Secretary of Labor Ray Marshall said last night that most of the world's large democratic powers "are unwilling to take . . . risks" necessary to return their countries to high employment.
In an unusually blunt speech to the Empire Club in Toronto, the Cabinet officer said central banks should expand the money supply sufficiently to reduce interest rates.
And the national governments should offset surpluses generated by the oil cartel with full-employment budgets that would replace purchasing power lost to excessive oil imports, Marshall continued.
"However, most governments are unwilling to take these risks," he said. "Instead, the industrial world's leaders are uncomfortably balancing the polical costs of budget deficits against those of high unemployment. And their constituencies are unhappy with both sides of the bargain."
The secretary stressed that he was speaking for himself and not reflecting the policies of the Carter administration. But he noted that the issues have been debated within the administration. They also will be discussed at international meetings in Mexco next week, and at an economic summit session in Bonn in mid-July.
Marshall said that the overall problem in the world today is economic stagnation, "which in some ways is similar in a generric sense to the problems industralized market economies faced in the 1930s. At that time, there was a terribly serious imbalance between savings and investment within individual countries."
He said his concern is that nations may resort to protectionism to cut imports, or seek to subsidize exports, leading inevitably to reciprocal actions.
The outcome could be political instability and a repeat of the beggar-thy-neighbor policies or political unrest which both developed in the 1930s.
A specific Marshall suggestion to ease the shifting burden of the oil deficit "is to greatly expand the lending capacity" of the World Bank, so it can make development loans "beyond the capacity of central bankers or individual bankers."
By implicationhe called on the Organization of Petroleum Exporting Countries as well s the Western countries to provide the funds necessary for the expanded program. He noted that members of OPEC as well as the industrialized nations have been reluctant to increase their individual investments in the less developed countries.
On domestic issues, Marshall said a major important lesson to be learned from the protracted U.S. coal strike is that the government should "avoid intervening in collective bargaining disputes unless absolutely necessary."