Like many Americans, Richard Clements Jr. has deep grievances about the state of the nation's economy.
Unlike most, however, he has virtually unlimited time and money to spend on his chosen mission: to rescue the United States from the tight-money policies of the Federal Reserve Board and its chairman, Paul A. Volcker.
Clements, who made millions as a designer and builder of custom homes in California, is an upper-brackets specimen of that peculiar species, the outsider who takes on the establishment in an effort to change conventional thinking.
By his account, his biggest problem is not persuading economists and financiers of the value of his ideas, but getting them to listen to him in the first place. To these experts, he lacks any of the credentials that would oblige them to take his economic theories seriously.
But Clements, undaunted, is pressing ahead with his quixotic campaign. He is convinced that high interest rates cause inflation, rather than curing it, and that the Federal Reserve should therefore allow the money supply to increase on demand, creating a "buyer's market" for money, so long as the funds are channeled into constructive investment.
This runs counter to orthodox economic theory, which holds that overexpansion of the money supply is inflationary, and it ignores the long-established view that if the Fed pumped more money into the economy, investors, anticipating inflation, would demand a higher return for their money, offsetting the rate-lowering impact of the Fed's action.
Coming from an economist or investment executive, Clements' views would be controversial. Coming from an obscure California millionaire, they are met mostly by silence. Last year, when Clements outlined his views in a letter to President Reagan, he sent 1,700 copies to economics professors, bankers and politicians, but received, he said, "only one response from anyone who had actually read the thing," Sen. Alan Cranston (D-Calif.).
He got more response, he said, by giving a copy directly to White House Counselor Edwin Meese III, a fellow member of the Bohemian Club in San Franciso, who forwarded it to a member of the staff of the president's Council of Economic Advisers. The staff member, Clements said, "called me about it. We had lunch, and he told me he disagreed completely with everything I said."
The quest for an audience is "very frustrating," he said during one of his frequent trips to Washington. "I think this nation has an infectious disease called credentialitis. I've been a student of the business of people coming in from the outside and challenging the conventional wisdom and being right. The history of science is full of it -- Darwin, Archimedes, Newton, Galileo. The fact that I lack written credentials doesn't bother me at all. It bothers everybody else," he said.
What Volcker and the Fed should do, he said, "is set guidelines for critical levels of interest rates and head for those guidelines. I would try to bring rates down to where discretionary investment capital is motivated to take risks" instead of buying high-interest paper. The Fed should "make enough money available through the banking system to supply the debt component of investment, and the test of the availability of enough money should be the level of interest rates, which would then be set by the market."
Clements is not without resources in his campaign to challenge orthodox economists. As a member of the Bohemian Club and the Explorers Club, and as a friend of such people as photographer Ansel Adams and commentator Eric Sevareid, he has access to more corridors of power than do many other lonely crusaders. But he still seems to resemble Coleridge's Ancient Mariner, importuning strangers to listen to a tale they would rather not hear.
"I had him checked out thoroughly," a professional acquaintance of Clements said, "and he is a serious person. He is widely respected in the San Francisco area. As for his economic theories, I don't understand them."
Clements, born in Oakland, in 1932, studied philosophy at Berkeley before turning to home building. His specialty was innovative, dramatic houses in the Big Sur area, some of which, including his own home, were featured in a National Geographic article in 1972. Economics, and his views about interest as the fuel of inflation, are a sideline.
"Paradoxically," he said, "my income, which is well into six figures, is almost all interest. I don't have to work, probably for the rest of my life. So I'm not a disgruntled builder who is upset because the housing industry has been paralyzed, but I am a disgruntled American who thinks the housing industry should be the most vital in the nation. It's not. Housing always gets the last money," as reflected in the scarcity of mortgage money that has crippled the industry.
Clements, who describes himself as "exceptionally gifted in a certain type of mathematical reasoning" says he calculates that "80.5 percent of inflation over the last 10 years can be laid directly on the doorstep of interest rate increases." That being the case, he argues, it becomes clear that tight money and high rates ought to be abandoned in favor of an expansion of the money supply to meet the demand. Moreover, Clements argues the increased money should be channeled into the economy through banks, not through issues of Treasury paper, because that will ensure it goes into productive, noninflationary, investment.
"Piggybacked on a Fed policy which would create a buyer's market for money," he said, "there needs to be a set of regulatory controls, the fewer the better, to discourage that money from being used for speculative purposes. It should be used for new businesses, for capital formation, not to speculate in the stock market. I think it is morally beyond belief that a nation could permit a man like Bunker Hunt to borrow billions from banks to corner the silver market when ordinary people can't get credit to put a roof over their heads."
The attempt to persuade the entire economic establishment to jettison theories developed over decades is "not a full time thing," Clements said. He is trying to arrange financing for a string of hotels in the trekking country of Nepal, and works on rewriting Fed policy and the banking regulations between trips to the East Coast and Asia. He has no interest in politics, he said, but he is so convinced of the rightness of his views and the destructiveness of current policy that he will go on risking rebuff and ridicule until "we have a man who thinks like me sitting in Volcker's chair."