Gustafson Maintains Arms Control Won't Injure U.S. Economy
Declaring that political rather than economic problems present the major obstacles to disarmament, Eric Gustafson, former University instructor in economics, pointed out "common fallacies" about defense spending in the first of a forum series on "Problems of World Order" sponsored by the Harvard-Radcliffe World Federalists.
A pacifist, Gustafson maintained that a policy of limited arms control would be more feasible than the government's present policy of general and complete disarmament. He avoided prolonged discussion of the political aspects of disarmament but did speculate that the Kennedy Administration is considering a reduction in arms production.
Discussing the fear that disarmament would seriously harm the nation's economy, Gustafson warned of the "multiplier fallacy." This belief states that while defense investment money "multiplies," benefiting more and more people, money spent in other enterprises does not. All money "multiplies," he maintained.
Taking up the "fallacy of satiation" which suggests that our economy is so advanced we have no more ways to spend money, the speaker cited great needs in health education and urban redevelopment. He suggested that men and ma- chines now employed in the arms race could easily be converted to space research.
Although the cost of monitoring an arms control plan might exceed that of stockpiling arms, Gustafson predicted that a cut in defense spending would most likely precede a cut in taxes. But the tax cut by itself will not keep up purchasing power to a high enough level to make possible a smooth transition from arms to peace production. A high enough demand created by government spending will prevent the necessity of having detailed conversion plans, he asserted.
Gustafson, recently appointed research advisor to Pakistan, maintained that increased government spending must parallel a tax reduction to keep the economy at a high level