Ceiling Unlimited

While Washington pulled a long face and talked of austerity ahead (see Controls), Arno H. Johnson, vice president and economist of J. Walter Thompson Co. last week took a refreshingly different view. Said he: "The opportunity exists for Americans to improve their standard of living by one-third within the next five years and at the same time invest $200 billion--or $40 billion a year--in the security of a strong defense." To do this, Johnson told the Chicago Tribune forum, the U.S. will have to step up its productivity, but no more so than it has since 1940.

There is nothing new about the current cry for austerity and controls, said Johnson. When World War II began, he recalled, the economic crepehangers advocated cutting civilian goods and services back from the 1940 level of $72 billion to the $56 billion of the worst depression year. But what actually happened was that the U.S. stepped up its production enough to produce $100 billion of war goods and services in 1944 plus $112 billion for civilian consumption. After that, the U.S. standard of living rose steadily.

After the war, U.S. production continued to climb. By 1950, it stood 57% above 1940, as measured in "real" dollars, corrected for inflation. Reasoned Johnson: "We proved during World War II that we had a productive ability far beyond what had been believed possible. This productive ability is even greater now because of improved facilities and know-how."

By hard work, said Johnson, the U.S. can produce 8% more goods next year, enough for a full defense program and a 5% increase in living standards. In the five years since the war, $86 billion has been spent expanding industrial plants, about 175% more than was spent on such expansion during the war. The U.S. now has a labor force of about 65,000,000, some 9,000,000 greater than during the war. By 1955, when the population, at its current rate of increase, will reach 162,000,000, Johnson believes the U.S. should be able to reach a gross national production of $350 billion (v. $270 billion now). This would provide a $245 billion market for consumer goods, double prewar and one-third greater than in 1949.

Argued Economist Johnson: "We should at least give openminded and serious consideration to the possibility of having an expanding economy providing both 'guns and butter,' before accepting as inevitable the philosophy of 'austerity,' the lowering of living standards, excessive controls and taxation, or excessive centralization of power in Government."

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