Lethbridge Herald, The (Newspaper) - April 26, 1973, Lethbridge, Alberta
ihundoy, April 26, T973 THE LETHBRIOCE HERALD 5 Alarmists' cries fall on deaf ears By Edwin Dale. York Times commentator WASHINGTON To the sur- prise of many people here, President Nixon's message on the energy problem scarcely mentioned the term "balance of payments" and did not men- tion the word "Arab" at all. The omission does not mean that the government is unaware of a problem that preoc- cupies and even terrifies the financial community: the in- exorable growth of imports of oil from the Middle East and North Africa by the United States and the other industrial countries, the parallel enor- mous growth of wealth in the hands of oil-producing coun- tries and the resulting strains on the U.S. balance of payments and even the whole world mone- tary system. But the omission may reflect a more relaxed view of this problem in the government than in the financial commun- ity a view that should be reported. In any event, the president purposely chose in his message not to be alarm- ist on any aspect of the energy problem. A starting point of any analysis of the oil import and monetary problems, as conced- ed on all sides, is that all fi- gures are msrely estimates. For example, the volume of U.S. oil imports in 1950 could vary by several million bar- rels a day, depending on the success of a number of propos- als the president made in his message to increase oil pro- duction in the United States and its surrounding waters or to substitute "clean" coal for low-sulphur oil in some power producing and heating uses. But it is also conceded on all sides that there will inevitably be a large growth in U.S. oil imports over the years ahead and an almost fabulous increase in the revenues of a handful of oil producing countries along the Persian Gulf and Medi- terranean Sea. Thus the exact figure may not be crucial. Why, then, is the alarmist view being challenged here? The first detailed presenta- tion of the latest government analysis, not widely noticed, came earlier this month in Congressional testimony by William E. Simon, deputy sec- retary of the treasury and head of the government's oil policy committee. He pointed out, first, that the Arab countries fall into two categories: those that can (and want to) spend their rapidly rising income, mainly on im- ports from the industrial coun- tries, and those that cannot. In the first category are such major producers as Iran, Algeria and orobablv Libya, along with such non-Arab Unit- ed States suppliers as Canada, Venezuela and Indonesia. While these countries' imports will continue to come ir, good part from Europe and Japan, some will come from the United States. Simon disclosed that "the commerce department es- timates that the outflow of dollars to pay for oil imports will generate United Spates ex- ports worth billion in 1S80." The second category of countries includes only four of major importance: Saudi Arabia, Kuwait, Abu Dhabi and Qatar. But their money incomes, with tinv popula- tions and thus limited import needs, will be enormous. Simon estimated their revenues at bill'on by 1975 and "up to 20 billion to 30 billion" by 1830. In general, the estimate is that these four countries as a whole could increase im- ports by billion in 1980 from present levels. It is the rest, which will go into their reserves, that cause the worry. But suppose they invest it or give, it away in foreign aid presumably to poor Arab coun- tries like Egypt and Syria, which in turn will increase im- ports? If they invest it. the money will, in effect, return to the international income stream. And the investments will go mainly to the industrial countries, including the United States, which were the source of the revenues in the first place. Some U.S. officials are al- ready talking about a new "quadrangular" flow of funds (and balances of payments) in the world to replace the pre- sent "triangular" flow. The triangular flow works like this: industrial countries as a group run a current account surplus, meaning essanttally more exports than imports. makes possible a flow of capital, private and government, to the less de- veloped countries. less developed countries as a group import more than they export. The addition of oil to the equation changes it in this the growth of oil im- ports. the current account sur- plus of the industrial countries is reduced. continue to have a capital outflow to the non-oil- less developed countries and 1he same exoort surplus with those countries. gap is made up by a capital inflow from the hand- ful of oil countries that have excess capital to invest. Of course, no one can be sure how much of the invest- ment the United States might receive, though Simon pointed out that "the United States should serve as an excellent investment area" on the nor- mal criterion of a good rate of return. In any case allowing for increased exports, income from the earnings of U.S. oil com- panies and long term invest- ments by Arab countries the net drain on the U.S. bal- ance of payments because of oil over the coming years may not be nearly as large as many have feared. No one can be sure, but alar- mist cries that the dollar will be in a permanent state of de- valuation from this cause are, in the prevailing view, prema- ture. Nothing to worry about Bruce Hutchison, Herald special commentator The only complete study of the North American energy situation has recently been provided by Professor Julius Brainworthy, the distinguished analyst of Harvard University but, as you would expect, the timid world press has refused to print it. By special arrange- ment his conclusions are re- ported herewith in a taped in- terview of questions and ans- wers that summarize all the information available from the United States government and other trusted sources. "Professor Brainworthy, is there an energy crisis in North "There is no crisis, except in the minds of excited journa- lists. There is merely a larg- er demand for energy than the supply and this temporary im- balance will soon be corrected by the price system." "When the price of oil and gas increases sufficiently it will finance the discovery of ample extra supplies. All the oil companies agree on that obvious proposition. There- fore it is essential for the public to use as much of these products as possible to raise the price and encourage production. The more we use the more we shall have. Even a journalist should understand that." "But for the time being isn't it true that the United States depends on the Middle East for vital supplies of oil and must spend countless billions to buy them, if it can find the money, and if the Arab countries are willing to "This small difficulty has been grossly exaggerated. It will be easy to pay for ade- quate oil imports by doubling or quadrupling the exports of American manufactured goods. And if these competi- tive exports close the factor- ies of Europe and Japan that will be a minor price to pay for the growth of the Ameri- can economy." "Is it true that the sheikhs of Arabia will soon hold enough gold, dollars and other reserves to blackmail the Un'ted States and buy up its "No, it's not true. The sheikhs don't know how to save money. They don't want investments. They only want consumer goods. So they will squander all their money on American luxuries for the ladies in their harems and big limousines for the m- selves. For example, they will buy most of the output of the American automobile indus- try, thus stimulating our econo- mic growth, reducing our own use of automobiles, our need of gasoline and our air pollu- tion as well. They may not know it but the sheikhs are solving all our problems auto- matically." "What of Russia? It has more than enough oil for its ewn use and a stranglehold on the politics of the Middle East. Isn't this "No. it is not. Russia has no strategic designs against the Middle East or any nation. Moreover, its economy is in bad shape because the Rus- sians don't understand modern business and can't even feed themselves. They will be glad to supply the United States with all the oil and gas we need on easy financial terms. If nec- essary, their generous govern- Eaim Credit life Insurance, WeVe made it easy to get because if very important to have. There was a time yon couldn't get life insurance protection when you arranged bank loans for your farm business. But at the Commerce, we changed all that And, we made it easy to get. when you're pre- arranging your credit needs for the coming year, think about Commerce Farm Credit Life Insurance. Commerce Farm Credit Life Insurance is optional. The cost is low, just a year for every coverage. And if you're under 60 years of age, up to life insurance coverage is available with no medical required. Also, you can get as much as coverage if you qualify. Ask your Commerce manager aoout Farm Credit Life Insurance today. We've made it easy to get, because it's very important to have. CANADIAN IMPERIAL BANK OF COMMERCE ment will give us foreign aid as it has done in Cuba and India. Perhaps we can't trust Europe but we can trust Rus- sia." "Nevertheless, isn't it possi- ble that there will be a definite shortage of gasoline and heat- ing oil next "Possibly a slight shortage, but it will benefit everyone. If Americans walk to work in- stead of driving, that will im- prove their health because they are physically soft. And if the temperature of their houses is reduced, that will effectively cool the heated state of public opinion, exactly as President Nixon planned from the begin- ning." "Then why didn't the govern- ment foresee the shortage and prepare for "All the governments of the Western world foresaw every- thing. But they were too hon- est and responsible to tell the people, disturb them unneces- sarily and interrupt their dom- estic peace. For reasons of national security the short- age was wisely kept as a state secret. In the best tradition of democracy, only, foreigners were allowed to know the facts." "Was the meat shortage also a state "Of course. The government skillfully arranged the short- age to raise prices and encour- age production. And as the se- cretary of agriculture says, the people can quickly overcome the shortage by eating less. They're too fat anyway. Ask your doctor. It will be a more healthy and happy America when meat is eaten once a week as in the ageless, indes- tructible civilizations of China and India. We have much to learn from those ancient cul- tures." "You mean that the North American living standard must "On the contrary it will rise. The people may have less meat, gasoline and fuel next winter but the Gross National Product is rapidly increasing and that is all that reslly mat- ters." "By the end of the century the American population will increase by about 50 million. Won't that create a demand and supply "No, it will not. After all, that increase is only the pre- sent population of Britain and it's doing fine. Surely Ameri- cans are just as smart as the British? So long as the GNP keeps rising it will take care of the population.1' "So there's no "Unfortunately there is one very serious problem. The pub- lic is recklessly wasting more energy worrying about energy than the whole economy uses to maintain the GNP. If the people would only stop worry- ing there would be nothing to worry about. The so-called cri- sis exists only in the irrespon- sible press and the arithmetic of the computers." "What is your advice, "The people should trust the price system and avoid econo- mic controls that would benefit no one but the consumer and. in the end. would ruin the high- est living standard in the world by keeping prices too low and discouraging production. Yes. and let the peopte trust their governments. AH the govern- ments know what they're doing or we wouldn't have reached our present state of affluence, strength aad general happi- 'Crazy Capers' No reason for a free ride By Jim Fishbournc, Ilcrald staff writer Tl'e University of Alberta Graduate Stu- dents Association has called for "total pub- lic support for high3r education." By that it means elimination of tuition fees, and any other fees students now pay. This is not a new plea (should that be and there is nothing new about the reasoning offered to support the idea. It consists of the ancient claim that while student fees don't affect the wealthy, they are a barrier to the children of the poor. Whenever fees are raised, it is claimed, more poor folks must forego unmrsity education. The students also say fees should not be tied to- the expanse of the program, i.e., there should be no extra fees for extra high cost programs like medicine and en- gineering. This is not justified, they claim, because future job prospects are no long- er certain, as they once were. In summary, then, the s'.udent position is that really there should be no fees at all, but if there must be, they should slay at the present low level, and fees for all programs should be the same. That position would be total nonsense, if it were not for one small point: these stu- dents are showing that they are learning something at university, learning how to use a position of privilege to rip-off the tax- payer. It costs the taxpayer of this province an incredible amount to finance university education. After spending hundreds of mil- lions of dollars to build three universities and plan a fourth, he must still meet the annual operating costs, which this year will approximate one hundred million, and pro- bably will double in the next 10 years. On a per students basis, costs run from a "modest" or so a year for the least expensive undergraduate programs to 008 a year for others. At the graduate level costs probably start at or per student per year, and they run to heights the public would have trouble believing. (As a starter, scores of courses taught by and up professors have three, two or even one lone student figure the tuiton costs for just one student who takes two or three such courses a year. And there are plenty probably hundreds of stu- dents who do just that.) Five years ago student fees covered about 15 per cent of operating costs. Now it is H per cent and dropping, as costs rise and fees do not. So the taxpayer puts in about 90 per cent. From the students' point of view if you can believe what they teli the students finance board about their budgets tuition fees are about 25 per cent of the expense of attending university. It is hard to believe that a student who can find three quarters of the cost cannot find the other quarter, in a province that beyond question has the most generous system of student loans extant. (It has been tightened up some, from its previous "give- away'' basis but is still more liberal than that of any other province.) It is equally hard to see why the public, that already foots an exorbitant bill for higher education, should be expected to assume even the tiny share that the bene- ficiaries of the system are now asked to bear. It is hard to conceive of a more blatantly greedy attitude than to protest higher fees for the more expensive programs because of the absence of an iron-clad guarantee that the eventual gain will be proportion- ally higher than that of other students. And as for the students who are said to be "reluctant to make loans" because of the uncertainty of future employment pros- pects, well, after making it so painfully clear why they're in university, they'll need a much better excuse than that for de- manding a free ride. The pot cooking By Louis Burke NAIROBI The community of East African nations has just about disintegrat- ed. It all started with Tanzania going its own sweet way into African socialism. This was contrasted by efforts in Kenya and Uganda where vested British interest held a voice in government affairs until very re- cently. That partnership broke down -with the revolt of President Idi Amin who drove out non-Ugandans indiscriminately blacks, browns, whites. This, then, leaves Kenya alone in the original fold, but matters though superficially fine, are percolating, or beginning to do so. Even before Uhuru, or independence, the political and every other kind of pot was cooking slowly in Firstly, there was the -white fanner problem in the rich highlands area bordering, if not part of, original Kikuyuland, many of whom were British, but most were Africaaner, or South African The latter pulled up stakes and left almost before the Uhuru ceremonies ended. Many of them trekked southwards overland in cavalcades of cars, trucks and farm machinery, imitat- ing in reverse the great trek northwards which their fathers and grandfathers had completed at the turn of the century. But many of the British stayed on. Now, they are a problem again, as they are elsewhere. Thus, one sees such recent headlines in local papers as, "British farmers will be bought out" says Kibaki, and along with that goes the subheading "6 million grant will pay for acres.'' That will end that problem, they think. This was the main story on page one in the March 14, 1973. Most British head for South Africa where life is still what they were used to; some are going to Australia where a surprise may be in store for them. This exodus is accel- erating. The Kenya Asians, too, are on the move selling off businesses and properties at rock bottom prices. In their case, much fear is added to the fire by the arrival of hundreds of what are now stateless, homeless, penniless Ugandan Asians. They lost all money and property when Amin expelled them. One might say the Asian community is caught in a storm of quiet franticness; watching, waiting and hoping. There is no British government around to bail them out, and the govern- ments of India and Pakistan pretend they don't exist. Added to this is the fact that the presi- dent of Kenya, Mzee Jomo Kenyatta, speaks mainiy Kikuyu, his own language, these days. He has switched from English and Swahili a fact jealously noted by othar nation-tribes; Jaluo, Masai and oth- ers. They fear the growing Kikuyu power is evident to them. Not the least important factor in the pot is the increas- ing age of President Kenyatta, though he is slill strong and very active. Some of the most important politicians of Uhuru time have gone from the scene Mboya and Ngala are dead; Mannnbi is in business and very rich; Githuru though still around has been ill while Odinga, the main Jaluo man, has been neutralized and is almost a prisoner in his own province, Nyanza, in the west on the shores of Lake Victoria. That leaves the field open for Dr. N. Mungai, foreign affairs, and Mr. arap Moi who is vice-president, though of the wrong tribe. Thus, Kenya presents an interesting picture for those who watch the world's political games in progress. Besides, the army is quite an unknown entity today. II revolted once soon after Uburu and if it were not for the fast ar- rival of British troops, it might be in con- trol today. It not be so easiry crushed if it decides to take over at some future date. And it still has a score to settle. However, Kenya is still stable though it has problems. It is among the most beau- tiful countries in the world with something for everycae. It is still a tourist's paradise with spectaculars galore and prices well within reason. Kenya more than repays the visitor for what money is spent. On the use of words Theodore Bernstein The the many. A common phrase for the common people is boi poUoi. It is Greek meaning literally the many and for those who know that meaning it poses a dil- emma: If they say the hoi polloi." they are speaking incorrectly because they are introducing a redundant if they omit "the"