrow money supply | 2:29 | |
currency plus demand deposits alone has been growing | 2:33 | |
to judge from the four weeks ending September 23rd, | 2:37 | |
the latest figures available to me has grown at the rate | 2:43 | |
of five percent per year since December of last year | 2:46 | |
at the rate of a little under 6.57 percent since February. | 2:49 | |
This rate has four or five months, been within this range | 2:55 | |
of five percent measured from December of about | 3:00 | |
less than six percent if measured since February. | 3:04 | |
A broader total of currency plus demand of deposits | 3:08 | |
plus time deposits but excluding the highly erratic seaways, | 3:11 | |
has been growing at the rate of about six and a half percent | 3:16 | |
since December of nine percent since February. | 3:20 | |
Here again, these are not, too much out of the line | 3:24 | |
with the rates that have been observed throughout the past | 3:29 | |
four or five months. | 3:33 | |
But they are if anything as I say on the high side. | 3:34 | |
Generally these have been less. | 3:37 | |
So what we have then is a picture, if we take it since | 3:40 | |
February of the narrow money supply growing somewhere | 3:44 | |
between five and six percent. | 3:47 | |
The broader money supply somewhere around nine percent. | 3:49 | |
These are very high rates | 3:54 | |
by historical standards. | 3:59 | |
In my opinion, if they were to continue at this rate, | 4:01 | |
these rates for a long time, they would imply | 4:04 | |
not merely a healthy expansion, | 4:08 | |
Not merely a known inflationary expansion | 4:12 | |
but they would imply more than that. | 4:15 | |
They would mean by the end of 1971, we would observe | 4:17 | |
a renewal of inflation. | 4:21 | |
However, as I indicated in the last tape, | 4:23 | |
I do to believe it would be wise to assume that these rates | 4:27 | |
will in fact continue. | 4:31 | |
The federal reserve has stated it's objectives | 4:32 | |
are lower than this. | 4:36 | |
It has the power to make the rate of monetary growth | 4:38 | |
what it wishes. | 4:41 | |
I expect to see the rate of monetary growth | 4:43 | |
come down somewhat but not drastically. | 4:46 | |
That is I would expect to see M1 come back down | 4:48 | |
to the range of about five percent rather than being | 4:52 | |
up around six percent. | 4:54 | |
In that case, the prospects would be a bit better. | 4:56 | |
If we look at the other aspects of the economic system, | 5:01 | |
everything seems to be going very much along the lines of | 5:05 | |
what I suggested in my last tape. | 5:07 | |
There has been a continued decline in interest rates | 5:09 | |
but that has been happening at a moderate pace. | 5:12 | |
It has been affecting both short term interest rates | 5:15 | |
and long term interest rates. | 5:18 | |
Again, in line with the earlier predictions, | 5:20 | |
there continue to be signs that the economy | 5:25 | |
either has brought them down or shortly will. | 5:30 | |
The jump in the unemployment rate to five and half percent | 5:33 | |
is not inconsistent with this as I have emphasized before, | 5:36 | |
even after the economy turns up, one can expect | 5:41 | |
unemployment to continue to rise. | 5:44 | |
When I do not expect unemployment to start declining | 5:46 | |
until sometime next year. | 5:50 | |
Moreover, this number is a very erratic number | 5:52 | |
from month to month. | 5:56 | |
Unemployment is computed from a moderately small sample. | 5:58 | |
It's in any event the difference between | 6:05 | |
two very large numbers, a total labor force on the one hand | 6:07 | |
and the total amount of unemployment, | 6:10 | |
the total number of people unemployed on the other. | 6:12 | |
Seasonal movement is erratic. | 6:15 | |
A one month up and down shift in it is not | 6:19 | |
of great importance but even if this five and a half percent | 6:22 | |
prevails as I think I indicated in my last tape, | 6:26 | |
my own expectation is that unemployment will continue | 6:30 | |
to rise until somewhere in the neighborhood of six percent. | 6:33 | |
And it might even go higher than that without in any way | 6:36 | |
being inconsistent with the turn around in the economy | 6:39 | |
and the resumption of real rate. | 6:43 | |
Putting it all together therefore, I really see no reason | 6:47 | |
to alter the general evaluation that I expressed | 6:51 | |
in my last tape with one minor exception. | 6:54 | |
And that minor exception is that the monetary development | 6:57 | |
since then, have been a little bit more expansive | 7:01 | |
than I looked for, therefore to that extent, | 7:09 | |
fore tend over the much longer pull, | 7:13 | |
greater inflationary pressure. | 7:15 | |
However, that may not, may turn out to be a flash in the pan | 7:17 | |
and we will have lots of time to check on whether | 7:22 | |
that fear will be realized because as in the past | 7:25 | |
the lag between the changes in the money supply | 7:29 | |
on the one hand and the prices, not on the economy, | 7:33 | |
is very long indeed. | 7:36 | |
Woman | Professor Freedman, what countries did you visit | 7:39 |
on this trip? | 7:41 | |
- | [Professor Freedman] I spent roughly a week | 7:43 |
in each of four countries. | 7:45 | |
Germany, Britain, Italy and for a much greater degree | 7:47 | |
of variety and exotic interest, Iran, that is modern Persia. | 7:55 | |
Woman | Would you like to tell your subscribers | 8:02 |
any off handy impressions on conditions | 8:06 | |
in the European countries? | 8:08 | |
- | [Professor Freedman] Well let me, I'd be very glad to. | 8:11 |
Let me start with Italy. | 8:13 | |
Although primarily because that's the country | 8:16 | |
which I have least to say. | 8:18 | |
The reason for that is the week I was there | 8:21 | |
was spent mostly at a conference in Venice | 8:23 | |
which involved a meeting between economists | 8:27 | |
of the Eastern European countries | 8:31 | |
and of the Western countries. | 8:33 | |
This is a meeting which is sponsored by an organization | 8:36 | |
in Italy that is held every year with the idea | 8:39 | |
of establishing a greater degree of communication | 8:42 | |
between economists from very different backgrounds. | 8:47 | |
The Eastern European countries represented included | 8:53 | |
Hungary, Romania, Czech Slovakia, Poland, East Germany, | 8:57 | |
Yugoslavia, but not as you will have noticed Russia. | 9:05 | |
Each year the Russians are invited to send economists | 9:11 | |
to this meeting. | 9:14 | |
Each year they agree to do os, but each year | 9:15 | |
something comes up at the last minute which makes it | 9:18 | |
impossible for the Russian representatives to come. | 9:21 | |
I say each year, this is only the second of these meetings | 9:24 | |
I have been at myself personally, but at both of those | 9:29 | |
that is what happened and I have been told | 9:33 | |
that it is what has happened at other meetings. | 9:35 | |
So far as the Western economists are concerned, | 9:38 | |
the particular teacher of this particular conference | 9:40 | |
is that it tends to stress bringing Together | 9:47 | |
with people from the East. | 9:51 | |
Not specialists in the field of planning, | 9:52 | |
not specialists in the field of Eastern European countries, | 9:55 | |
but general economists like myself and particularly | 9:58 | |
economists who have a great deal of interest | 10:01 | |
in the price system and free markets | 10:04 | |
in the capitalist system. | 10:06 | |
One of the things that has impressed me at these meetings | 10:08 | |
is that the people, the economists | 10:12 | |
in the Eastern European countries are much more interested | 10:14 | |
in having a chance to have contact with economists | 10:16 | |
of a general character who are concerned | 10:19 | |
with the economy as a whole, and particularly those | 10:22 | |
who are favorable to a market economy. | 10:25 | |
Because they know very well | 10:28 | |
about how planned economies work, | 10:32 | |
about how the Eastern European economies work, | 10:34 | |
and they feel as if they have very little to learn | 10:37 | |
from the enormously numerous Western specialists | 10:39 | |
on planning. | 10:43 | |
I have found both this time and the time before | 10:45 | |
this contact extremely interesting and fascinating. | 10:49 | |
It's perfectly obvious that the Eastern European countries | 10:52 | |
are very much interested in greater understanding | 10:56 | |
of how to use a market for their purposes | 11:00 | |
but it is also clear that they are operating | 11:02 | |
under very great handicaps. | 11:04 | |
Needless to say, the political circumstances | 11:06 | |
alter the kind of representation you can have. | 11:08 | |
The Czechs who were there this time were vastly different | 11:12 | |
from the Czechs who were at the meeting I was at | 11:15 | |
two years ago. | 11:18 | |
The one stable element are the Yugoslavs. | 11:19 | |
That is of course because Yugoslavia of all | 11:22 | |
the communist countries is the most committed | 11:25 | |
to free markets. | 11:28 | |
Indeed, my impression is that Yugoslavia is a country | 11:30 | |
which can be described as engaged in creeping capitalism, | 11:34 | |
gradually approaching our creeping socialism. | 11:37 | |
We are moving together from opposite directions | 11:41 | |
and if we don't watch out they shortly will have | 11:43 | |
more economic freedom than we do. | 11:46 | |
But this really is a digression, to go back to Italy. | 11:49 | |
As the result of my participation in the conference | 11:53 | |
I did not have much of a chance to find out | 11:55 | |
in any detail what is happening in the Italian economy. | 11:59 | |
The short run situation as in the other countries | 12:04 | |
that I shall discuss, is inflation. | 12:07 | |
They are very much aware of the problem of inflation. | 12:10 | |
It is a very serious problem in Italy as it is today | 12:14 | |
in Germany and in Great Britain. | 12:17 | |
Indeed what you are observing in these countries | 12:19 | |
is a delayed replay of our own experience. | 12:22 | |
Our inflation of the past few years had it's effect | 12:25 | |
on all those countries which we're linked to us | 12:29 | |
by rigid exchange rates. | 12:31 | |
We have been exporting for the past few years inflation | 12:32 | |
and as a result, largely as a result of this, | 12:37 | |
though also of course, as a result of indigenous influences | 12:40 | |
particularly the pressure for full employment | 12:44 | |
and continuous welfare programs. | 12:48 | |
As a result of all this, you have been having | 12:51 | |
inflationary pressure in all the European countries. | 12:53 | |
Beyond this, what impresses me most about Italy | 12:56 | |
is the question about whether it may have passed | 12:59 | |
beyond the point of no return in respect of government | 13:01 | |
involvement in the economy. | 13:04 | |
Westerners do not often appreciate how extensive | 13:06 | |
the role of government is in Italy. | 13:11 | |
I have heard estimates of something like 60 percent | 13:13 | |
of the total economic activity of Italy is already | 13:16 | |
in governmental hands. | 13:20 | |
In addition to the usual kind of thing that you have | 13:21 | |
in most European countries of post, telegraph, | 13:24 | |
railroads and the light, you have in Italy | 13:28 | |
some enormously large governmental conglamoraty | 13:31 | |
and ERI, one of which started out with a oil conglomerate | 13:35 | |
has production on oil, controls a great host of the | 13:41 | |
gas link stations throughout Italy. | 13:48 | |
But in addition, the government owns and runs | 13:51 | |
either through one of these organizations or in other ways | 13:54 | |
oil plants, steel plants, manufacturing enterprises | 13:58 | |
of various kinds. | 14:02 | |
And as I say, not at all clear whether this process | 14:04 | |
can now be reversed or whether you have gone so far | 14:09 | |
that the most likely eventuality is the continued takeover | 14:12 | |
of private enterprises by governmental enterprises. | 14:15 | |
The private enterprises that exist, | 14:19 | |
if we exclude for the moment a very small scale segment. | 14:21 | |
If we exclude the retail merchant | 14:26 | |
of whom there are of course | 14:30 | |
an enormous number, in the small handicraft | 14:32 | |
and artisan activity. | 14:35 | |
The larger enterprises almost all feel themselves | 14:38 | |
dependent upon the governmental sector for support | 14:41 | |
and nurture and have a natural tendency to turn to it. | 14:45 | |
This is why you tend to continue in that path. | 14:48 | |
The saving grace in Italy may however be | 14:51 | |
the extreme individualism of the Italian people. | 14:55 | |
Their extraordinary cleverness | 14:58 | |
in getting around regulations. | 15:00 | |
Their ability to avoid paying income taxes. | 15:02 | |
And indeed to circumvent the best late plans | 15:05 | |
of the central administration. | 15:08 | |
That is the one feature in Italy which from | 15:11 | |
a longer point of view, gives reason for optimism. | 15:13 | |
If I turn from Italy to Great Britain, | 15:16 | |
what impresses me most about Great Britain | 15:21 | |
is the number of respects in which you seem to be having | 15:24 | |
a replay of the American situation. | 15:27 | |
The British have found a new phrase | 15:29 | |
for their present predicament. | 15:32 | |
It's one I haven't heard before, but presumably | 15:34 | |
will hear more of. | 15:36 | |
They described their situation as one of stag deflation. | 15:38 | |
Deflation of course for the, what they are coming to believe | 15:43 | |
as an almost irresistible upward pressure of prices. | 15:49 | |
The stag for stagnation, for the fact that economic output | 15:52 | |
has been growing very slowly, that they have been having | 15:57 | |
something of an increase in unemployment | 16:00 | |
although their level of unemployment is still trivial | 16:04 | |
by our standard. | 16:05 | |
One of the interesting features that occurred | 16:09 | |
was the extent to which the week I was there | 16:13 | |
there was suddenly a great ado, because the figures came out | 16:16 | |
about the very rapid rate of increase and the quantity | 16:20 | |
of money in the quarter just before the election | 16:23 | |
at the rate of 16 percent per year. | 16:26 | |
What amused me about this was that last April | 16:28 | |
when I was in Korea for a day or so, exactly the same story | 16:33 | |
came out before their election, there had been | 16:38 | |
an extraordinarily rapid increase in the quantity | 16:40 | |
of money. | 16:42 | |
I suppose if one is going to have an understanding | 16:43 | |
of what determines a quantity of money in these modern days | 16:46 | |
elections cannot be ruled out. | 16:49 | |
There is as you know, a new government in Great Britain, | 16:53 | |
a heath government, a very surprising turn around. | 16:57 | |
All the pollsters were predicting that labor | 17:03 | |
would be returned but instead the conservatives | 17:05 | |
came through with a moderate margin. | 17:07 | |
And as yet, there is no clear line from the new government | 17:13 | |
exactly what economic or other policies it will follow. | 17:16 | |
During the campaign and to some extent since, | 17:21 | |
it has stressed the | 17:25 | |
as its aim, a reduction in government taxes | 17:30 | |
and a reduction in government expenditures | 17:34 | |
in order to give a greater degree of freedom | 17:36 | |
for the individuals. | 17:38 | |
Whether under the immediate pressures it finds itself, | 17:40 | |
it will be able to do that is a different issue. | 17:43 | |
Aside from the economic situation which I say | 17:49 | |
is something of a replay of the position we were in | 17:53 | |
about a year or a year and a half ago with inflation still | 17:56 | |
very much present, with no clear signs of any effect | 17:59 | |
of monetary policy to cope with that inflation, | 18:03 | |
but with a great deal of talk about desire to do so, | 18:05 | |
with incomes policy much bruited here, widely regarded | 18:09 | |
by everybody on all sides, in Great Britain it's | 18:14 | |
an utter failure and something that has to be abandoned. | 18:16 | |
You have as I say, considerable similarity, | 18:19 | |
although also some differences with the situation in the US. | 18:23 | |
The particular area where I was most impressed with the | 18:26 | |
similarities is in the area of my own special interest, | 18:29 | |
namely monetary analysis. | 18:33 | |
I turn now from the question of economic developments | 18:37 | |
to the question of intellectual developments, | 18:40 | |
the kind of discussions that are going on. | 18:42 | |
Here I felt I was back in the United States | 18:45 | |
roughly five years ago. | 18:47 | |
I attended a monetary conference at Sheffield University | 18:49 | |
that was held for two or three days and the level | 18:51 | |
of the discussion and the controversy was precisely | 18:54 | |
the level that prevailed here about four or five years ago. | 18:57 | |
If we go back all of 30 years, when the Cannes analysis | 19:00 | |
was being developed, it started in Great Britain. | 19:05 | |
And it occurred to me that many of the Englishmen | 19:08 | |
who came over to the United States in the late 30's | 19:11 | |
must of felt very much as I now feel going over to Britain | 19:13 | |
in the early 1970's. | 19:16 | |
They must of felt what backward people these Americans are. | 19:19 | |
They haven't yet caught up with the latest rankle | 19:22 | |
of the multiplier analysis. | 19:24 | |
They don't really understand autonomous expenditures | 19:26 | |
as Cannes has developed at Cambridge. | 19:29 | |
The situation is now the other way around. | 19:32 | |
The monetarists revolution, the monetarists developments | 19:36 | |
have had their origin in the United States. | 19:40 | |
They have passed beyond the initial point. | 19:43 | |
Many of their features have been widely adopted | 19:47 | |
by everybody. | 19:49 | |
The level of discussion is now on | 19:51 | |
a fairly sophisticated level. | 19:52 | |
In Britain on the other hand, the monetarists revolution | 19:54 | |
is just in its early stages. | 19:57 | |
The Cannes are still dominant but thy have passed | 20:00 | |
from the stage of utterly ignoring the monetarists | 20:04 | |
alternative to the stage of deriding it, | 20:08 | |
of making fun of it but without really understanding it. | 20:15 | |
That stage will pass because there is a very able, | 20:19 | |
active group of young people in Britain | 20:22 | |
who are carrying out for British data | 20:25 | |
and British institutions the kind of analysis | 20:27 | |
that did not so much in this country to get a | 20:30 | |
much wider acceptance of monetarists views. | 20:33 | |
And in particular, within the bank of England, | 20:37 | |
which is the English counterpart to our federal reserve | 20:39 | |
system, there is an increasing recognition | 20:42 | |
of the importance of distinguishing between | 20:45 | |
monetary magnitudes and credit magnitudes | 20:48 | |
and increasing work which is being done in that aspect | 20:51 | |
of the problem. | 20:53 | |
While Britain has started out in this respect | 20:55 | |
fairly slowly and is three or four years behind us in this, | 20:58 | |
on a broader level, there is a possibility that Britain | 21:03 | |
will again set the pattern for the United States. | 21:06 | |
One of the things that interested me in talking | 21:09 | |
to various members of the new government, | 21:12 | |
both members of parliament and members of the administration | 21:16 | |
is their determination to start Britain going | 21:23 | |
in a different direction. | 21:26 | |
There is a wide spread disillusionment about | 21:28 | |
the direction of policy that has dominated Britain | 21:32 | |
in the last 20, 25 years. | 21:34 | |
A policy which involves every increasing welfare measures | 21:37 | |
which involves ever large government expenditures | 21:40 | |
which involves ever large government intervention | 21:44 | |
in the affairs of the ordinary business. | 21:46 | |
This move toward what one can call collectivism | 21:50 | |
or central control is a very long standing in Britain. | 21:55 | |
I think one must date it back to before the first World War. | 21:59 | |
The US was slow to follow. | 22:03 | |
It took us about 20 years after Britain initiated this | 22:06 | |
to move. | 22:09 | |
Now the part of the reason why we were so slow | 22:10 | |
and they were so quick was because of the | 22:12 | |
different structures of our two countries. | 22:14 | |
The British have a much more homogenous elite. | 22:16 | |
They have a parliamentary system under which | 22:20 | |
you don't have the pull and haul between president | 22:23 | |
and the congress that we have here in which | 22:25 | |
if the prime minister proposes, congress, | 22:27 | |
that is their parliament must accept. | 22:30 | |
And as a result, it is possible in Great Britain | 22:33 | |
for more drastic changes to take place in a short period | 22:35 | |
of time than it is in the United States. | 22:38 | |
I may say, that is both an advantage of our system | 22:41 | |
and a disadvantage. | 22:43 | |
It's an advantage because it prevents bad developments. | 22:44 | |
It's a disadvantage because it prevents good ones. | 22:48 | |
But, in the present situation, if there is going to be | 22:51 | |
a substantial change in the direction of British policy, | 22:55 | |
it will be away from that pattern of collectivism. | 22:58 | |
It will be toward a pattern of a greater role | 23:01 | |
of individual and the free enterprise and the free markets. | 23:04 | |
What interested me was the signs in the new government | 23:09 | |
that this was a direction that they were interested | 23:13 | |
in taking and therefore it may be that just as Britain | 23:15 | |
led us into the more racive collectivism, | 23:20 | |
it will in the next 20 years start showing us the way out. | 23:22 | |
That may be just wishful thinking, but it is not entirely | 23:26 | |
without some bases and discussions. | 23:31 | |
One of the bases for it I may say, | 23:34 | |
was the extraordinary interest which the British displayed | 23:37 | |
in some of the ideas that I have myself been proposing. | 23:40 | |
I gave a number of talks in Britain, had interviews | 23:45 | |
with a number of papers and I found the atmosphere | 23:48 | |
quite different and much more respective | 23:52 | |
to the ideas I was expressing, than the last time | 23:55 | |
I was in Britain for any period which was several years ago. | 23:59 | |
In the area of welfare, there is a great deal of interest | 24:05 | |
trying to get rid of their universal methods of welfare | 24:08 | |
and shift to what I call a negative income tax, | 24:11 | |
what they have come to call a reverse income tax. | 24:15 | |
In the area of other programs, welfare state programs, | 24:19 | |
there is a great deal of interest in moving | 24:24 | |
to a selective as opposed to a universal approach. | 24:25 | |
There is considerable interest in the voucher plan | 24:29 | |
for schooling. | 24:32 | |
On the financial level, there is a much greater readiness | 24:33 | |
to discuss the possibilities of flexible exchange rates. | 24:38 | |
Indeed, I would be willing to hazard prediction | 24:41 | |
that a move toward flexible or floating exchange rates | 24:45 | |
is highly likely in Great Britain within the next few years | 24:49 | |
despite the fact that Mr. Heath, the present prime minister | 24:52 | |
has always expressed himself as opposed to that. | 24:56 | |
The reason is that Britain will unquestionably run | 25:00 | |
into balance of payment problems. | 25:04 | |
There's no way in which he can avoid it. | 25:06 | |
If we continue to, our present policy of successful | 25:07 | |
moderation of the inflation, of a slowing down in the rate | 25:11 | |
of price rise, while Britain will inevitably | 25:16 | |
be a little slower in getting its price rise under control, | 25:20 | |
then you're going to have balance of payments problems | 25:23 | |
again and this government has almost nothing else to do | 25:25 | |
except to move to floating exchange rates. | 25:28 | |
And this shows up in the extent of discussion of the topic. | 25:30 | |
A book has just come out by Sam Britain, | 25:34 | |
the financial correspondent, financial writer | 25:37 | |
for the Financial Times, which strongly supports | 25:39 | |
floating exchange rates and there are many other signs | 25:44 | |
of interest. | 25:47 | |
So all in all, I think the situation in Britain is one | 25:47 | |
where many changes are in prospect, where it is possible | 25:52 | |
that their stabilization policy will shift | 25:56 | |
from reliance on income policies and fiscal policy | 25:59 | |
to a great degree of reliance on monetary policy. | 26:02 | |
It is possible that their welfare programs will shift | 26:06 | |
toward a more selective and a less rigid structure. | 26:09 | |
It is possible that their international financial policy | 26:12 | |
will shift toward a greater flexibility of exchange rates. | 26:16 | |
One final thing I should mention which is of great interest | 26:19 | |
everywhere in Britain and this is whether Britain | 26:23 | |
will in fact join the common market. | 26:25 | |
Mr. Heath has in the past been one of the great devotes | 26:27 | |
of the common market. | 26:30 | |
He was indeed in the earlier conservative administration, | 26:31 | |
he was designated to engage in the negotiations | 26:35 | |
about the common market. | 26:39 | |
The conservative party is committed to trying to get into | 26:41 | |
the common market. | 26:44 | |
But it is also clear that there is very little interest | 26:45 | |
on the part of the public at large. | 26:49 | |
Most people think that if you had a referendum | 26:51 | |
the English people would vote two to one | 26:53 | |
against going into the common market. | 26:57 | |
The major up to go, is the major agricultural plans | 26:59 | |
of the common market which is an utter mess | 27:02 | |
following a pattern after our own agricultural program. | 27:05 | |
It would involve an enormous cost to Britain, | 27:09 | |
higher food costs at home, as well as pressure | 27:13 | |
on the balance of payments as a result. | 27:18 | |
Unfortunately, I see that my time is up | 27:21 | |
and I will have to stop this comment here | 27:24 | |
and leave my comments on Germany and Iran | 27:27 | |
to the next tape. | 27:30 | |
Woman | Thank you very much Professor Freedman. | 27:32 |
Remember subscribers, if you have any questions or comments | 27:34 | |
for topics you would like to hear discussed in this series, | 27:37 | |
please send them to Instructional Dynamics Incorporated | 27:40 | |
166 East Superior Street, Chicago, Illinois, 60611. | 27:44 | |
Doctor Freedman will be visiting with you again | 27:50 | |
in two weeks. | 27:52 |
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