Although the world has enough natural resources to sustain economic growth well into the 21st century, the United States is inadequately prepared to cope with raw material and commodity shortages caused by economic "shocks," a high-level commission reported yesterday.
In a voluminous report to the President and Congress, the National Commission on Supplies and Shortages proposed measures to ameliorate crises like the 1973-74 shortages in materials ranging from steel to plastics that prompted Congress to commission the study.
The proposals include:
Limited domestic stockpiling of critical materials as "worthwhile insurance" against sudden, severe disruptions in supply or cartel-inspired price increases, along with negotiations to achieve multinational grain stockpiles.
Removal of depletion allowances on the ground that they are a costly, ineffective tool for stimulating resource development, and encouragement of recycling by mandatory deposits on beverage containers, excise taxes on nonreturnable containers and disposal charges on paper and packaging.
Major improvements in governmental collection and analysis of information about resources' supply and demand, including "better early warning of impending problems," and more long-range policy planning including budgeting for more than one year at a time.
Creation of an economic and industrial monitoring unit within the Office of Management and Budget, a strengthened resource analysis by the Council of Economic Advisers and creation of a Department of Energy and Natural Resources, combining the Interior Department, parts of the Commerce Department and various other resource-related agencies. (President-elect Jimmy Carter has proposed a Department of Energy that would not embrace all of the Interior Department.)
Restructuring of congressional committees to "permit more effective consideration of complex and interrelated policy issues" in the resources field.
Improved management of federal research and development efforts, without which, the commission said, it is impossible to assess whether current efforts are sufficient.
The commission, headed by Rand Corp. President Donald B. Rice with Treasury Secretary William E. Simon as vice chairman, was created in response to the acute shortage of fuel, raw materials and industrial commodities in 1973 and 1974.
It was charged with assessing how close the world is to resource exhaustion, the nation's dependence on imported materials and governmental and market mechanisms for dealing with shortages.
Rejecting the views of "catastrophists" and "cornucoplans," the commission said that "the geologic, economic and demographic evidence indicates that no physical lack of resources will seriously strain our economic growth for the next quarter century and probably for generations thereafter."
Experience shows that estimates of most reserves will continue to increase and in the few cases where resources appear to be running out "there will be sufficient warning for adjustments," such as development of substitutes, the commission said.
But it said that increasingly complex international relationships, including population pressures, tensions between Northern and Southern Hemisphere countries and energy demands make necessary better monitoring of readily available resources and a "more sophisticated, more responsible role for government in interpreting and supplementing market signals."
This was missing in the early 1970s, the commission said, when a worldwide surge in demand, insufficient production capacity and a "shortage mentality" leading to inventory hoarding combined to create "widespread and severe shortages in aluminum, copper, chemicals, petrochemicals, steel, paper, plastics and other materials."
"Our analysis of the period shows that the magnitude of the government's influence over the materials industries - sometimes subtle, sometimes direct - was not fully appreciated," the commission said. "It is essential that government policies be consistent and exert a stablilizing influence on the economy.This cannot happen unless the government understands the effects of its actions, not only on the economy as a whole, but on important segments of it."
As for reliance on imports, the commission found that "except for petroleum, our dependence has increased only modestly" and will continue at a similar pace unless environmental controls curb production or government support programs increase it. The commission said it did not favor governmental support of production to promote self-sufficiency.
The commission also found that there is no immediate danger of a "squeeze on nonfuel minerals comparable to the oil crisis of 1973-74" and said that embargoes on mineral exports would be ineffective.
But supply problems can occur, it said, because of civil disorders, local military hostilities, manipulation of prices by producers and unfavorable governmental attitudes toward foreign investments.
The commission suggested cooperation with Third World countries on production and safe of raw materials and an international convention on export controls.