Labor, Capital, and Materials

Abstract

GOVERNMENT impinges on economic matters in a great many ways—in fact, government is something like the mushroom in Alice in Wonderland. You may remember that the rabbit told Alice to eat some of a special mushroom: One side makes you smaller, the other one taller. The government mushroom affects the economic structure—enlarging and contracting—in a great variety of ways, which may be conveniently summarized in four broad groups: 1. Fiscal policy, including such matters as spending, taxing, lending and guaranteeing, and debt management. 2. Monetary Policy, including such matters as selective credit controls over specific kinds of credit, and general efforts to influence the volume of bank credit. 3. Regulatory functions, as for example, the supervision of transportation and communication. 4. Physical controls used in war and emergency periods to influence the use of materials and manpower and put ceilings on prices and wages. Raw Materials There is a general shortage of raw ...