Presbyterian Council held at the Federal Reserve Bank of Philadelphia on Monday, April 4, 1966. R I C H L A N D l P O O R L A N D I. INTRODUCTION: WHY TALK ON THIS TOPIC? A. B. Trained as an economist problem has economic aspects! C. Have concern for international economic relations. 1. Balance of payments. 2. Technical Secretary at Bretton Woods. D. Because Bob Hilkert asked me tol II. THERE ARE RICH NATIONS AND POOR NATIONS. A. 3. B. Rich becoming richer; poor becoming poorer H I. FEELING THAT SOMETHING SHOULD BE DONE. A. Selfishlyt 1. Explosive character of situation. 2. Poor now know about differences and have aspirations. B. Moral imperative. 1. Guilt 2. Positive
v o ^ 4 d e ^ & ^ í. U r & t j t ' o í t í * ^ V» / -V* 0 - Z t / jl *^ / / X. / ^ w _ j ^ r á ~. ^ m W. J -T ^ t» L ^. «*'*'~ *»/ ^ ^ á t ^ X. c * ^, - & * ~ 4 * C.+ r+ ~ «y \ J L j f* C j /é ^ ju tc X * * 'i } u J L > fb A u c i. r% S 5. r / ' -V -U ^ ò
(Presbyterian Council, p. 2) IV. WHAT SHOULD BE DONE? A. Simplistic solution. 1. Transfer GNP from rich to poor. i B. Depends on character and organization of people involved. Ca.'L/j& w 1. Character. a, Liberian student wants job "big wheel." (I) I happen to fear power. (Goes back to ray childhood.) (II) Some relish exercising it. b. First-class air travel cleaning your plate. c. Our character is a function of our genes and our environment and experience. d. These change slowly usually. 2. Organization. a. Meaning of democracy in tribal countries. b. Shintoism and Japanese defeat. The success (?) of materialismi V. NOT SO MUCH AN ECONOMIC PROBLEM AS A SOCIAL AND POLITICAL PROBLEM. A. Effectiveness of the Marshall Plan. B. Relative ineffectiveness of aid to underdeveloped countries.
(Presbyterian Council, p. 3) I. WHAT THE UNITED STATES HAS DONE.
T a b l e C-QQ. United States foreign assistance, by type and area, fiscal years 1946-65 [Millions of dollars] Net obligations and loan authorisations Type and fiscal period Total Near East and South Asia Latin America Far East Africa Europe Other and nonregional Foreign assistance: Total postwar... 1062-44 average... 1865... Economic aid: Total postwar... Loans... Grants... 1962-64 average... Loans... Grants... 1066... Loans... Grants... AID and predecessor agencies: Total postwar... 1962-64 average... 1965... Food for Peace: Total postwar... 1962-64 average 1965... Kxport-Import Bank longterm loans: Total postwar... 1862-64 average... 1965... Other economic aid: * Total postwar 1962-64 average... 1965... Military assistance:* Total postwar... Loans Grants... 1962-64 average... Loans...... Grants.... 1965... Loans... Grants... Addendum Repayments and Interest:* Economic assistance: Total postwar... 1965... Military assistance: Total postwar 1965... 115,875 23,600 10,343 25,842 3,237 44,676 8,178 6,505 2,120 1,210 1,369 480 664 782 6,958 2,045 1,346 1,390 347 611 320 81,197 17,324 9,430 16,191 3,061 30,292 4,910 32,008 9,366 6,720 2,926 1,286 11,494 218 49,189 7,958 2,710 13,267 1,766 18,797 4,692 4,861 1,792 1,114 764 464 335 402 2,682 1,234 767 220 170 266 25 2,179 658 347 646 285 69 376 4,645 1,680 1,282 726 329 204 424 2,643 1,336 778 190 157 182 2,002 344 604 635 172 22 424 40,030 *103 3,010 8,625 1,683 10,230 2,479 2,314 922 648 356 248 4 230 2,028 669 632 408 160-1 207 13,225 6,311 1,390 1,960 862 2,334 358 1,671 798 226 283 161 164 60 1,527 922 107 210 117 118 62 8,770 987 3,573 896 380 2,909 26 461 67 115 83 30 166 O 622 78 258 86 34 66 19,172 922 1,456 4,791 136 9,819 2,048 416 6 226 42 16 11 115 671 11 385 22 27 22 106 34,678 4276 913 <9,661 186 14,384 3,268 586 160 132 «35 11 126 134 34,092 0,126 781 <9,616 176 14,269 3,134 1,644 328 96 <695 26 219 380 50 2 6 <12 0) 19 11 1,694 326 90 <683 20 200 309 1,313 365 64 <664 18 307-104 71 25 8 (0 19 19 1,242 340 66 <664 17 288-123 12,156 1,312 2,474 830 298 7,129 116 1,012 275 324 166 36 211 10 302 67 69 14 3 101 07 42 4 6 14 0) 11 9 1Less than $500,000. * Includes capital subscriptions to Inter-American Development Bank, International Bank for Reconstruction and Development, International Development Association, and International Finance Corporation (1946-65, $1,541 million; 1962-64 average, $135 million; 1965, $312 million) and Peace Corps (1946-65, $246 million; 1962-64 average, $54 million; 1965, $85 million). * Includes grant-aid and credit assistance under the Foreign Assistance Act (FAA) phis military assistance grants under other acts. Regional totals for the former include country aid programs only; all other programs are shown in "other and nonregional. FAA military data are from the Department of Defense. Annual data are for deliveries. "Total postwar entries are program totals. * Excludes Australia and New Zealand, shown in "other and nonregional." * Data for certain programs from Department of Commerce. Office of Business Economics, and Department of Defense. Calculations for 1962-64 period not available at time of publication. 8ource: Agency for International Development (except as noted). (ECONOMIC REPORT OF THE PRESIDENT - January 1966) 3P3
UNITED STATES PRIVATE FOREIGN INVESTMENT POSITION END-1964 ($ billions) Total West Europe Canada Latin America Other Countries International Institutions and Unallocated Total U.S. Private Investment Abroad $75-5 $19.5 $24.6 $13.8 $14.6 $2.9 Direct 44.3 12.1 13.8 8.9 7.7 1.9 Portfolio 20.4 5.4 8.8 2.3 2.9 1.0 Short-term 10.7 2.0 2.0 2.6 4.1 ----------- Total Private Foreign Investment in U.S. 42.5 24.8 6.4 5.0 5.6 0.6 Direct 8.4 5.8 2.3 0.1 0.1 Portfolio 16.6 II.9 1-9 1.6 1.0 0.2 Short-term 17.5 7.1 2.2 3.3 4.4 0.4 Net Private Foreign Investment 32.9-5.3 18.2 8.8 9.0 2.3 Net Private Long-term Investment 39.8-0.2 18.4 9.5 9.4 2.7 Source: Survey of Current Business, September 1965
Comments by Karl R. Bopp (Presbyterian Council, p. 1) Monday, April k, 1966 II. REQUIREMENTS FOR INCREASING PER CAPITA INCOME. THE "STANDARD OF LIVING ^.... National Income A. Definition: per capita income = Population---* B. Population developments: For the world: Population tomorrow equals population today - deaths + births. For a nation: Must subtract emigrants and add immigrants. 1. Deaths. a. Survival in an over-populated world. b. Medical science and survival. 2. Emigration. (I) Survival of the unfit? Bentley Glass lecture. Moron. (II) Euthanasia of whom? a. Not a general solution: would result in lowering of standards all around. 3. Immigration. 4. Births. a. Aggravates the problem. a. Control is only prospect with hope. b. Who shall determine? Eugenics. (I) Individual freedom with education? (A) Slow process. (B) Least effect where most needed. (II) The State. (A) Hazards. c. 700 million ChineseI
(Presbyterian Council, p. 2 ) C Income developments. Income» domestic production + net flow with foreigners. 1. Net flow with foreigners. a. Desirable to have maximum gross trade with others. b. Net exports reduce per capita availabilities. c. Net imports increase per capita availabilities. But no permanent solution. (I) Would involve ever larger gifts or indebtedness where we want (II) Ultimate self-support. 2. Domestic production. a. Factors: Land, manpower, organization, capital. b. Output = consumption + saving. Present versus the future. Distribution of + I as affecting c. Saving = investment. d. Investment. (I) Intensive vs. extensive use of capital. (II) Pride, religion, tradition and investment. (A) Religion. (B) Pride. (1) Sacred cows. (2) No fertilizer. (3) Gilding the Taj Mahal. (1) Ethiopia - Haile Selassie and his airplanes. (2) The showpieces - modern steel mill. (C) Tradition: unproductive investment (1) Gold. Silver. (2) Precious stones. (Ill) Modern versus traditional sectors of underdeveloped countries (A) City versus country Digitized for FRASER (B) Education and Rising Expectations
(Presbyterian Council, p. 3) D. Conflict of objectives. 1. No absolute priorities. a* Only 2 per cent of GNP! - and we spend 2+ per cent for some "foolishness. b. Who is to establish what is "foolish"? Incentives to those who want foolish things. c. Marginal utility. 2. Foreign aid ian't ultimately a country to country proposition. a. Poor as well as rich pay taxes. b. Priest on redistribution. 3. National objectives in foreign aid. a. Generosity. b. Self-determination. Do we know what it means for those without our traditions? c. Defense of free world. E. On what conditions should aid depend? 1. Political? 0. 0 On basis of uses. 2. Economic? X. On amount. The problem of incentives. a. Why not on degree to which recipient improves himself? Per capita income. Not a final solution: Aid would continue forever1 At decreasing rate perhaps? Upper limit? b. Difficulties of measurement. Bretton Woods and the populations of China (Kung) and India (Deshmuck).