One economist who wants tighter federal grip on US economy
Economist Wassily Leontief has a favorite image for talking about the economy. He likens it to a sailboat. ''The problem of guiding the economy is like sailing,'' he says. ''You need the wind and a rudder. The wind is the private profit motive. The rudder is government influence.''
The New York University professor continues: ''The Russians have a big rudder , but have completely lost the wind.'' In contrast, President Reagan has put a big sail on the American economy and the wind is blowing hard. ''But if he doesn't use the rudder he will end up on the rocks.''
With that image, Dr. Leontief supports some modest degree of state planning.
''Planning,'' he says, ''can never replace initiative, but initiative can never replace planning.''
Many economists nowadays avoid the word ''planning'' - if they're in favor of it. It is a word with so many connotations and preconceptions that many Americans automatically turn off when an economist advocates it. They know that planning has failed to produce prosperity in communist countries and want nothing of it here. So economists talk of a ''national industrial policy'' or ''reindustrialization,'' which involve some degree of government intervention in the economy.
But Leontief has been around for too long to play such word games. He graduated from the University of Leningrad with the title ''Learned Economist'' at the age of 18, got a PhD at the University of Berlin when 21, and joined the faculty at Harvard University a few years later, in 1931. He's the father of input-output economics, winning a Nobel Prize in economics for that in 1973. It is a method of analysis used in dozens of countries, including communist ones, for planning or other purposes. The Russian-born economist is one of those rare individuals who has moved somewhat to the left politically as the years passed, ending up today left of center but generally in favor of free enterprise and not a socialist.
He is certainly not a fan of Reaganomics, which he describes as ''a Darwinian approach to economics.'' Letting businessmen find out what is good or bad investment through the competitive process of success or bankruptcy, he says, ''is a very expensive way of making selection.'' He believes that the government , using input-output analysis, could provide better guidance as to what industries should succeed and what will fail, what jobs will flourish, what activities will dwindle.
In this regard, he and another economist, Dr. Faye Duchin, have just used a ''dynamic'' input-output model to study ''The Impacts of Automation on Employment, 1963-2000.'' The method involves a mathematical and statistical look at the inner workings of the economy, taking account of the output (goods and services) and input (labor, raw materials, semifinished goods, etc.) of various industries or sectors and how they affect one another.
One interesting conclusion is that even the intensive introduction of more computer-based automation should not result in sharp technological unemployment, at least until the year 2000.
There has been a lot written about the impact of automation on jobs. Some say the decline in the rate of growth of the labor force in the years ahead could even produce labor shortages in this decade and the next. By contrast, others have predicted that the manufacturing labor force will fall from more than 25 million now to fewer than 3 million by the year 2010.
These two economists figure their study at least offers something more concrete in the way of analysis.
What they and colleagues with Leontief's Institute for Economic Analysis have done at New York University is make up three scenarios. The first assumes no change in technology from that available in 1980 in such areas as electronic computing, robotics, office automation, computer-numerically controlled machine tools, education technology, and medical technology. However, that 1980 level of technology will continue spreading throughout industry gradually. A second scenario assumes specific modest advances in technology; and a third, rapid technological progress.
With the third, 156.6 million people could produce what 176.8 million would produce in the year 2000 if technology remained at about today's level. But that doesn't necessarily mean 20 million more people would be without work. Living standards will be higher, and people will enjoy the use of more goods and services. Or employees could work fewer hours. The change will be slow enough that with proper retraining of workers, the necessary adjustments can be made without enormous dislocation, the study reckons.
If this study is right, however, there will be major shifts in the labor market. For instance, with rapid automation, there would be 31 million professionals needed, rather than the 25.6 million that would be employed with no advances in technology. More professionals will be designing and looking after the new automated machinery.
Contrariwise, the number of clerical workers will drop drastically - to 15 million in Scenario 3 vs. 33 million for Scenario 1 - as the so-called ''office of the future'' spreads through the nation. The number of middle managers will also drop, since office automation will simplify their chores, too.
However, the number of production workers will remain about the same. With numerically controlled machines, there will be fewer metalworkers. But that will be offset by rising demand for workers to produce modern capital goods. That study conclusion is contrary to the common assumption that production workers will be a disappearing breed in the next decades.
''We see nothing to indicate the country will be losing its manufacturing base,'' says Dr. Duchin.
The study doesn't look at the impact of other technologies, such as new high-yield crops or other agricultural advances, substitution of one material for another, and so on. These, too, could have some impact on the labor force.
Leontief suspects many workers will take the benefits of greater office and industrial productivity in the form of more leisure, with the workweek perhaps dropping to 30 hours.
''What will the poor fellows do?'' he asks rhetorically. ''Many will go fishing or watch TV. But that is too bad, because human possibilities are much greater.''
He hopes that many people, like the wealthy, leisured upper class of Great Britain many decades ago, will turn to the creation of literature and other cultural activities.
''Cultural occupations will become terribly important,'' he forecasts. ''The distinction between play and work will be less sharp.'' More people will do handiwork and do-it-yourself activities. They will read more, write more, and do more voluntary services, he hopes.
Leontief isn't always the most popular economist in the profession. He attacks academic economists who ''play with mathematics,'' disregarding the fact that their economic models are too fancy for the accuracy level of the statistics used in them. ''It is hot air,'' he says. ''The young economists are trained absolutely wrong.''
That sort of bluntness hasn't always helped him in raising funds for his institute. But if he gets enough money, this senior economist has ambitious plans for future input-output studies in areas of the social sciences and natural sciences as well as the economy.
''It is very important to work with other fields,'' he says.