1977 Economic Outlook

article image
The economic outlook in July 1977 looked dim as people from all around the world tried to find solutions to inflation and energy crisis problems. 

1977 London Economic Summit

The newspapers and TV news reporters all proclaimed the May 7 — 8, 1977 London Economic Summit a great success. The leaders of the U.S., Canada, West Germany, Japan, France, Italy, and Britain — we were sagely informed — unanimously agreed that all seven countries favored economic growth without inflation. (How those leaders proposed to bring this about at this time — or to turn water into wine or repeal the law of gravity — was not revealed.)

Interestingly enough, however, none of those glowing stories quoted Horst Schulmann — Chief Adviser, Directorate General II, Economic and Financial Affairs, European Economic Community — who predicts that, despite rosy Summit press releases, the European community won’t be able to meet even its currently modest goals for growth and employment. As a result, says Mr. Schulmann (and, again, despite Summit pledges of trade cooperation), more and more countries in the months ahead will desperately try to stay financially alive at each other’s expense by restricting imports and promoting exports.

This, of course, will not work and it’s just a matter of time until the “strong” (those with “only” 4-to-6 percent inflation) and not-so-strong countries of the West go down the tubes to join the other nations that have already been transformed into communist satellites. “In a few years,” states Herr Schulmann, “the United States won’t have to worry about relations with Europe. It will be dealing with an extension of the Russian Empire.”

Those newspaper and TV features on the London Economic Summit — which did such a wonderful job of telling us that Jimmy Carter stole the show with his down-home admission that he “has a lot to learn about economics” — also completely overlooked the real story of the meeting: the fact that it was held at all.

Back in the “Good Old Days” before the printing press money crowd gained control of most of the world’s governments, there simply was no need for such grandstand plays to reassure the planet’s peons that “someone’s doing something” about the earth’s (politically created) economic ills. It was 31 1/2 years between the major economic conference held in Bretton Woods, New Hampshire in July of 1944 and the one held in France, November 15 — 17, 1975. But in just the following year and a half, the world has witnessed two more Economic Summits (one in Puerto Rico in June of 1976 and the second in London this past May) … and still another is planned for early next year (these things are currently being staged more often than class reunions), probably in Germany.

This may be a foolish question … but why is it that the more frequently our “leaders” get together to “solve” our economic problems … the faster the world’s economy goes to hell in a hand basket? 

Economic Inflation

And why is it if we’ve really made all the economic “advances” since World War II that the Keynesian politicians and economists brag about … why is it that almost everyone on the planet (except the Arabs, who woke up to the difference between real wealth and paper promises in 1974) is now in hock up to his or her ear lobes to everybody else?

Why is it that the whole world is absolutely awash in printing press money … yet nearly every country on earth — “rich” or “poor,” democratic or communistic, developed or underdeveloped — is desperate for enough credit to get it through this year … this month … even, in some cases, this week? Why is it that almost every one of the world’s addled “leaders” thinks that just a little more credit — just a little more printing press money — is all his country needs to “prime the pump” and put it back on the road to prosperity?

Doesn’t anyone (except the Germans) remember that the deluded “leaders” of the Weimar Republic — already afloat in fiat currency — also cried for “just a little more credit” … right up until their self-induced hyperinflation plunged Germany into a mirror-image depression?

“Energy Crisis”

And why is it that we now allow complete idiots to mold our opinions for us? In the May 15, 1977 issue of one particularly vapid economic tip sheet (claimed to be the fastest growing periodical of its kind), its editor-in-chief confidentially, confidently, and blandly wrapped up (at least to his satisfaction) one of the “problems” of the world with this sentence: “Suffice it to say that the United States is running out of energy.” (The emphasis is his.)

As if that weren’t bad enough (then again, with only something over 22,000 subscribers, just how much harm can a publication carrying that sort of foolish blathering do?), Eric Sevareid keynoted one of his portentous “commentaries” on the CBS Evening News during the week of May 15 with nearly identical words.

The U.S. is NOT “running out of energy.” Not as long as the sun shines and the wind blows and water runs downhill and cattle graze in pastures and trees grow and people can walk and lift boxes and ride bicycles and there’s still uncounted tons of coal buried in the earth. (That’s why MOTHER has always been very careful to talk about the “so-called energy crisis.” Such a “crisis” exists only in the minds of politicians, sellers of fast-buck tip sheets, and people who stupidly believe that a large Gross National Product can somehow be equated with a high standard of living.)

What we really have is a gluttony crisis … an addiction crisis. The whole world — and the United States in particular — has simply become accustomed to lazily and wantonly gorging itself unnecessarily on energy …  most especially on easily tapped and easily transported and easily processed oil and natural gas energy. Modern society, in short, is a gigantic petroleum junkie. And now that the planet’s production of petroleum is starting to peak — and will almost certainly soon begin to taper off — a certain number of us are attempting to “solve” this “problem” — or out and out personally profit from it — by hysterically telling anyone who’ll listen that “the United States is running out of energy.”

Don’t you believe it. We’re not running out of energy at all. And, even if we were, just remember that Sweden has roughly the same standard of living as the U.S. (an even higher one, in many respects) … but, per capita, consumes only 60 percent as much energy as the United States. If we’ll only act rationally and not be stampeded by those with a vested interest in mass hysteria, we’ve got a long, long way to go yet before we face any real and serious energy problems.

Federal Department of Energy

Real problems, that is. The contrived complications (courtesy of our politicians) are already here. And a few calm individuals are trying to point them out.

Jimmy Carter and James Schlesinger’s hastily conceived “solution” to the “energy problem” — the establishment of a super agency Federal Department of Energy — has already been tagged by Nobel Prize winning economist Milton Friedman as a disaster. Friedman said — in the May 23, 1977 issue of Newsweek — that, “The new Energy Department will produce distortions and disruptions, which its Secretary and its bureaucrats will take not as evidence of their own malfeasance but as demonstrating the need for still broader powers.”

Mr. Friedman bases his opinion, in part, on the fact that the Federal Energy Administration — which was established in 1973 to “solve” the nation’s so-called energy problem — has, in fact, solved nothing. Instead — in four years — it has grown from zero to 4,000 employees, created a great deal of confusion, and spawned “no one knows how many agencies … to ‘solve’ the energy crisis that theFEA and its associated agencies have created.” (Our emphasis.)

Economist Friedman finds it disconcerting that, for this completely counterproductive performance, the FEA is now to be rewarded — if Carter and Schlesinger have their way — by expansion from an administration into a department … which, for starters, will employ 20,000 people. “A Department of Energy has the potential of being … the most harmful of all federal agencies,” says Friedman. “Our economic system has been able to survive the U.S. Postal Service. It has been able to survive Amtrak. I suspect that it will survive Conrail … but can our economic system survive federal control of the pricing, the production, the distribution, the import of energy? … (This is) a further major step toward converting our free-enterprise system into a corporate state.”

Social Security System

Although it was no surprise to regular MOTHER readers (the fact has been reported in these pages several times), Jimmy Carter — as you know — recently discovered that the U.S. social security system is bankrupt. As usual, though, Jimmy (being a politician and all) has an answer to the problem. No, he’s not going to try to halt the federal government’s “something for everybody for nothing” philosophy. He’s proposing, instead, that the yawning deficit be papered over with more taxes, more government fiscal sleight of hand, and more printing press money.

Medical Insurance

Blue Shield, which provides medical insurance to 72 million U.S. citizens, has announced that, in an effort to “check runaway medical costs,” it will no longer routinely approve payment for “28 ineffective operations and diagnostic tests.” William E. Ryan, Blue Shield Association president, further states that the no-payment list “will be expanded to cover new procedures with undemonstrated effectiveness as well as other medical specialties.”

City Updates

  • Chicago is doing without new traffic signals and is skipping street repairs.
  • Seattle will mow the grass in ifs parks less often.
  • The animals in Atlanta’s zoo will be fed a less costly diet.
  • New Orleans has cut the frequency of its trash collections and now closes its libraries on Sundays.
  • Philadelphia is shutting down its only public hospital and has canceled the construction of 32 playgrounds and swimming pools, a library, a health center, and a police station.
  • Boston no longer operates its swimming pools during the winter and has trimmed the number of foot patrolmen on its police force. So reports Paul Delaney, in a New York Times article about cities, tight budgets, and dropped services.

The Art of Bartering

It ain’t just MOTHER readers who now beat the high cost of living with barter. Swapping out goods and services is a lot more important to the world’s economy than the governments which print paper money would like you to believe. A front page article in the May 18, 1977 issue of The Wall Street Journal reports that perhaps as much as 40 percent of all trade between the West and Eastern European communist countries is now conducted by barter, that some cash-short Third World nations see barter as “the only road to economic development,” and that even Switzerland — which has one of the strongest currencies in the world — has to barter an increasing amount of its high quality industrial goods “to be … competitive.”

The Great Frontier

We’ve said it many times before in these pages, but we’ll say it again: The boom of what Walter Prescott Webb has called The Great Frontier is over and the quality of life will steadily deteriorate for as long as you, your children, and your children’s children live.

Democracy is giving way to socialism and fascism. Prosperity is slipping through the fingers of England and Europe (and it will eventually slip through our fingers too). You can look forward to a future of brownouts, blackouts, expensive fossil fuels, increasing government controls, rising crime and pollution, of things that “don’t work as well as they used to.” People who put faith in the brayings of politicians and the paper promises of government, insurance companies, large corporations, and the other issuers of printed money, annuities, pensions, insurance policies, stocks, bonds, etc., are in for an especially hard time.

Put your faith in yourself and in real wealth. Buy a piece of land. Own your own house. Heat with solar energy. Build a windplant. Put up a greenhouse. Grow a garden. Raise chickens. Keep a cow or a couple of goats. Set up your own little business which provides a service that others need in good times or bad. Stash away some gold and silver coins, bottles of liquor, and other trade goods that will always be worth something no matter how wildly the value of paper money fluctuates. If worst comes to worst, you’ll — at least — be prepared. And if the worst doesn’t come to pass? You’ll still be able to sleep at night when all your neighbors are developing ulcers as Blue Shield goes completely out of business, the stock market is declared dead, social security finally and absolutely tails, the pension funds dry up … and the world’s “leaders” declare monthly — or weekly — Economic Summits.

Need Help? Call 1-800-234-3368