Speech to the American Finance and American Economic Associations

December 29, 1968

Following is the remarks by Stanford GSB Dean Arjay Miller to the annual combined luncheon of the American Finance Association and the American Economic Association at the Pick-Congress Hotel, Chicago, December 29, 1968. At the time, he was vice chairman of the board of Ford Motor Company.

The Revolution of Rising Expectations

We are meeting in the closing days of a troubled, arid, turbulent year in which, as a people, we have known joy and despair, compassion and violence, advancement and frustration. Out of the turmoil of the past year has come, I believe, a new sense of national awareness and purpose.

I am reminded of those opening words in Charles Dickens’ Tale of Two Cities: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope it was the winter of despair, we had everything before us, we had nothing before us.”

How apt those words are to our situation today.

On the one hand, we Americans are in most respects the most fortunate and the most privileged people on earth. Our economy has enjoyed steady growth for more than 20 years, unemployment, is at the lowest rate in 15 years and personal income has nearly tripled since 1945. Science and technology have contributed immeasurably to the comfort, convenience and general well-being of us all. In short, the bright promise of the “Soaring Sixties” has been fulfilled by most of the traditional yardsticks.

On the other hand, we are beset on all sides by problems grave enough and urgent enough to threaten the progress, if not the very stability, of our society. The grinding pressures and demands of our involvement in Vietnam, continuing poverty amidst plenty, racial tensions, the upsurge in crime and civil violence, air and water pollution, soaring noise levels, the progressive erosion of public services, social regimentation, loss of privacy — these and many more frustrate our efforts to achieve a better life in a better world.

Revolution of Expectations

It might be argued that earlier generations had their problems, too, and this I would not deny. But today there is a very great and very significant difference — something new has been added. This something new is the soaring level of public expectations. People are no longer willing to resign themselves to the failures or shortcomings or to the social order. In a time of general affluence and great technological advances, they know that significant improvement is possible, and they want that improvement now.

As John W. Gardner puts it: “Once people were fatalistic about their problems because they attributed those problems to the will of God or the forces of nature or simply to the unchanging order of things… (but) the individual who used to curse his fate now curses himself or his employer or the party in power. The pressures and strains on institutions are particularly severe when people who have suffered oppression, as have some of our minority groups, begin to see the chance for a better life… Once the grip of tradition or apathy or oppression has been broken and people can hope for a better life, their aspirations rise very steeply.”

I happen to believe that this revolution of rising expectations is justified. I am fully convinced that we as a people do have the power, actual or potential, to alleviate the ills of our present society. But we have not yet learned to use that power in massive ways to meet massive social needs. We are bound by too much by traditional thinking, failing to recognize that social unrest can be an opportunity as well as a threat.

Progress comes only when a majority of people wants it enough to adopt new approaches and new methods. And certainly there are many now who believe that we must launch a bolder and more effective attack upon our social problems. Those who suggest that we are a “sick society” are guilty of narrow vision and a profound misunderstanding of the nature of our times. Whatever else may be said of us, the American people do not lack compassion. The aberrations of a minority cannot fairly be charged to the majority.

No society in all history has ever attempted so much in so short a time. No society has ever reached out so willingly to meet human needs and wants on so grand a scale. This needs no documentation. If there is frustration and cynicism and even despair, it is not because we have not tried to do better — it is because we have not known how to do better.

What, then, is lacking? I want to spend the remainder of my time today exploring with you what I believe may be a viable approach to our problems.

All of us tend to approach a problem using methods or techniques we have found useful in our past experience. I am no exception. In fact, I believe that a successful approach to one problem is transferable to almost any other, because all problem-solving is subject to the same basic constraints.

Priorities vs. Goals

The first step in any problem-solving is the establishment of objectives. What specifically do we want to achieve? We begin, of course, with the fundamentals of dignity and self-fulfillment for all individuals in society. But then we must go on to deal with more tangible matters: What should our goals be in such areas as education, housing, health, and welfare?

Where there is more than one objective — where there are many needs to be met at one time — we must also establish priorities. Given limited resources, what will we “trade off” in one area of need in order to accomplish more in another area? This seems so elementary that it should not require discussion. And yet I believe our failure to establish national goals and priorities is one of the most serious obstacles in the way of national progress.

We have only recently come to recognize that, rich as this nation is, we are not rich enough to have as much as we want of both guns and butter. More of one means less of the other. Given this painful but inescapable fact, the present competition between military needs and domestic needs offers all of us a useful lesson.

But we can’t afford to stop here in our thinking. If all military expenditures on Vietnam were to end tomorrow, our needs would still outrun our resources and we would still face difficult choices.

I believe we must step up — now — to the essential task of establishing realistic goals and reasonable priorities in meeting public needs. We as a people must determine what we want to achieve and how much we will spend, for example, on welfare, education, safety, clean air, and pure water. These are “public goods,” not subject to the law of supply and demand in the way private goods are.

Either they are not available in any marketplace and therefore are not subject to the usual market tests, or we have decided as a matter of public policy that we cannot rely, solely on the market to produce and distribute them.

In the final analysis, the quantity and quality of “public goods” — the scope and pace of our efforts to improve the American society — must be a matter of conscious public choice. It is we as a people, as citizens and as voters, who must exercise this responsibility. Can we set up some better means of establishing national goals and priorities? Is it feasible to suggest that an entire people can actively participate in determining specific national purposes and directions? My answer is that it will not be easy, but that we definitely can do better than we are doing at present. One effort along this line was launched in 1960 by President Eisenhower through his Commission on National Goals. The president asked the commission to “develop a broad outline of coordinated national policies and programs” and to “set up a series of goals in various areas of national activity.”

What Will It Cost?

Although the commission listed some very broad and general goals in 15 different areas of national activity, it did not attempt to deal with specifics and, more importantly, it did not attempt to cost out any of these goals.

In the words of one member, “the commission’s task was to point out what this nation should do. It could not enter into the more difficult and detailed problems of priorities and the exact costing and paying for goals achievement.” Upon issuance of its report, the work of the 10-member commission was terminated.

A few years later, the National Planning Association, an independent, nonprofit organization in Washington, took up where the Eisenhower Commission had left off. In 1965, it published in summary form the results of a two-year study of goals and costs indicating that even, in 1975, our national resources will still fall far short of paying for the goals we presently envision.

The NPA report contained a message that is worth noting here:

“Concentration on… individual goals obscures the fact that our objectives make up a system of competing claims on resources. We could well afford the cost of any single goal at levels reflecting current aspirations, and we could probably afford the cost for any group of goals over the next decade.”

“We could rebuild our cities, or abolish poverty, or replace all the obsolete plant and equipment in private industry, or we could begin to develop the hardware to get us to Mars and back before the year 2000. We could make some progress on all the goals, perhaps substantial progress on many, but we cannot accomplish aspirations at the same time.”

“Collectively, their costs would exceed the capabilities for supplying resources, and they are likely to exceed them by $150 billion, or 15 per cent of GNP 1975. Confronted with the need to make sense of steadily expanding claims, we face the options of increasing our resources, utilizing them more fully, setting limits… for our objectives.”

“And, if we are to do more than muddle through in the coming decade, we face the underlying problem of planning in a democracy — of devising more effective public and private techniques for balancing resources and aspirations.”

This was an important effort in the right direction, but it has not been sustained. It has had neither the visibility nor the support that a highly significant undertaking of this kind must have. And in the meantime, like the legendary character who jumped on his horse and rode furiously off in a thousand directions, we have continued to splinter our resources in a vain effort to meet all of our problems at the same time.

I believe there is a better way. What we need, I am convinced is an overall approach that will do two things: first, tell us what our economy is capable of producing over a given period of time, and second, project the cost of present and contemplated national programs.

The first of these tasks is the easier by far. We can project at least the magnitude of future increases in output. The long-term trend rate of increase in Gross National Product probably will be about four per cent per year.

With a GNP now of roughly $900 billion, our total output should advance about $40 billion a year, valued at today’s prices. This is a rough calculation, of course, but it gives an idea of what added resources might be available as time goes on. The second step — projecting the cost of present and contemplated programs — is more difficult. But it can be done, I believe, even if we have to settle for ranges of cost in some of our long-term estimates.

Costing Current Programs

First, we could project the cost of existing programs over, say, the next 10 years. The magnitude of built-in increases in these programs is not generally recognized, so the extent of this existing commitment must be made clear as we estimate the total demand upon our resources.

Next we could project the cost of generally recognized goals over the next 10 years in, for example, such areas as education, pollution control and public housing. Here we could begin by putting dollar signs on certain widely accepted reports by special study groups in each of these fields. The recent Carnegie Commission report on higher education is the type of study I have in mind.

Proposed legislation and Congressional committee recommendations would also be considered. In addition to some mechanism for costing out generally recognized goals, there should also be some means for gathering and analyzing serious major proposals by groups or individuals wanting to press specific ideas. This would serve, in effect, as a national forum for the airing of new approaches to public needs.

A listing of all our national goals, together with mated costs and the resources available to meet those costs, would be published on an annual basis. Probably the most significant figure in such a report would be the “gap” between the total cost of our goals and our ability to pay.

General recognition of this “gap” would in itself be valuable, because it would open the eyes of those who believe that our problem is overproduction or that everything is possible in what is sometimes called our “economy of abundance.”

What’s more, recognition of this “gap” would throw into perspective such recurrent questions as the shorter work week and technological unemployment. As long as so many recognized needs remain unsatisfied, the overall problem can be correctly portrayed as one of requiring more work, not less. One big question remains: How is all this to be done? In my opinion, no existing organization seems appropriate to perform this task. So I want to propose here today the establishment of a permanent National Goals Institute to develop an overview of America’s needs and resources. Under broad and responsible direction, the institute would be made up of a permanent, full-time professional staff drawn from many relevant disciplines — the behavioral sciences, economics, engineering, urban planning, medicine and so forth. It’s task would be relatively narrow in scope but almost limitless in its implications for sound, coordinated social progress in the years ahead.

It would be most useful — if this idea has merit — for such an institute to be recommended by the president and established by an Act of Congress. I would recommend that its work be supported by annual government appropriations and that its trustees or directors include representatives of both the Executive Branch and the Congress as well as the general public. Certainly its reports should be made directly to the president and to the Congress and given wide public distribution.

Does It Go Far Enough?

Now let me deal with some of the questions I am sure this proposal will raise. Some might contend that an institute of this kind does not go far enough. They would prefer to see a neat ordering of social objectives that could be contained within our ability to pay.

Some such restrictions and cutbacks in our aspirations would of course have to be accepted in any event, but this cannot be the prerogative of any single group or organization in our society. In a democracy, this is a process that all of us must and should share.

Reports by the Institute would have no binding force or direct authority in and of themselves. They would simply point out directions and possibilities and provide a factual basis for enlightened public discussion and decision-making. Moreover, there would always be alternatives spelled out, with some idea of the magnitude involved in each of the different approaches.

Individual members of the Institute would be free to differ with a majority opinion and to add their own comments or recommendations to the basic report. Thus these reports would be only the beginning point for orderly planning.

Our concern is not with absolutes, but with choices — with the kind of information that we as a people must have if we are to be able to see clearly the various alternatives open to us and choose rationally from among them. In Russia, a five-year plan carries the full force of government authority and the people have no options. In our case, the people would choose, through their elected representatives, whether to follow one plan or another — or one part of one plan and not another. This kind of planning is not meant to supplant “The People’s Choice;” on the contrary, it is meant to increase the people’s ability to make clear and informed choices. A second choice that might be raised about a National Goals Institute is whether or not it is possible to to treat in quantitative terms all the goals of society. There are obviously many values in life that cannot be measured.

The mission of the Institute would be limited to setting forth those quantifiable needs that are basic to social progress and on which there is general agreement.

Quantifiable Needs

The dispossessed in our society have no problem in recognizing — and demanding — such basic quantitative objectives as more income, more jobs, more health care, to name just a few. These goals are important in themselves, and they are a foundation for the achievement of such broader goals as dignity and self-respect, social harmony and cultural advancement.

Let me turn now to another part of my subject today — the task of moving effectively toward the goals we choose. Even with a clear sense of priorities and adequate funding, tremendous effort would still be needed to develop a sound and effective attack on social problems. My own experience leads me to believe, however, that new approaches can be made to work if there is general agreement on the broad objectives of the entire community. For example, I have been devoting a great deal of my time recently to the work of the Economic Development Corporation of Greater Detroit, an organization of businessmen established to encourage and assist the development of black-owned and operated businesses in the city.

There is general agreement among both whites and blacks on the desirability of minority ownership of varied kinds of business in the inner city and there is general agreement as to the kinds of assistance required — financial, technical, legal and so forth.

But it is clear that these enterprises must be controlled and directed by residents of the inner city. We in the Economic Development Corporation are responding to requests for help from black entrepreneurs, but making no effort to tell anyone how he must run his business. This is determined by the black businessmen themselves.

We are fortunate to have working in Detroit, a black coordinating group called the Inner City Business Improvement Forum. These men are in a position both to suggest what new businesses might be established by blacks and then to help them in the initial operations of those enterprises that are actually launched.

We believe this entire program can and will succeed so long as there is no attempt by the white community to make decisions for those members of minority groups who want to do for themselves what they regard as best for them.

Answer to Patchwork Progress

Locally managed programs of this kind will add up to an effective national attack on social problems, I believe, if the local programs are conceived and implemented with clear understanding that they are only part of an overall effort to meet a problem of international dimensions.

This is why I believe so strongly in the idea of a National Goals Institute. Something of this kind is needed if we as a nation are to see our problems whole and learn to deal with them effectively. Unless we adopt a total view, we must resign ourselves to patchwork progress.

To make gains in one area of need while compounding problems in other areas is not real progress. For example, factories would increase total employment but might at the same time add to air pollution and urban congestion. So what we must seek, actually, is a synthesis of efforts.

Before I close, let me urge that academic people, whatever their field of learning, assume a larger role in helping to resolve the critical social problems our nation faces. Universities should, of course, maintain their primary emphasis on teaching and research, but this does not mean that they cannot relate more effectively to the problems of the “outside world.”

The university has two advantages in this respect: first it has the interdisciplinary talent and intellect to deal with complex problems and, second, university people can be more objective than either business or government people, who are direct parties of interest in most problems.

The proposed National Goals Institute should provide an appropriate frame of reference for university response to critical social needs — either by individual scholars or by groups of academic people.

There can be no doubt about the magnitude and gravity of the present challenge to our free society. The task we face is both awesome and urgent.

But there can be no doubt, on the other hand, of our power to meet our problems and achieve a better society. Having that power, we have also an obligation to recognize the challenge and the opportunities and to make a beginning. Let us not fail to use all of the vision, good will and power at our command.