Diagnosis & Prescription

The man who made the most sense about the U.S. economy last week was Vice President Nixon. He ignored, for the moment, the economic thermometers that showed the cost of living at a new high, and unemployment compensation at a new high, too. He gave the body-economic a couple of solid thumps and came up with his prescription: some belt-tightening around the soft underbelly of business and labor, a generous dosage of self-reliance, and a faith that the U.S. Government has no intention of letting a full-scale depression develop.

"We can state this categorically," said white-tied Richard Nixon to a banquet of the American Newspaper Publishers Association in Manhattan. "There will be no depression in the United States."

Bad Habits. A normal economic system, said Nixon, "just like a normal human body, does not and should not run at full speed all the time. There are times when it must slow down so that needed changes can be made and bad habits and faulty practices corrected."

Some of the bad habits belong to business. Since 1946 "we have been getting soft in a period of easy sales. Many businesses have enjoyed sellers' markets for 15 or 20 years . . . We have become a nation of order-takers rather than salesmen."

Some of the bad habits belong to labor: wage increases not based upon increases in productivity mean higher prices, lower sales, fewer jobs. "The pattern of spectacular competitive wage increases is relatively new in American labor. It arose after 1946 because of special postwar conditions."

The Central But. Government, said Nixon, should help "correct the evils of inflation, profitless prosperity and low productivity." Action already taken includes: 1) more extended unemployment compensation; 2) accelerated Government spending especially in hard-hit areas; 3) more credit. Government should promote a sense-making public-works program but should resist "massive spending--a spending binge now can only lead to a, hangover of debt and inflation later."

"If further action should be required, a tax cut is the fastest, the best and surest method" to stimulate an upturn. ''However, a tax cut will not do the job unless it is the right kind. It must be designed to put money in the hands of investors and job creators as well as consumers."

But, said Nixon--and it was perhaps the central "but" of Recession 1958--"there is too much of a tendency in some business quarters to say: let the Government bail out the economy. Government can help, but the primary responsibility for recovery must be assumed by American business and labor and the other vital forces that make up the private sector of the American economy."

The future of the U.S. economy, Nixon summed up, is the bright promise propounded by the newest Rockefeller report of beefing up the gross national product from $434 billion today to $707 billion in 1967. "It will never be achieved if we adopt a standpat status quo attitude toward our economy. It will never be attained in a socialistic straitjacket."

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