BEWARE of 1985!" warns Boardroom Reports magazine. Why? More and more the world economy demands careful attention. High interest rates, crushing Third World debt, high unemployment levels, slumping core industries such as automotive and steel, a U.S. debt topping $1,000 billion, the chronic farm crisis aggravated by the ups and downs of the Cold War thermometer. These are some of the economic realities. Then come the realities of widespread drought — in Africa and elsewhere, — killing frosts, floods, insect infestations and government support programs that disrupt the market place. On the personal level citizens face mortgage rate headaches, serious personal debts and the specter of bankruptcy. Wives find work more easily than husbands. These and other harbingers sap the optimism of millions in the Western world. What is happening? Is there a way out for us as individuals and for the ailing world economy? What are the prospects for long-term recovery? Will the economic rally in the United States continue past the presidential election of November 1984? It's time for the plain truth. Let's review the present crisis, out line the prospects for lasting recovery and — most important — consider what we should be doing as individuals.
Collapse of Family Life
Today's economic mess has been decades in the making! It's no use blaming the thermometers on the wall — the soaring inflation of the late 1970s, the sky-high interest rates of 1980-82. In some ways, these were only symptoms. Major long-term factors were decisive in getting us here. Few economists understand the relationship between the collapse of family life and this crisis. The home was once the cradle of true values, the factory producing stable, hard-working personalities with a sense of social responsibility. Lax family and school discipline fostering the world-owes-me-a-living attitude has undermined the once-prized work ethic. In North America — the post World War I locomotive of the world economy — workers for about a generation have produced less per unit while expecting higher wages. "U.S. unit labor costs have been growing faster than in any other major industrialized country except Britain for the past 10 years" (Business Week, August 29, 1983). The result? "Those early post-World War II days when 'made in U.S.A.' was a magic symbol," editorialized one newspaper, "are now as far away as the Middle Ages." Business Week's cover story of August 29, 1983, painfully exposed "America's Hidden Problem." What is it? "The nation from 1870 to 1970 almost always exported more than it imported. In the 1970s that began to change, and now U.S. foreign trade is running $60 billion in the red — 18 times the figure in 1973.... [This] trade problem could be the economic disaster of the decade."
The Enemy Is Us
Already 1.5 million lost American jobs are the price tag for the narrowing of what economists call the "productivity gap" — the shrinking world market resulting when Europe and Japan began to catch up with the U.S. in the 1960s. The Plain Truth printed repeated warnings during those years that diligence in the work places of Japan and Germany would finally do to America and Britain what a tragic war could not do! Now David A. Levy in Industry Forecasts warns: "The trade deficit will be a major factor leading the economy to lose momentum in 1984." And why the trade deficit? Harvard's professor of business, Robert B. Reich, blames a combination of "misguided government policies, myopic labor and management practices, and growing foreign government intervention in markets." Yet it all happened so gradually. While we all enjoyed the good life in the 1950s and early '60s, expecting more and more from an economy slowly undermined by obsolescence and foreign competition, U.S. President John F. Kennedy warned that Americans must "trade or fade." He was rightly alarmed at the hemorrhaging of the U.S. gold supply from 60 percent of the world's total in 1944 to $20 billion of excess claims against it in 1962. Then came the Space Race, Great Society spending, Vietnam and the siphoning off of thousands and thousands of North America's best brains into government research.
The easy affluence, creeping socialism and continued high expectations drove government and private citizens into deeper and deeper debt. In the 1970s we began to reap the whirlwind. August 15, 1971: President Richard Nixon, facing more than $60 billion in claims against the dollar, mostly from foreign competitors, shut the "gold window." No longer would the United States exchange dollars for gold. What was obvious for years was now official policy: the U.S. dollar was no more "as good as gold!" No longer pegged to the price of $35 an ounce, the dollar was devalued, then floated, encouraging the expansion of paper money throughout the decade. Next came the abrupt end of the era of cheap energy triggered by the Organization of Petroleum Exporting Countries (OPEC) oil embargo in 1973-74. The oil embargo also made fertilizer — with its close relationship to oil-based chemicals — more expensive, especially for Third World countries. Three pillars of the United States' postwar dominance were in ruins — control of the Western world's gold supply, a dedicated work force and an era of cheap energy. Cheap immigrant labor, women entering the marketplace in droves, the escalation of computer technology — these added hammer blows helped fashion the high U.S. unemployment picture of the 1980s.
As government deficits escalated to pay for costly funding programs, private corporations found themselves vying with government for investment capital. By the mid-1970s city governments needed huge transfusions of credit just to pay their interest. New York's near-default in 1975 was a chilling example. Bankers, alarmed, raised interest rates as insurance against future defaults. Government borrowing and giveaways plus the average North American worker's addiction to higher wages from a declining economy meant that debt was almost the norm. Worse still, borrowed money and government funding in a sagging market meant more pressure for prices to rise. By the time President Ronald Reagan was inaugurated in January 1981, unemployment in the United States stood at 7.4 percent, interest rates in some areas reached 20 percent and inflation raged in the double digits. The President's commitment to economic recovery was a faint breath of life to the stricken business community. By 1983 a definite recovery was in progress. But are we seeing a healthy rebound whereby the United States can once again lead the West into a new decade of recovery?
Recovery, or Respite?
The Economist of London warns: "Three things stand in the way of a long recovery. Real rates of interest are too high, particularly in the United States, choking any temptation for business to invest. One consequence is that the dollar is too strong (making U.S. exports more expensive since they're paid for in hard-to-get American currency), which turns Americans protectionists to keep out cheap imports. Third, bankers and businessmen are worried that over-borrowed countries like Brazil will not be able to service their debt if they are also finding it hard to earn enough foreign exchange from a protectionist world" (April 23, 1983). Basically, the recovery is consumer led. The recession has set up a buyer's market temporarily. But unless business fully joins in, the recovery will fade. In Canada, individual savings are at their lowest level in years. Savings in the United States are severely down. Fortune magazine even warns of a possible return to controlled double-digit inflation from its current 4-5 percent level in the United States: "Inflation is headed back up dramatically, perhaps even to double digits, as early as 1985" (Fortune, March 21, 1983). What's happening is that the Federal Reserve, no doubt under pressure to stimulate an artificial recovery before the November 1984 election, has expanded the money supply somewhat faster than most people realize. Carnegie-Mellon University monetarists predict that the rise in the money supply might temporarily sustain the recovery but at the expense of controlled higher inflation and lower long-term growth!
The New Protectionism
World trade is becoming an explosive issue for all the exporting nations. The United States is getting more and more sensitive about foreign trade. In 1964, for example, one in 14 manufacturing workers made goods for export, now it is one in 6. The United States is falling behind. The record clearly shows that the nation has priced itself out of overseas markets. How much longer can this strained, constricted global market hold together? Canada's Macdonald Commission on the economy cries out for a concerted national effort to "meet the challenges of a world in which markets are difficult to penetrate and maintain." "Reciprocity" — mild doubletalk for protectionism — is a term already bandied about not only in Canada, but also by the Reagan administration. Warns Richard I. Kirkland: "The storm is a furious one, and it is heading our way. It may be just a matter of time before a hard rain starts to fall." What can workers in the West do to protect themselves in this troubled economy?. What are the steps to take now, before this present recovery begins to fail, perhaps as early as 1985 if not sooner? Where is your best investment in this "cold, dark era" just ahead? What can you do?
A Way Out
First, stay abreast of changing times. Stay informed. About 75 percent of all jobs in the United States within two years will involve computers in some form. While high-tech may be all the rage these days, the occupations on the wane are victims of technology, e.g., postal clerks, compositors, typesetters, graduate assistants and teachers (especially as the population ages), farm laborers and operators. The American Bureau of Labor Statistics, however, projects new job openings in areas such as clerical, fast-food outlets, janitorial, secretarial and anything connected with maintenance and product servicing. People don't tend to buy new products in economic downturns, so repair and maintenance skills are more in demand. Accountants, engineers, technicians, food service workers, secretaries, sales and office clerks and mechanics will be more in demand. If you are out of work for some time, consider retraining. Self-improvement in times of economic downturns is one of your best investments. Take advantage now of employer-sponsored retraining programs. Be willing to tackle new job skills, especially in technical areas. The days of a life-long single career in most every profession are basically over. A growing number of people must master three or four professions during their working life. Adjust your life-style now. How? Begin to consider cheaper alternatives for those expensive vacations, costly dinners out, season tickets, entertainment extravaganzas. Become more family oriented in your recreational pursuits. Potluck socials are cheaper (and more fun) than two automobiles tied up in more costly out-of-the-house activities. It is an undeniable fact that strong family units survive economic hardship. Some even thrive on it! Reduce debts as much as possible. Particularly, high-interest credit card debts. Avoid unnecessary purchases on long-term credit. The people and institutions suffering the most in this economic distress are those with heavy debts. The penalties are just not worth it. If currently employed, avoid moving and relocating, if possible. Moving is expensive and stressful, especially on families. The history of boom-town cities is just that — boom, and bust. Sometimes a move is positive and beneficial, but it is quite often wiser to show loyalty to a product or an organization in a dark period rather than immaturely pursuing a will-o'-the-wisp. Brush up on your people skills. Those who work well with others, men and women capable of enduring and handling knotty work relationships without aggravating the boss or other employees, tend to come up for promotion sooner. Respect your superiors. Let them know you appreciate your job. Radiate a little enthusiasm and goodwill. Don't be a personnel problem, rather strive to be the kind of worker the company will not want to lose. Analyze yourself: Are you that way now? Continue reading and studying the Plain Truth magazine. This magazine predicted today's economic morass decades ago. Note these headlines from previous issues: "Trade War!" (August 1960); "What U.S. Gold Crisis Means to You" (February 1961); "What Inflation Is Doing to America — And to You" (August 1969); "The Battle for Economic Survival" (June-July 1970); "Europe-Supergiant of the Seventies?" (August 1972); "Strategies for Coping with Inflation" (December 1976); "Prepare to Greatly Reduce Your Standard of Living!" (January 1980), Why have we been on the right track for so long? Longtime readers of The Plain Truth know that this magazine correlates today's world news with a vital key, a key not understood by most politicians, economists and technical analysts. That — key is the identity of the United States, Canada, Britain and the other nations of this world in Bible prophecy. Our free book The United States And Britain In Prophecy gives the overall picture of world events well past the year 1985. Understanding. this certain and sure knowledge of the future beyond today's steadily darkening world scene is your best investment in the years ahead. Write for our book, You'll always be glad you did. You can face 1985, and the years after that, if you prepare NOW!