Free Enterprise

U.S. businessmen, tuning in on the first Presidential address since Casablanca (see p. 75), had good reason to prick up their ears. In a speech in which he mildly chided Labor and Farm leaders for obstructionist tactics, the President failed also to chide Business.

More important still: in discussing the postwar world, the President, while conceding that some governmental spending may be necessary to pick up employment slack, said flatly: "I am certain that private enterprise will provide the vast majority of the jobs.

This open espousal of free enterprise by the President might have sounded still better had not his Administration in the very same week adopted its curious compromise on the 40-hour-week law (see p. 18). Without modification of the law, which forces virtually all employers to pay overtime for work over 40 hours, Economic Stabilizer Byrnes ordered the vast majority of business firms in the 32 areas of critical manpower shortage to go immediately to a 48-hour week.

Not only does this greatly accelerate the forces of inflation but its effect in freeing manpower are dubious. For it disregards the simplest law of free competitive enterprise: namely, that employers will inevitably tend to adjust production and employment to a point where they maximize profits.

Under the workings of this axiom most war firms are now at a 48-hour week or over because the Army and the Navy pay them to pay their workers overtime. On the other hand, most producers of consumer goods are working on a 40-hour week or less, because under frozen prices and material shortages there is no reason for them to push to higher levels. But such employers would willingly do the same work they are now doing with fewer men working longer hours if the 40-hour-week law were relaxed for the duration for most consumer industries and services. But so long as the law holds, business is given a powerful incentive to waste manpower. Nothing in the Administration's new order gets around this hard fact.

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