World Recession and the United States

Abstract

T tHIS subject today invites us British to take a world-wide survey. I pay tribute to centres where work in this direction is going forward, such as the United Nations in New York and its Economic Commission for Europe in Geneva; in both these places you have groups of people who are trying to see the world as a whole. But I would say that, in recent years, the British have not been thinking enough about the world as a whole. After all, we have world-wide interests. What happens in the world as a whole matters very much for our trade and for our overseas investment, and indeed also because people hold sterling all round the world. I have felt in the last year or two that we have been thinking and talking too much about little problems which are really quite parochial, such as, for instance, whether there is a wage spiral in this country. We give that type of problem too much importance in relation to the far graver questions, graver for us, about what is happening i n the world as a whole and what our attitude to that ought to be. I also think-but this is a digression-that we have a bad habit of forming slogans, which get world-wide publicity, entirely from a domestic point of view. We heard a great deal last year about the 'fight against inflation'. That is a terrible slogan to cast around the world, because all the people who have trading connexions with us and people who hold our sterling think, 'Oh, this is something special that is going on in Britain; they have got a formidable wage problem; they have strikes and then they have to make large wage increases.' But the actual cold fact is that, if you take the two years I956 and I957 together, the German hourly earnings-which is perhaps the best index to take-rose i8 per cent, ours rose I3 per cent, and the American rose 9 per cent. Thus our rise is a little worse than the American, but not nearly so bad as the German. Now I do not believe that people round the world who hear these formidable ministerial utterances about wage inflation and how sterling might have to be devalued in consequence-and there was a time last year when a great many people thought it would have to be devalued -are aware of those simple facts that I have just cited, namely, that our wage increases are less than in Germany and only slightly more than in the United States, the two countries which are our principal competitors. But a slogan has come up lately that is far worse than the 'fight against inflation', a slogan which I should say reaches an all-time low. I refer to 444