We drop out. So the next Administration will have to admit that we were never offended by excessive hyperbole. We were never reticent to announce that we had one more historic first. We were more reluctant to admit that I guess in retrospect most of our historic first. We're nothing more than Migos on my eyes glaze over which was perhaps one of our major contributions taste like shoe a life in America in my case Juanita and I don't know whether you've been around long enough to to I have this experience. The only thing anything remembers about me when pressed is that in a another moment of indiscretion. I didn't indicate that then explaining my departure from the Nixon White House that I guess my fat my calves were so fat that I couldn't click my heels and today it makes no difference where I appear whether it's testifying on the Chrysler matter or some other occasion that I think is important. The first question is always mr. Secretary. How are your calves today? Maui Wowie in the Nixon Administration may have launched a bunch of Migos in some respects. I think this President it is honest and fair to say has coalesced a remarkable group of constituencies in what I shall call a new and an unmistakable Reagan consensus. It is truly a historic first. And yet has broad and deep as the consensus is and is relieved and in some ways enthusiastic as the country is about a more honest sense of our past and future. I also detect. That there is an unexpected mix of conflicted emotions. I missed all of the excitement about this program. I sent some growing signs of disquiet however, respectful however discreet and growing I think doubts that somehow the Reagan program fills fits the Reagan consent consensus. Let me put it a bit differently. Could it be that the Reagan consensus of campaign 80 had such momentum that a new consensus the consensus of 81 has since emerged I sent growing numbers of people in business at least while I'm nervously grateful to the present for defining and leading this remarkable new consensus. Wonder if last year's political program is up to this year's consensus, whether they political commitments of campaign 80 are really adequate to the new consensus for the spring of 81. Let me therefore analyze the consensus and analyze the program as I see it against that consensus. Try to Define what I see as its great promise as well as its potential for disappointment. I hate to refute every shoot our Charming Hostess, but I should say that I am an on anima to amanat Nani, I know I'm not an economist because I wouldn't know a model if it's your hands with me. And I from my standpoint my de maiz in Washington was a premature. It was untimely and it was an elegant but and I think everyone would agree that I established myself as a non-politician of fat calves and all. So my only defense for being here, is that a Charming woman Maria Roth invited me. I can't imagine what your defense is for being here unless it's at The Economist and politicians got us where we are. What can we listen to Blues by listen to someone that is neither The Economist North politician. So let's look at this consensus. I think the consensus number one is obviously that inflation is truly a Public Enemy Number One. As we used to say in Nebraska, I think our long National ambivalence is over about that subject. I think among other things the thing that it is brought it to this level of consensus is that it used to be romantic, I guess to talk about zero growth, but now that it's here. It seems like not an occasion for celebration. Secondly while I think the country agrees that inflation really is Public Enemy Number One. The Reagan consensus to is the government spending is indeed and is kissing cousin the federal deficits in the federal borrowing is the number one cause of it all, you know, the Drury statistics non defense spending as increase 44% for your faster than GNP Federal transfer payments that increase 67% faster than GNP. And ironically it is this fastest-growing category that has been excluded from any of the Reagan budget cuts. Let me just take you through briefly some interesting numbers. If you remember that they directly and indirectly and directly index Federal transfer programs account for about 40% of the spending defense spending for another 25 and interest payments for 10. I think that leaves us with the vast majority of the budget cuts must come from only 30% of the of the budget while this is very difficult in 82, it becomes extraordinary difficult and 84. For example, I've seen estimates that if we keep insisting that the budget cuts are restricted to those items to that 30% of the budget. It'll be a requirement to cut it in half my 1984. Now that's kind of the budget has been plundered to the point effectively. I think by the OMB but the what's left is terribly cut up or terribly popular or terribly important and what I'm trying to suggest is that more budget cuts, I think will be very very difficult to to get from that area. Now in this vein, it seems to me that it becomes important to discuss the question of whether these highly sensitive political program. So I should be excluded the other day and I don't say this in a sexist way, but even I a compassionate conservative if that's not an oxymoron in the in the minds of some of you For the argument made by a woman that could have been made by anyone that she assumed that we Republicans new. The big slashers in sex education for example would result in big increases and illegitimate children unwanted by mother son. Wanted by Society at enormous cost to us all she said was this a supply side effect that we supply-siders wear after. It didn't take too many questions like this to get me thinking hard about some of these transfer payments programs Reagan consensus number three savings and investment. I think most Americans now agree and understand that we're sadly behind the world and savings and investment. I think many Americans look for example at the Toyota plant as there's a kind of an image. They say that the worker they are saying about 25% of what he makes. That there's unparalleled Automation and Robotics and so forth and that these Toyota's are multiplying not on the the docks of Tokyo, but on the streets of America and more Americans, I think know that your pan with an economy half the size of ours is now spending more in absolute terms and planting equipment than we are. On R&D, which is a subject that I would have hoped would get more attention in this and other programs many Americans know the last 15 years, Japan and West Germany have more than doubled their output of scientists and Engineers wear as we've gone down five to 10% in the patent office. I am not happy about saying that in the 68 to 78. American patents declined about 10% All Japanese patents went up 372% The patent balance between ourselves in the United States has shifted about 5 years ago in favor of Japan more Patton, so there's here than ours there. On high technology products, but you are a really litmus test of our competitive position on the horizons. It might be interesting to know that last year Japan became the country with the largest surplus of technologically intensive products in the world. And finally if we look at these Marvels companies that have been a so close to the to the fiber in the strength of this country the small budding entrepreneurial technical companies that are rocks Polaroid the Hewlett-Packard Etc. It's interesting to see how rapidly that number is trunk of small companies coming to the market for about five hundred fifty and nineteen seventy in 78. We had 29 So one has to squint a bit. I think to see the budding Xerox is polarized hewlett-packard's and so forth. So is it any wonder that people are saying one part of our economic malaise is to find perhaps 45% more of our GNP to put into planning equipment in R&D. I think the fourth Reagan consensus is defense and in the interest of time, let me just stipulate though. I got a lot of numbers on it that the defense budgets are going up. Now against this consensus, let's take a brief look at the program. How confident are we that the budget deficits will be as well? If that's the right number. I word as they are projected. I say the rest of the much larger budget deficit are to be at least unacceptably large. I talked in preparation for this event may surprise you Maria, but I did prepare for it a bit. I went to friend of mine in the government off the Record as I say and look for alternative scenarios and I was interested if that's the right word to say that one scenario could say the government deficit at something like a hundred billion dollars under a variety of circumstances that if you wish we can discuss I am a business. I have learned to respect the inevitable logic of compound probabilities. Each of the guy that goes to this program the high rate of growth. They rapidly declining inflation rate to five and a half percent in four years the rapid decline in interest rates from 11 and a half percent to 7% the drop in unemployment rate each. One of these alone is not impossible. We have accomplished eat separately before but to me the important question is whether in the future because never in the past have we accomplished so many things simultaneously along with a restricted the money supply. So I think something we got to talk about if anybody's interested is what the odds are of that deficit being where they are. This leads me painfully but inescapably to the requirement that we need to even larger and more substantial budget cuts. We need them to protect us against the distinct and even likely possibility that some of the beds at that budget beds are over-optimistic. We are after all here not betting on Chrysler. We are betting on the country the country itself and as much respect as I have for the extraordinary draw the mr. Stockman is done my eyes did and this connection fall on a sentence in the presence economic program that I at least do not included in the Reagan consensus. It says the highest priority will be given to the fence and Social Security benefits including cost of living protection. My suggestion would be that we should and we must reconsider the Untouchable Lili of index increases and entitlement transfer programs. It is there for the word uncontrollable has a great deal of its meeting. Let me give you one example of how it works on the Social Security program. Last year there was a period in which the retirees on Social Security received a 14.3% tax free increase in benefits. One study I saw suggests that there actual cost of living of those senior citizens when I paid to 9% Therefore. They had a 5 or 6% real increase in income at the same time. We were telling workers to go up about 9 % pretext will have time to discuss this further but I think this whole issue of indexing of a variety of programs should and must be addressed along with a major reform of the entire social security system one estimate. I've seen suggests that we are now in deficit a number approaching a trillion dollars and at a time or we must look at about 4 to 5% of the GNP and investment for our own future. I don't see how we can tolerate not facing those kind of deficits but coming up with alternative retirement programs to meet the needs of our people if we have time, let's discuss regulatory cost but I'll say only one thing about those it now looks like they're well over a hundred billion perhaps as high as a hundred and twenty I would wonder if the Congress and the president couldn't get together and agree on some kind of budgetary targets a a reduction of 25% which I don't think would be out of the question which might release about 25 billion dollars to the rest of the economy. The next leg of the Reagan a program versus the consensus is the need to save invest much more. I would say 45% more and against the standard. Let's look at the proposed program nearly 80% of it is provided individuals and only 22% is perfect has provided for business investment. I think it is essential that we could go back and look at a variety of ways of increasing investment in in plant and equipment in research and development. I have a specific suggestion that I would make that is that it may be well for the Congress the Senate finance committee and the Ways and Means Committee working closely first for the executive branch to ask a bipartisan group of the secretaries of Treasury in the Federal Reserve board, perhaps something like the committee to stop inflation to explore immediately the appropriateness of alternative incentive programs if we have time, I think we should discuss. Why is there a penalty for unearned income are international competitors don't have it. Why is it that we can't have a cap on ordinary interest income. Should we consider a more integrated corporate tax? What might we do to permit depreciation much closer to real depreciation? What about indexing of capital gains? So we have numbers that are available in my material on Japan and West Germany insured. I would like to see some real inquiry questions asked about incentives to plant and Equipment R&D on energy. I would simply make the following comment. I think we've done some very important things with d control on Supply but let's get to work on the defense side because the best projections in the world are not going to be valid if we have a supply cut off of oil that I think is very likely in the 80s and I would propose incidentally Maria that you're around table help build a consensus maybe for next. Cuz you sure are going to get it this year for a really major gasoline tax major programs on emergency storage. And because this country must be protected against wife what I consider to be the likelihood of of that finally enclosing. Let me just say then and Juanita would know more about this and other guess I wish we could focus more on this country and increase exports. It's one of the ultimate Migos subjects. I'll just give you one set of Statistics while we persuaded ourselves from 7278 that our situation was Home imports and all this sort of thing Japan sat there importing 35 billion dollars more oil than they did ten billion dollars more food 9 billion dollars more resources and ended up with a trade surplus and how do they do it? They increase their manufactured goods Surplus by 63 billion dollars between 1970 and 78 and there's a host of things we could do a neck. I can see I've talked too much. Let me just say I support and applaud enormously the presents great success and building this consensus. I think the time is now to see if we can get together on a bipartisan basis and bring the program in the consensus together. Thank you for ending. Thank you very much. I assume that one of the reasons we're all here is that we know that he is Chairman of Lehman Brothers and all that and therefore has a basic understanding of the problems of investment, which is one of the big questions today. I'd now like to introduce our to panelist. Dr. Juanita kreps in the interest of brevity. They have I asked when I given one titled Secretary of Commerce, the panel and Elizabeth Jagger also known as well as we're having nickname trouble today and will doctor Crepes. Please ask the first question. First of all, I refused to comment no matter how you urge me on the circumference of my calves. It's very difficult to disagree with mr. Peterson, but I should like to pick up on the very end of his comments and ask him with us to expand on any one of three important International Trade questions. In particular, I would like us to discuss how we are to deal with the growing pressure for trade from the developing countries to how we can resolve this Troublesome problem. We now have in our trade relations for the communist countries and finally, what are the trade implications and that matter the growth implications of our economy's shift from Goods to services. And although I would like to take some time to explain why I think those are key questions. I shall up preps do that later. Thank you. What's regard of the Soviet Union Juanita? It was my view from the beginning. That as unpopular as the word linkage was the reality was. That job the amount of trade that we would do with the Soviet Union. I was not an amount. That would have a substantial effect on the economy United States. It could have a substantial effect on the economy of the Soviet Union. If we were going to land in the money to do this trade, it seemed to me that it would be important to put that trade in the context of the overall National interest which would include of the political interests the United States. We had always assumed at the time. We negotiated that agreement. That there would be progress linkage. However implicit I never believed Juanita that making it to expose that was very helpful. But that somehow improvement in our political relations would go along with improvement in our trade with them. Frankly. It would continue to be my view that unless trade could be seen as part of that kind of relationship in which the overall National interest United States were served. I could not at this time being Enthusiast for much expanded trade. I remember vigorously and 72 listening to the secretary-general and others tell me That they're we're terribly interested in the standard of living of their people. I'm sure you heard the same thing and how they wanted increase productivity and how trade could help do that. My on litmus test for the time it was a simple mind the business of person. So forgive the redundancy. It was named Ali that we would know how they're too tan had succeeded if defense spending on both sides would start going down that isn't phatically what is not happening in until we better understand this context. I would not be for expanded to a trade with the Soviet Union as far as the developing countries are concerned, you know so much better than I But in this country on trade, we somehow get a view that to trade to help the other person but hurts us. We tend to overlook the fact that fully 35% of the exports the United States are developing countries that 12 out of the top 13 gross markets in America are developing countries and another way of viewing that situation to see them as the great growth Market, you know of the future I would prefer to see the solution to our so-called trade problems and why I took the Japanese example, as one I think there are enormous opportunities for the United States increased its share of World Markets. We put incredible disincentives on our businesses and expanding trade and my general formulations of that is to expand trade not to restrict Imports. Elizabeth Jagger, please research Economist AFL-CIO probably approach this from a different angle. Thank you. I like raise a few questions, but the preface it with a few statements. First of all in terms of Economist. I'm sure you were aware that the current joke is when an economist is a person who went ask for a telephone number will be glad to supply me with an estimate. And that relates really to some of my comments on this statement so far. when asked about the honeymoon with the new president The president of the AFL-CIO said that he wasn't present at the nuptials. if there is in fact a consensus in the United States I'm not sure that people are asking the right questions because consensus implies agreement from all of the parties. If in fact the subject of the discussion here today is the competitive position of the United States in the 80s. I would think that in terms of speaking about the future. and the targets and the economically Mirage that is being perpetrated in terms of a revolution that is now occurring in Washington that most of you from the business Community would be interested in going to Washington and finding out that by the time you have finished talking about all of these vague abstractions, you might find out that your programmes have been repealed in terms of a legislated ceiling that the budget which you were so enamored of Will have taken care of before the fact to be more precise. If you really care about the competitive position of the United States. Why aren't you down in Washington talking about the XM Bank in about Amtrak and about mass transit and other very very basic infrastructure questions of this economy and stop landing on the poor in the old is the solution to all of your problems, but my question first of all is In view of your concern about our major competitors and your concern about the budget. Why is it that you don't pay any attention to the fact that both West Germany? Andrew pan Have a higher percentage of their budget in deficits. for public spending than the United States But my major question is one that was asked to the president of the AFL-CIO when he was in Japan recently, and it comes so far down to earth from this ethereal discussion that I hesitate to ask it but I think it's well worth asking. The question goes like this. And it goes to the heart of your discussion of international trade, which is not an abstraction. If this country wants to be competitive it has to be competitive at home. Not necessarily abroad has to start where things start. The question was. I've been a little bit confused said one correspondent about the events over the past year and thought you might be able to clear up two points for me. Now that the United States is a big powerful country Japan's major trading partner and it's been telling your pan for about a year to slow down on automobile exports and nothing special is happening. When you have a small European countries like England, which keeps Imports to 11% that's in cars or France which keeps Imports to about 3% and more recently. It has stopped. I've been told Japanese cars at the border or Italy which keeps Imports to about 1% And now I think Belgium is joining and maybe Germany I was wondering why these small countries are so successful. And my second point and when dog Frasier came here remember this was in Japan he gave us a very kind invitation to Toyota and Nissan the set up a new factories in the United States. But they couldn't go because they were worried about economies of scale and the cost of the investment and I think the labor unions and people who didn't work hard enough and I read this morning and apparently it's going to open up a factory in Britain. Now, what do they have that we don't have Is it lots of land or a big marking or they harder working than the Americans? Where are the trade unions in England in Europe? So friendly in a mineral, could you explain what the Europeans have in the first case? And what the British have in the second case, but the Americans don't seem to have I want to ask you to repeat the question. We probably aren't going to benefit to buy a high-level Dialogue on Pi I think protective behaviors are inappropriate for all countries, but they're most inappropriate for the citizens in the countries in which they're letting but let's talk about competitiveness and let me put it right back to you and to American Management in my opinion the most major challenges facing this country on competitiveness our first at the macro level to get more resources into plan equipment research and development and savings and so far so that our plans can indeed be as modern as theirs. But secondly and I think we businessman and labor unions. May I say very bluntly tend to behave at times is other solutions to our problems are either restrictive practices on the one hand or a lot of tax incentives on the other hand and I don't think it's that simple. I remind you for example than a fascinating study of the Ford plant the best Ford engine plant versus the Toyota plant and General Motors has similar studies the best Toyota plant turned out 9 engines per day per employee vs. To in the Ford plant. They did it in 40% less square fit to space. They had one hour back up versus 3 weeks of back up here. They had half the levels of organization that we did hear. They had seven job classifications instead of over a 200. They had far lower absentee rates. They had enormous emphasis on quality work. For example in this country in my checking with rent-a-cars. I discover sign I say this sadly that the American cars are having two to three times. The breakdowns was the Japanese cars and I submit to us that those problems the second category of problems are not going to be solved by more automation or more robotics. They're going to be solved by a managerial union worker Revolution. This country in which we forcefully attack together the organizational aspects of how we can work better together how we can share profits how we can build in our workers in our management of common sense of participation. And in that area, I think American management is facing his most serious manage management challenge in years, and I would hope in a forthcoming way and I know your boss and I think he's a you know, one of the brightest people I know I think creative labor and business leadership must really think through the Dynamics of by the Japanese economy is getting such a large share of Marcus and I submit to you that trade restrictions or whatever. They're done wherever they may be done. We'll never solve that problem. The panelist singer of decided that they like to throw it open to the floor and your questions can be addressed any one of if you want to sign them. I'll be very glad to give attribution. This one is not sign it says has a 1981 consensus been billed on the false. Hope it does objectives can be achieved without a lot of sacrifice will a consensus breakdown when the cost become clear any one of you three like to the dresser? Earl shortly Well, well, I'll see you soon figure out the answer. I'm just like the comment that I think. I think in fact politicians do the American people a great disservice by pretending that problems such as inflation can be solved without sacrifice. And I think if you have listened to the President Reagan's address is on the subject you get the impression that somehow we will turn it around but it isn't going to hurt the poor and it isn't going to hurt the needy and it's going to help business and it'll be good for labor. And I think that's rubbish. In the first place was a republic and I would never say what a republican said was rubbish on the other hand. I never agree disagree with a brilliant woman of your quality either I wouldn't go on to say That I think Juanita our political system has become very expert at Distributing benefits. And boy, we have sure been Distributing the benefits in this country for the last 10 years where government spending and so forth has been going up much faster than our creation resources. The time has come or if we are going to have several percent of GNP to invest in our future and whether that number is 3 4 5 doesn't matter you cannot consume and spend and invest in the future simultaneously and the message that must be gotten across is that we must reduce our spending levels now so we can invest more in the future one of the reasons frankly that I believe it is essential that we include some of these transfer payment programs in the budget cuts. Is that if we don't Juanita, I think it is very likely that the cuts for the genuinely needy for the really poor for the illegitimate children for those who have legal names are going to have to be cut in a Draconian way and I think we are rapidly reaching the point where to say that the media are not going to be hurt by these budget cuts does not square with the obvious reality of the cuts themselves. And if I can put it. More bluntly. How is it that you can avoid? with theoretical abstractions about restrictions of trade the fact that the Japanese economy Which is a brilliant success in international competition does not allow Imports of automobiles into its economy. They sent four million cars to the world somewhere like that in 1979 and imported 60,000 and virtually every other country of the world is increasing restrictions on Imports of automobiles. And you are going to blame on myopic managers and lazy workers and some vague productivity figures that you have extrapolated from a few reports of a couple of plants here in there. I might interject that this is a little bit like comparing elephants and peanuts. Because the Japanese production system their legal system and their economic system is very different from ours. But how are you in the short run going to allow this country? To develop its competitive strength. If you talk about Vegas tractions while the rest of the world makes the United States a funnel for the absorption of the productive Goods of all the other countries of the world. I submit that unless you answer this question here and now before it's too late and don't wait for a 84 You got to produce cars and parts for cars and parts and Machinery. You got to keep people at work and you got to get them to work on mass transit and in their automobiles. How are you going to do this if you ignore the pressing realities of the differences of trade and trade restrictions around the world and you have the United States pursuing some mythical highroad of Economics while the real facts are undercutting you everyday at home. I can tell you that American managers are not myopic. They will move out and import. We are going workers are not lazy. They won't be willing to make sacrifices, but they simply don't understand a world in which they would like to work and wear card. Which day do we have some people on the floor? Who can I have three questions of the same subject been reluctant to impose restrictions on the import of Japanese automobiles is that we reason that the American people would like to buy those cars that they consider them for whatever reasons goodbyes. Well crap, so but the fact is that we we are not making them here and we're not making a smaller more fuel efficient cars at the time that we started buying and heavily imported cars. Now. There are different ways to worry about American workers. One of the ways is to worry about their real standard of living in the standard of living is a Lord by forcing the Americans to buy Goods that they find a less desirable than those that they could buy from abroad that is a very real cut in their level of living now. I think the other side it would be very good if we could somehow big persuade clobber the Japanese into opening up their markets to our Goods. But I don't see you at the game. I want to be made by are restricting the important their goods in that and I hope that Pete is not going to disagree with this. Thank you. I want to hear you know, I find her your questions remarkably candid and I find them spirited to use a nice word. And in this evolving more liberal world of men and women it would almost be sexist to me not to respond. Similarly. I don't think I said that I that the American worker was lazy. I don't recall saying that I said that the the 80s presented management with a managerial a crisis. My real feelings is that the work ethic is not at the source of this problem. It is a company. I think it is a quality. I think it's an export I think but it most emphatically is not a work ethic and if there's any question about that, I remind you that the Sony plant in San Diego California with American workers is producing quality as good as as being produced in. Pan with productivity at exactly the same levels. So management techniques training techniques motivational techniques are in my opinion ate an enormous part of the answer and I would never say the American worker was in any sense lazy. Now secondly as to why we perhaps don't sell more cars in Japan. There was no one more unpleasant than I was with regard to opening up Japanese markets when I was in the government and I had very little sympathy for it. However I remind you that the Secretary of Transportation in this last Administration on his most interesting Auto study concluded that there was up to a $1,500 cost difference between American cars in Japanese cars and I submit to you that might be a reason why we are not capturing an important share the world markets and if my friends in the labor movement in addition to emphasizing getting access to other markets and God bless us. We should would put equal emphasis on together with management making American Products competitive in cost in quality and reliability so that we could get a share of the world markets. Which is the subject you did not discuss leave aside Japan leave aside the United States. Why did the Japanese increase their share of manufactured goods by 50% in the last 15 years. They did it because their products were well built their products were low cost and their management was devoted to getting a share of the World Market and that doesn't have anything to do with trade restrictions and it certainly has nothing to do with work ethic. I have enormous admiration for the workforce of this country. It has enormous amounts to do with the work with the question that I asked I didn't restrict my comments to Japan. If you will recall. I indicated that the world as it really exists includes trade restrictions of a variety of Kinds in almost every country in some of them purely cultural and to ignore this and to clean as I thought I indicated that myopic management is not with it is to avoid the question. The question is not an open world in which some people are more cost-efficient than others and certainly we would strive for cost efficiency. The problem is that the real world doesn't fit with the economic model and that is your dilemma. Not ours. The same way that I don't think workers are lazy in America. I don't think American managers are myopic. I didn't say that either that would be self-destructive in my business. Even if I felt that way. Let me ask you a question that you not commented on. Forget Japan in the United States. Why don't we take third markets that we both sell to why is it that our share of those markets with a denticle restrictions that the Japanese face has fallen significantly while their share of those markets that has gone up dramatically. How do you explain that? If you look at the record of the United States view the Japanese have concentrated on production at home and using and regulating their foreign investment for the advantage of Japan. Whereas if you'll recall we haven't had a rather large debate throughout the seventies of whether or not us trade and tax policies were encouraging American firms to invest abroad at the expense of the American economy. And we believe that some of those chickens are coming home to roost we don't resent foreign investment internally, but we we reiterate that American trade and tax policies are geared against the development here. Whereas other countries both Japan and Germany have had far less foreign investment and certainly not for production for their own economy while the United States still encourages and gives added incentives for Broad and the president's budget still includes efforts to encourage investment abroad instead of intelligent policies with your Chief competitors pursue which emphasized and not only investment abroad I'd like to pick up and and production within their own economy argument YouTube and carry on after the rest of us up from the floor. Two related questions to move to another sector the short one first Mister Peterson. Where why when and how do you see the supply cut off of our oil that you referred to earlier? The other question we were told that they control the oil and natural gas Industries would lead to a surge of investments in R&D for alternative sources of energy. I have several major oil companies recently invested heavily in stock in such things as copper mines and related Industries similar to their own stabbed. Where is that promised increasing R&D dollars? The subject to the supply oil cutoff is as follows. I see one scenario leading to that which might be what you might call an off-the-wall random series of events like the Iran Iraq War. Where we must remember that we're dealing here with something under 30 million barrels a day of production from one of the less stable areas of the world. Where the internal regime so by their own admission or not stable where the Dynamics between them are obviously highly variable in competitive and we don't have time to go through each of the countries now Kuwait Saudi Arabia and so forth, but I told you during my speech. I'm a great believer in compound probabilities. I have great admiration for my colleague both. Mr. Ball. Mr. Schlessinger. They haven't given me a whole variety of scenarios that have made my dinner less enjoyable than I'd hoped on the possibilities that might emerge and if you believe it all and compound probabilities, I do not see how you can escape the very distinct likelihood that somewhere someplace during the 80s. There will be a series of Supply cut off just do two random events. The other possibility of course is that it could become a concerted action on the part of an entire a group of countries. Let's hope it it never happens. That's a very delicate set. But I would say in general among the arguments as to why it is essential to make a progress in the Mideast in the political context is that until we do we we increase the risks in my view of what we might call political shut offs of oil. So in my judgment these events are to a major extend beyond our control. I think it is absolutely a responsible for us face with these probabilities not to be taking strong defensive measures both to reduce our our consumption of oil. I think by a very large gasoline tax and secondly by Major increases in emergency storage of oil on the second Point namely that oil companies, you know made promises as to what they were going to do with her money. I have trouble enough running Lehman Brothers that may be a contradiction in terms to without speculating on what promises they did to you know, where did not Naked at the time that these that the decontrol was in I had a you recall there were some discussions. How about putting in Provisions that increase revenues would have to be put back into the energy business those Provisions were not put in the in the legislature and therefore my presumption would be but the heads of those oil companies looking at available oil supplies in this country, which are obviously dwindling which is another reason that I think that we must do something on the defensive side have concluded that the rates are returned and some of these other fields are higher in the eighties and nineties then they are in the energy business and I am not here to suggest that they don't have a responsibility to do whatever they conclude is in the interests of their particular companies. But I think one of most interesting comments of the day was a peach early reference to the the projections by the Reagan Administration in the likelihood of those being born out by actual events. And I would like to return your attention to that. I wish I wish it were possible for that all of those Rosy things to happen. But if you look carefully at what the Reagan Economist have projected, you see that the the projections really hurt internally not consistent. You really can't expect to have a four and a half percent growth rate with a restrained money supply with a sharply dropping inflation rate down to 6% Stay with a drop in unemployment. Who sings simply don't move in the same direction at the same time and certainly not to the lovely conclusion that they have projected. Therefore. I think we should be much more realistic about what we can expect to see happen. Even assuming the best outcome of that we can possibly suppose I think the inflation rate will come down only very slowly that the unemployment rate hover around our go back up a bit but certainly won't go down at the rate he has stated there is no chance that I can see that we will have a four and a half percent growth rate in in 1982-83. And and so it goes I would like it much better. See if the projections that had much more realism to them and I think people generally would would do them with the with the less suspicion. Run projections may be inaccurate and certainly many of us are fearful of that that you moved to Washington and urge the media to tell people right now that there's a Revolution going on and by the time you find out and that's not your mistress talk when his words not mine. But unless you find out that they are appealing through the budget process legislation that is a benefit to business and labor within this country. The long run maybe very well be too late and secondly with all due respect to the government of Japan and I think they've done a brilliant job. I think the real question is how long can the United States stay open while the rest of the world stays relatively closed and we can't afford to blame it on lack of cooperation between what come down to be myopic managers, which they are not they're selling cars brilliantly around the world. And lazy workers as far as components are concerned. Nobody knows what the cost would be. If its economy were allowed to be competitive at home as well as being urged to be competitive abroad. Thank you all very much for coming today and thank our speakers and panelists Orthopedics scrap Vegas. You've been listening to the US competitive situation in the 80s a discussion sponsored by the women's economic Roundtable. The featured speakers were Peter G Peterson chairman of Lehman Brothers. Dr. Juanita kreps former Secretary of Commerce Elizabeth Jagger Economist with the AFL-CIO and moderator Millie Sage president of the International University Foundation the panel took place on Wednesday, March 18th, 1981 at the Waldorf, Astoria in New York City technical assistance was provided by manoli wetherald. I'm Warren Kozak in New York. Thank you very much for joining us. This program was made possible by an unrestricted event coverage fund supported by grants from the Mobil Corporation and the Corporation for Public Broadcasting. This is NPR National Public Radio.