TALK ABOUT THE RECESSION

Artemus Smith (a hardheaded businessman): As I was saying, Joe. I'm tired of all this pussyfooting. Why not come right out and call it a depression?

Josephus Jones (a watcher of trends, an economist): Couldn't agree more, Art. I'm tired of euphemisms myself.

Smith: Good! Good to get that settled. But I've been fascinated by something else. I hate to blurt it out, because some people might mistake my meaning. But this isn't really a sincere depression.

Jones: What do you mean? Sounds like you've been spending too much time on Madison Avenue.

Smith: What I mean is--well, pollsters like Sam Lubell have discovered that most people aren't very disturbed by the depression and, God knows, a lot of businessmen think it will be over in six months or so without getting much worse. You know--not really cutting deep, not sincere.

Jones: True, true. As my barber says, it isn't as if people didn't have money.

Smith: Sure, they've got money. They're saving it, and they're paying off earlier purchases and things like that. But they're not spending enough of it on new goods. I guess there are lots of reasons for this. But I think I've got the real name for what's going on. It's the Depression of Consumer Disenchantment.

Jones: Now you sound like you've been hobnobbing with those fellows over on FORTUNE. That's a pretty fancy phrase. But you may be right. What worries me--and I'm not a businessman--is that if this disenchantment continues long enough, we might get a sincere depression. I think we need to watch the next few months with a good deal of nervousness.

Smith: Right. But let's be sure what we're nervous about. After all, this recession was triggered by attempts to check inflation. The Fed's tight-money policy was right, and then you had that congressional howl about economy. But of course it's too much to expect that you can manipulate the economy with precision.

Jones: Not from Washington alone.

Smith: No! But businessmen did some damage, too. They overproduced, and they cut down investment--one of the perils, by the way, of the Age of Abundance. Much of the blame has to go to the auto industry. The overselling of cars in 1955 was shocking. And it was a mistake not to cut prices in 1957. Matter of fact, this depression could rightly be called the Auto Depression.

Jones: Well, it could. But consider that, by creating a surplus of cars, the auto industry probably reduced the actual price to the buyer--by big knock-offs on the list price. That leads me back to your talk about consumer disenchantment. How did it start--what with these price knockoffs and discount houses, and such?

Smith: I was coming to that. Point is, the American people have been buying a huge volume of goods, and they're pleased with their high standard of living. But just as services--TV repairing, dry cleaning, and such--have got more expensive, a lot of them got steadily worse. Goods, too, have declined in quality. Even such a basic item as the modern house is not what it should be; it's often thrown together like a woodshed.

Jones: That's pretty tough talk.

Smith: Maybe it is. But the fact is that the more buying of a lot of goods has not made people happy. It has not given them the psychic lift that so much advertising promised. I am not saying that people are on a conscious buyers' strike. I simply suggest that they are disenchanted with all the goodies on the American market, and are resisting. The field of home and women's products is a good example. Don't you think the housewife gets tired of being told that this shampoo or that detergent will hold her husband or solve her housekeeping problems? Maybe she would like to be told that a product is good because it wears well and does what it is supposed to do, reliably and economically.

Jones: Well, the women don't seem to mind being pushed around. They're still susceptible to any suggestion that they can become more beautiful. Look at the beauty industry--it's doing better than ever. And many of the items that come into the home are really invaluable--frozen foods and instant cake mixes that allow even the worst cook to turn out a good job.

Smith: The facts seem to prove that the consumer is good and tired of the U.S. car, at least--and that's far more important than cake mix.

Jones: Sure is. But maybe one of Detroit's big troubles is that it made its cars too well; they don't wear out fast enough. Let me read you something from London's Spectator. One of its writers, who has driven every sort of foreign car, gives his considered view of American cars as follows: "The reason I particularly like the Thunderbird is that everything works. Nothing goes wrong. Everything has a solid feel, all accessories seem to be infallible."

Smith: That's good to hear. They've always been good under the hood. Right now it's those damn fins and all that chrome that's bothering people.

Jones: I thought right now, as Ike says, the problem is to get more people to buy more things.

Smith: That's only part of the problem. The real question is not how to cure the depression quickly, but to do what's best for the country in the long run. This means more than getting people to go out and buy a new lipstick or a new refrigerator. If the depression is to serve any purpose, the people, and especially businessmen, should learn the proper economic lessons from it. They should relearn such basic virtues as prudence and the value of a good day's work, and what is worth how much. We need to cut waste, and work for a balanced budget.

Jones: You're talking like a Republican now.

Smith: Well, why not? If we try to solve our economic problems by shoving goods down people's throats through manufactured money and high-pressure salesmanship, we risk a deep corruption of the people, not just because they will be stuffed with goods they haven't earned and don't really need, but also because people eventually won't know what to do with them.

Jones: An overstuffed cornucopia! But let's not forget the problem at hand.

Smith: Let's not. What do you think it is?

Jones: Well, it could be a tax cut. Make a lot of people feel very good, and get a lot of money released for buying.

Smith: But I doubt it's the way to solve the depression. It would make the deficit too big and it would be too demagogic to do good where it is most needed.

Jones: A lot of businessmen and economists think so. The Committee for Economic Development and the National Planning Association have come out for a tax cut, and so has the Rockefeller Brothers Fund. So, for that matter, has Harry Truman.

Smith: I prefer less spectacular methods. Public works is a good starter, especially since many projects, such as highways, need doing anyway. Housing should be stimulated, and I have the pious but not unreasonable hope that we can get better houses. Urban renewal is a necessity, depression or no. Unemployment compensation should be increased to relieve distress.

Jones: All acceptable, but you've got to remember that politics determines what is really done.

Smith: True. And the depression--or recession--is a good excuse for a lot of political-economic folly--farm subsidies, xenophobic trade measures and things like that. What we really need, to use a businessman's trite expression, is a truly sound economy--growth and expansion, yes, but tempered with soundness. And we need to have it sound at every level--at the level of Government, at the level of the corporation, and at the level of the individual family budget.

Jones: For once, I can fully agree.

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