One economist who wants tighter federal grip on US economy
Economist Wassily Leontief has a favorite image for talking about the economy. He likens it to a sailboat. ''The problem of guiding the economy is like sailing,'' he says. ''You need the wind and a rudder. The wind is the private profit motive. The rudder is government influence.''Skip to next paragraph
Subscribe Today to the Monitor
The New York University professor continues: ''The Russians have a big rudder , but have completely lost the wind.'' In contrast, President Reagan has put a big sail on the American economy and the wind is blowing hard. ''But if he doesn't use the rudder he will end up on the rocks.''
With that image, Dr. Leontief supports some modest degree of state planning.
''Planning,'' he says, ''can never replace initiative, but initiative can never replace planning.''
Many economists nowadays avoid the word ''planning'' - if they're in favor of it. It is a word with so many connotations and preconceptions that many Americans automatically turn off when an economist advocates it. They know that planning has failed to produce prosperity in communist countries and want nothing of it here. So economists talk of a ''national industrial policy'' or ''reindustrialization,'' which involve some degree of government intervention in the economy.
But Leontief has been around for too long to play such word games. He graduated from the University of Leningrad with the title ''Learned Economist'' at the age of 18, got a PhD at the University of Berlin when 21, and joined the faculty at Harvard University a few years later, in 1931. He's the father of input-output economics, winning a Nobel Prize in economics for that in 1973. It is a method of analysis used in dozens of countries, including communist ones, for planning or other purposes. The Russian-born economist is one of those rare individuals who has moved somewhat to the left politically as the years passed, ending up today left of center but generally in favor of free enterprise and not a socialist.
He is certainly not a fan of Reaganomics, which he describes as ''a Darwinian approach to economics.'' Letting businessmen find out what is good or bad investment through the competitive process of success or bankruptcy, he says, ''is a very expensive way of making selection.'' He believes that the government , using input-output analysis, could provide better guidance as to what industries should succeed and what will fail, what jobs will flourish, what activities will dwindle.
In this regard, he and another economist, Dr. Faye Duchin, have just used a ''dynamic'' input-output model to study ''The Impacts of Automation on Employment, 1963-2000.'' The method involves a mathematical and statistical look at the inner workings of the economy, taking account of the output (goods and services) and input (labor, raw materials, semifinished goods, etc.) of various industries or sectors and how they affect one another.
One interesting conclusion is that even the intensive introduction of more computer-based automation should not result in sharp technological unemployment, at least until the year 2000.
There has been a lot written about the impact of automation on jobs. Some say the decline in the rate of growth of the labor force in the years ahead could even produce labor shortages in this decade and the next. By contrast, others have predicted that the manufacturing labor force will fall from more than 25 million now to fewer than 3 million by the year 2010.
These two economists figure their study at least offers something more concrete in the way of analysis.