FIVE DAYS after President Carter announced his anti-inflation program, my husband came across a youth size 18 dress blue shirt that mysteriously showed up in his closet. He has not been a size 18 for some time and neither have his three oldest sons. He handed me the shirt and suggested I see whether the 14-year-old could wear it and if not, give it to his friend Joe.
"I'm not giving this away," said I. "It's a perfectly good shirt. We'll save it." After all, the four-year-old is a boy.
"For nine years?"
"Doesn't matter. By then this shirt will cost $50 and we'll be trapped in a house that no one can afford to buy because it will cost a zillion dollars and we won't have any money to buy children's clothes."
What has me thinking about storing shirts is the fact that President Carter's anti-inflation program, for all it's budget balancing and credit tightening, failed to get to the heart of the problem. And this has happened because this administration has taken to acting like it's serving a three-course meal to the American public and we are supposed to stretch between courses while our host dashes back to the kitchen and throws together the next dish.
First we have an energy message, then we get a budget message, then we get an anti-inflation message. Only it doesn't attack rising oil costs and all the secondary price rises they inevitably provoke. We get an anti-inflation message that doesn't get to the source of inflation.
The administration has put together a series of steps to slow down the domestic economy, but until adjustment of the international aspects of the problem -- namely the exploitive behavior of the OPEC nations -- we are going to continue having direct inflationary pressures coming into the country. We've responded by cutting back oil consumption, but the OPEC countries have kept and will continue to keep their oil prices up because their interest is in money. So far, they've gotten away with this and we now have a world economy that is headed for chaos.
Our response to the energy problem has been to define it as something we have to approach domestically, by shifting to coal and solar energy. We've fallen into the habit of believing there is nothing we can do about the oil markets, that we are defenseless, and that short of seizing the oil fields in the Middle East, we are at the mercy of the OPEC countries. We've failed to realize that energy and the economy are fundamentally inseparable and that we can use our economic muscle to resolve our energy problems. Our decision-making has been based on the premise that we are weak when it comes to energy, rather than the premise Teddy Roosevelt would have used, namely that we are strong when it comes to economics.
The premise of weakness has been the Carter approach. Here is a scenario for what Teddy Roosevelt might have done, a scenario drawn by an economist who points out that we are probably the only country in the world that is in a position to reorganize the world economy and to stabilize it.
The weapon, the big stick in this, would be our trade agreements. The strategy in this scenario has an immensely appealing simpicity which begins with us saying, in effect, we've tried to be a good neighbor, we've played by the rules, but we are being exploited to a point where our national welfare is in jeopardy.
Then we stop the game by suspending our current trade agreements. We announce that we are interested only in buying from and selling to countries that are as interested in stabilizing prices and stopping world-wide inflation as we are. We enter into bilateral trade agreements with those countries, and a condition in those trade agreements is that they, too, will only enter into bilateral trade agreements with other countries that are committed to price stabilization programs.
How would this work? First off, Teddy Roosevelt would line up Saudi Arabia with the assurance that we will supply them with all they need to build universities and roads and military aid in return for their agreement to supply us with our oil needs. This takes most of the pressure off us, and creates enormous problems for other countries since the Saudis could not supply them with oil unless they joined the price stabilization plan.
We then announce that we will not buy oil from any country that does not establish a long-range commitment to stable oil prices. We won't import their oil, and we won't export our typewriters, automobiles and wheat. The scenario assumes that Canada and Australia would join the United States and that, therefore, the world grain market would be limited to countries committed to stable price programs.
What are the risks? Obviously, as the Olympic boycott proposal has demonstrated, the rest of the world can tell us to fly a kite. But we are not talking about athletes and medals and a country whose national interests are as remote from ours as they are from almost everyone else's. We are talking about agricultural exports and trade agreements that go to the very heart of the way much of the world lives. If the rest of the world refused to go along, we would have our international trade lines dry up, and high -- maybe 15 per cent -- unemployment, but other countries would be in far worse trouble.
On the other hand, the goal of price stabilization and restortion of order to the world economy is such an attractive one that countries behaving rationally would want to join in. The countries that would hesitate are those such as Libya that are currently hellbent on exploiting the rest of the world for money.
Who could be hurt in all of this? If our exports are reduced or dried up, large American corporations with a lot of international activity would be unhappy. Farmers might have to produce less, but we know how to subsidize them. Some small countries we care about might be damaged unintentionally and we might want to help them with a Marshall Plan.
Our current approach to international business has evolved in a series of trade conferences held since World War II, which is another way of saying the approach has not been with us so long that it can't be challenged and changed.
The main issue here is setting our domestic economy in order so we can protect the economic freedoms and prosperity that are such a part of the American way of life. But we will never be able to do that until we get our international problems stabilized.
The Carter administration has yet to face that. Jimmy Carter is still wringing his hands and telling us to tighten our belts and stop spending. Teddy Roosevelt might be saying all of those things too, but I suspect he would also be saying no more Mr. Nice Guy.