Apathetic and complaisant legislators aren't the only supporters of prevailing economic myths, of course; businessmen have a far more direct and tangible stake in the conventional wisdom. And the recent subcommittee hearing indicated how they intend to contain the slowly growing pressure for a reappraisal. John Diebold, who has been called the father of automation, and is certainly one of the most uncritical observers of its effects, agreed that an important governmental responsibility is "to be sure that people aren't hurt [by automation], and to be sure the transition can be carried out properly." He strongly supported a commission on automation recommended by the President last July, but just as strongly disagreed with other advocates of the same agency regarding its proper role.

"What is lacking *** is a clear, unified understanding of the employment implications of technological change and the specific, appropriate methods of adjustment to such changes," Diebold said. "Additional legislation is necessary [but] *** such legislation should be based upon thorough examination of the full implications of technological change. * * *The necessary body of data to support such additional legislation does not at present exist. With this in mind, one should welcome [the proposal] to establish a Presidential Commission on Automation."

Said Charles Killingsworth, professor of labor and industrial relations at Michigan State University: "I do not think we need any further studies. *** I have the strong feeling that we should give a higher priority to a clear and present need."

Killingsworth described that need brilliantly in his prepared statement. He annihilated the favorite argument of the National Association of Manufacturers that technological advance automatically creates jobs by comparing Henry Ford's introduction of the assembly line in 1913 with the automation of the auto industry in the 1950's. In both cases, direct labor requirements were cut about 90 percent, said Killingsworth. But between 1913 and 1923, auto registrations increased 1,000 percent, so Ford was able to employ more workers even though output per man-hour was zooming upward simultaneously.

Between 1950 and 1960, auto registrations climbed only 50 percent because the market was much nearer saturation. The result: vast unemployment.

What was true of the auto industry in the fifties is true of most other consumer industries today, he added. "Improved productivity *** simply enables the industry to keep up with the normal growth of the market while employing fewer workers."

HITS THE LEAST SKILLED

Killingsworth's other major point was that unemployment hits the least skilled, least educated worker most. The administration has expressed similar sentiments on more than one occasion, but somehow has ended up with a rather different conclusion.

As Killingsworth put it: "The Council of Economic Advisers has virtually guaranteed that the administration's tax cut program **would reduce unemployment to an ‘interim target' rate of 4 percent. I seriously question the validity of this critically important assumption."

Accordingly to Keyserling, who shared this doubt and expressed it even more forcefully, the solution to the present high unemployment and low growth rates lies in providing "the other America" with a bigger relative share of the economic pie. The administration's fiscal policy is "calamitous," he added. Too little of the tax cut will end up in the pockets of the low-income group; too many Federal expenditures, capable of directly helping this same group, will have to be cut in order to placate those who believe deficit spending is immoral; and the projected growth of gross national product won't put enough jobless back on the job.

Keyserling said the President and his Council of Economic Advisers should orchestrate private investment, private consumption, public outlays, the pace of automation, aid to the unemployed, and all the other dynamic factors controlling who get what, into a plan which will bring about full employment and maximum production rapidly. Most important, he added, the plan should recognize that past relationships between these factors "obviously have * yielded neither a good economic nor a good social performance."

Killingsworth called for "greater investment in human beings"-specifically, long-term, low-interest Federal loans which would enable more teenagers from the wrong side of the tracks to attend college.

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It is doubtful that either of these suggestions will get very far on the Hill, despite their obvious logic and despite the fact that the Kennedy administration is supposed to occupy the same liberal side of the U.S. political spectrum. As Senator Clark ruefully commented, the majority of the Senate believes that by "leaving the economy alone, everything will be all right. This is what frightens me."

Senator RANDOLPH. We can both agree with a statement by Phil Hirsch, and he says Senator Clark is an astute politician. I know we can ascribe to the word astute and forget politician.

Senator CLARK. May I return the compliment.

Senator RANDOLPH. I think there are some points stressed in this column which are helpful and should be in the record. Senator CLARK. That will be done.

Mr. Hollomon, my last question is this: We have been told recently that high taxes are the cause of slow growth. You suggest a shortage of scientists and engineers as the key; others blame structural unemployment; and still others say our troubles stem from our departing from the principles of free enterprise which made our country great. Can you reconcile these views? I cannot.

Mr. HOLLOMON. No, sir; I cannot. I think that clearly tax incentives are important. I think the arguments are sound, they have been made many places. My own view is that large pockets of unemployment in regions and industries of this country are of the structural type, and that we have done an inadequate job of anticipation and retraining of those people, and reeducation.

I also feel that large industries of the country are inadequately using technology for rapid growth, and this will become important to our ability to meet foreign competition.

At the same time, there are those who claim that we do not have enough "riskateers" and entrepreneurs in this society. I suspect that all of these factors are important, and there is no single answer that can lead to a panacea. We need them all, and this committee seems to be looking at all the aspects.

Senator CLARK. Thank you very much, sir, I share your views; it has been a very stimulating hour.

Dr. Ginzberg, an old friend and frequent consultant of the subcommittee.

Mr. GINZBERG. I don't know whether my being welcomed back here is an indication of whether my colleagues have more sense than to show up.

Senator CLARK. I think your devotion to a mutual cause is a little keener than theirs.

Mr. GINZBERG. I don't know how you want me to begin. I think if you will insert these in the record.

Senator CLARK. Off the record a minute.

(Discussion off the record.)

Senator CLARK. On the record.

Mr. GINZBERG. Why don't I try to make a few comments first on Mr. Hollomon's testimony and it may sharpen some of the issues for you.

Senator CLARK. Yes; we will put the memorandum that you have handed to the staff in the record at this point. Perhaps you will com

ment on Dr. Hollomon's testimony and then give us the essence of these major points.

(The prepared statement of Mr. Ginzberg follows:)

PREPARED STATEMENT OF ELI GINZBERG, PROFESSOR OF ECONOMICS AND DIRECTOR, CONSERVATION OF HUMAN RESOURCES PROJECT, COLUMBIA UNIVERSITY

1. The very size of the Department of Defense operations, both direct employment and through contracting, places it in a class by itself and makes it difficult, if not impossible, to apply conventional criteria to assess the effectiveness with which it utilizes its personnel. The search for appropriate criteria is further complicated by the unique mission of the Department in which preparedness is the key characteristic.

2. The fact that the Armed Forces must currently rely on both career and noncareer personnel also has an important impact on the utilization of manpower. A purely career force might be more effective and efficient in the short run, but not necessarily in the long run.

3. The difficulty of operating large Reserve Forces efficiently is very great because of shortages of adequate personnel for training and the problems of establishing units throughout the country that permit a balance between mission and manpower.

4. The fact that the basic legislation governing the eligibility of men for military service makes many more vulnerable for service than the Armed Forces currently require. Therefore, multiple bases for deferment have been established that create serious inequities and consequent lowering of morale.

5. There is a conflict between the efficient utilization of manpower by the Armed Forces, which is aided by their being highly selective in whom they accept, and the national goals which would be better met by affording many of the rejectees a chance for military training.

6. The lack of clear-cut legislative and administrative criteria as to the proper balancing within the Department of Defense use of both military and civil service employees is a source of malutilization.

7. In the past, the rapid turnover of top civilian staff was a source of malutilization of manpower, but the past several years have seen a considerable improvement on this score. However, serious problems remain in dovetailing the functions of top civilian secretariat and their advisers with the Regular Military Establishment. But such continuing conflict and its related effects on manpower utilization is probably inherent in the nature of our democratic structure. 8. With the Department of Defense becoming ever more heavily involved in expenditures for research, development, testing, and procurement of new weapons systems, the effectiveness with which it carries out this phase of its mission depends on the quality of its scientific and engineering personnel. It has been hard pressed to obtain and retain adequate numbers of such personnel with consequent weaknesses in its programing and control, which have been reflected in the malutilization of scarce manpower resources. Since such top research and development personnel are short throughout the Nation, there are no easy remedies at hand.

9. The Department of Defense faced with the highest priority national mission has been consistently disinclined to take into account in its contracting any considerations other than quality, price, and time. The question arises, however, whether the Nation may not be approaching a point when the impact of the placing, changing, and withholding of major defense contracts must be considered within the broader contexts of the employment situation in various parts of the country. If effective action along these lines is to be taken, it will be necessary to develop much improved criteria to guide the decisionmaking process.

10. Many academic and Government experts have assumed that a leveling off of Government expenditures for defense-space-AEC can be undertaken without worrying too much about the impact of such actions on other sectors of the economy. There is no reason, however, to assume that specialized manpower and other resources released in these sectors would be easily absorbed elsewhere. In the absence of careful planning and programing we are likely to experience a serious increase in unemployment among technical personnel and a possible drop in total output.

STATEMENT OF ELI GINZBERG, PROFESSOR OF ECONOMICS, COLUMBIA UNIVERSITY

Mr. GINZBERG. You asked the question of Mr. Hollomon about the best administrative structure for manpower in the Federal Government. There is one point of information, Senator Clark, you may be interested in, the Scientific and Technical Committee which exists in the Federal Government was moved to the Department of Labor recently.

Senator CLARK. I did not know that.

Mr. GINZBERG. That is an important move, I think.

Senator CLARK. It looks to me as if Bill Wirtz is getting ahead of his competitors.

Mr. GINZBERG. I think there are real hopes now to begin to coordinate in a more imaginative and constructive way the overall manpower picture partly as a result of this transfer. There has been a long fight about the transfer because many scientists thought that it was a downgrading to have their manpower put together with ordinary manpower.

Senator CLARK. I think I got the same implication from Dr. Hollo

mon.

Have you come to any conclusion as to where it ought to be and what the limitations of the functions should be?

Mr. GINZBERG. For the time being since there has recently been established in the Department of Labor a Department of Manpower Administration that goes beyond OMAT, I would like to see what an aggressive Department of Labor can do as a focal center.

The liaison with the Council of Economic Advisers should be improved. That is a question of temperament, inclination, and other matters of the key people.

Senator CLARK. Perhaps being a lawyer myself I am acting too much like an engineer. I short of think in terms of organization charts in lines, and how you can get across your program when you are dealing on an equal basis with Commerce and HEW and to some extent on an inferior basis with these elite advisory committees and the Council of Economic Advisers, who perhaps have a quicker access to the President than does the Secretary of Labor.

Mr. GINZBERG. I do not think it is solely, or primarily a matter of organization. I think it is really a question of intellectual leadership. I think if you can get a really good staff to work on the problems, you can establish your leadership, if you have any reasonable base from which to do it.

I would say the Secretary of Labor is a crucial figure in advising the President with respect to manpower. With good staff help I think he can go a good distance.

Senator CLARK. Of course, he has a lot of other things to do, and the salary level for the civil servants necessary to do this really backbreaking work is still pretty low. I wonder if you do not have to attach some kudos to it, and I don't know how you are going to do it in the Department of Labor.

Mr. GINZBERG. I don't think we have given the new situation a chance.

My views on Hollomon's testimony will focus on two of his or your positions: (1) there are not enough scientists and engineers; and

(2) there are not enough good engineers available to translate the advances of science into technology and into economic advances. I would say his second point is reasonable but I am not sure that technological advance is solely or primarily a matter of improvement of higher engineering education, although that is an issue. We run a technology seminar at Columbia and Rabi, my colleague, the Nobel Prize winner, did an analysis the other day for us, the burden of which was to emphasize the great shortage of inventors and translators. He does not know how to produce them. I have some skepticism about being able to force an increase through advanced education.

Senator CLARK. I wish you would clarify my mind on the difference between process, if there is such a thing, and what comes out of basic research followed by development.

Mr. GINZBERG. Well, I have to rely on him. I know nothing about either physics or engineering.

What he really argued was that the people who have the talent to go after new ideas are very seldom, almost never, the same people who have the special talent to translate known ideas into effective new products and processes.

Senator CLARK. This I would agree with, but where does that leave basic research? Are not the same people engaged in basic research now idea people?

Mr. GINZBERG. They are idea people but not inventors. There is one problem that Hollomon did not attack. I think we may see a cutback in the research and development budgets of private enterprise from here on because what was fashionable in the 1950's may not be in the 1960's; many firms have not gotten the payoff that they expected. I have been consulting with one large chemical concern in the research and development area. My impression is that everybody started in the early 1950's with great enthusiasm about payoff from R. & D. but it just did not turn out to be so easy.

A large input of money does not mean the certain output of new products and processes in anything like a straight line relationship. Mr. Greenewalt of Du Pont has been writing about this. He has been warning that R. & D. is a much more subtle process than meets the

eye.

Mr. Hollomon said a lot about the central importance of scientists and engineers for the security and welfare of the United States. I always have had the view that a few more able people in the State Department who really knew what was going on in Africa were really worth about 10,000 more engineers.

Senator CLARK. I am glad you expressed that point of view.
Mr. GINZBERG. That is my equation.

Senator CLARK. I know. It is all pretty controversial; you might say half a dozen first-class poets would be better than either. Mr. GINZBERG. I would buy that.

Senator CLARK. But the afterthought is that it is almost impossible to have a valued judgment on this.

Mr. GINZBERG. Well, but I think there is a certain type of training in economics that makes sense, that is a marginal approach. If you have 800,000 engineers, another 10,000 may not be very important. We are dealing with very big units. If we have 80 people in the United States who know Africa, another 8 might do you a lot of good.