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The Economic Crisis
Of all the problems facing President Kennedy and his brave new administration, the economic recession promises to be the mbst difficult to ^blve. ^
*f*he reasons for this are basic and, as a practical matter, the methods of solving them are almost impossible. We- have today a labor inflation that is reflected in the non-competitive price of our national product. This "inflation occurred during the 15 post-war boom years when powerful labor demanded and profit, thirsty .management conceded to unrealistic spiraling wage scales. For 15 years product demand absorbed this labor, inflation. Now produc~ tion has exceeded demand and what is the result? ^ There are over one million cars held by dealers in inventory for just one reason: the price is too high. There are 6 million unemployed people in the United States because the price of what they produce is too high.
My wife buys very attractive shirts at a local store for our boys. They are made in Hong Kong. Meanwhile Blue Bell closes down to a three day week. I buy barbed wire for my farm. Its made in Belgium. Toys are from Western Germany and Japan. Steel comes from Britain and Sweden. The better clothes come from Italy. The rate of flow of American capital to foreign countries is at the rate of 3 billion dollars per year. This not only figures in our gold outflow. Obviously it also accounts fo* increasing foreign competition. Sperry-Rand will no longer build typewriters (except electric ones) in the Unitea States They’ll be built overseas. Singer makes all of its sewing machines in Scotland, and ships them to this country. Unfortunately, its cheaper that way.
The trend is before us. How can the Kennedy Administration reverse it? The International Garment Workers Union has asked for a higher tariff on foreign made clothes. Funny, high tariff, the friend of capital years ago should now become the friend of labor. But of course, high tariff is no solution. You can’t live by yourself, economically. You got to compete. A large electrical workers local m Chicago had another answer. Taking note of the di.op in rto membership from 47,000 to 23,00, it served notice on several employing corporations that, as of May 1st; no member of tne hnion wotiid work on appliances using Japanese made com~ ponents. Again an attempt to side-step competition can on y lead to a greater evil: the manufacturer will build the entire appliance in Japan and ship the finished product to the United States.
No one wants to see the standard of living of the American worker go down, But the price of our products must return to a competitive level. To do this we must either have more automation or lower wage scales. Both have been fought by the unions, historically and we can expect them to continue to do so. And who can deny the political debt Mr. Kennedy owes to organized labor.
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