The declining dollar
Nicholas von Hoffman
Washington Every day the television announces that the dollar has dropped to yet a new post-World War Two low in relation to Japanese and German money. Mortifying news for all red, white and blue-blooded American eagles, but one senses something less than total consternation about the situation in Wall Street and Washington. True, the administration's posture continues to be one of alarm, but at the same time there has
been no discernible effort to sustain the dollar.
That the United States will strengthen its eurrency the way Bonn and Tokyo would 'Ike, by cutting oil imports, seems less and less likely. In the first place, it's getting harder to find people who believe the world W. soon run out of oil. There is a feeling, Instead, that Germany and Japan, who have no oil, want to depress world oil prices, and therefore the production costs of their own manufacturers, by persuading the United States to limit its foreign oil purchases. The rationale advanced in Washington for Cutting back on imports is that it will lessen America's balance of trade deficit. That is still the thinking of the Secretary of Energy, James Schlesinger, but he's not too bright.
Cleverer people are pointing out that a large fraction, sometimes more than half, of the deficit is accounted for by the Importation of cars, radios, cameras, etc., "'eh American industry and American workers can make here. Instead of ending the trade deficit by cutting oil purchases, it's being whispered that the smart thing to do is to. cut the import of manufactured goods. Given the American free trade stance, this Can't conveniently be done by allowing the dollar to continue to lose purchasing power. Thus the country drifts with :ts present Price-control disincentives to use domestic Oil. In addition there is a law prohibiting the export of crude from the huge, new Alaskan fields. That oil could in fact be sold to Japan, reducing the trade deficit but it doesn't look as though the law will be changed: even though there is no domestic market for Alaskan oil. California is already choking
on surplus supplies, and there is no pipeline available to get the stuff to the markets of the Midwest and the Atlantic coast.
Some people are saying that the strategy of letting the dollar devalue isn't working, and that the United States must fall back on protective tariffs. 'A lot of countries look upon us as a depression market where they can sell that part of their output that cannot be absorbed by their home markets,' says Edward Bernstein, an influential monetary expert and lifelong free-trader, who points out that the current deficits are so unfavourable to the US, that America would not be hurt if Japan and Germany retaliated with higher tariffs of their own. Men like Bernstein, who is credited with much of the thinking that went into the Bretton Woods Agreement, are careful about what they recommend, but the spirit of economic yahooishness can be shrill. The Land of the Rising Sony isn't yet being depicted in terms of the Yellow Peril, such as it customarily was from 1890 to 1945, but there are rising complaints about foreign business activity, especially about Japanese and Arabs buying banks, farm land, or factories. Only this week there was a media hullabaloo over rich Hong Kong Chinese who are supposed to have bought up the city of San Francisco while America snoozed.
Protectionist sentiment here, as elsewhere, generally goes up when unemployment does, but not this time. The jobless rate continues to be low, the only set of good economic numbers the Carter administration can point to. But in the last few months prices have been going up at an annual rate of more than 10 per cent, causing a gathering storm in a nation which looks on inflation as almost as foul as unemployment. Administration officials, far from depreciating the danger, are themselves predicting that unless the inflation rates drop soon there will be a recession. Like the businessmen and economists upon whom the Republicans and Democrats both depend for ideas, neither Party has been able to explain the reasons for inflation or the way to get rid of it. The President mirrors that uncertainty, with the result that the Administration's approach is an eclectic, often contradictory mishmash. Sometimes he blames budgetary deficits but concedes a balanced budget is years away. Sometimes he insists the answer to rising prices is unrestrained free market competition, while simultaneously calling major corporation executives to Washington to beg them to hold down prices — in the apparent belief that, while the Government can't slap Adam Smith's unseen hand, individual businessmen can get the impartial croupier of laissez-faire fantasy to stack the deck.
From every side the Georgia 'Peanut', whose care-creased face is beginning to resemble one, continues to be criticised for lack of macho and leadership, often by persons with no sharper idea than he of what's to be done. Neverthless, he had yet more of his charisma blown away with the resignation of Dr Peter Bourne, the psychiatrist on the White House staff who functioned as the President's advisor on drug problems, but who also goes way back with Carter politically to early Georgia days. It was the English-born, Americaneducated doctor who, in 1972, was the first one to tell Mr Carter he could run for the White House and make it.
Bourne's downfall came after a local official in Virginia revealed to the press that Bourne had written a prescription for fifteen sleeping tablets using a fake name for the recipient, his administrative assistant. The drug is so common that physicians wrote 1.3 million prescriptions for it last year, but it is a technical violation of the law to write a false name on such prescriptions. Bourne, poor man, explained he did it to protect his assistant's anonymity.
The newspapers immediately filled up with gossip about the doctor being seen at a party smoking marijuana and sniffing cocaine. What made these attacks all the more trashy is that these reporters must have been doing the same things themselves — or else why did they wait months before coming forward to say they saw the President's drug advisor sampling the merchandise? Mindful of the political golgotha of Bert Lance, Mr Carter's banker friend who was run out of his White House post by empty gossip and baseless insinuation, Bourne cut and ran. Within forty-eight hours he had gone.
It's been a great past few days for English medicine, however. The test-tube baby is being acclaimed by the populace. Agonised over by the theologians, deplored by the anti-abortionists, and welcomed by the friends of down-trodden minorities who are proposing that women on the dole living in public housing projects earn their keep by renting out their wombs to test-tube fetuses. Persons wishing to have a child by a famous athlete or a movie star will soon be able to buy a Farah Fawcett-Majors' egg or a centimeter of Burt Reynolds's sperm and have the fruit of this laboratory conception grow to parturition in the belly of an otherwise unoccupied black woman.
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