Knowledge that Transforms

expand investment as one in which underlying investment opportunities are impaired. If underlying investment opportunities are defined in relation to the natural rate of growth, this situation would have to be described as one in which the incentive to exploit investment opportunities is reduced. This seems quite as reasonable a use of words, at least if this type of situation is regarded as the exception rather than the rule.

THIS paper is concerned with a problem that is of considerable importance in the analysis of personal income size distributions, namely: for any given type of unit selected for analysis (family, spending unit, or any other useful recipient unit classification), how would ranking the units by aggregate income per unit versus ranking them by per capita income per unit affect the relative income shares received by various income groups. The problem may also be interpreted as a comparison of the effect on income shares of using a unit or a person basis of classification. Of the two path-breaking studiesrecently published in this field that of the United States Department of Commerce 1 yields estimates of relative income shares received by consumer units when ranking is by aggregate income per unit, while that of Professor Kuznets 2 yields estimates of shares received by individuals when ranking is by a procedure that attempts to approximate per capita income per unit. This variation in method is used by Dr. Selma Goldsmith and her associates 3 to explain, in part, some of the difference in results obtained in the two investigations. Though this paper considers the problem primarily in the context of Delaware data, first a brief digression is undertaken to comment upon a small portion of the analysis made by the Commerce Group (Dr. Goldsmith and her associates). This digression serves three purposes. It provides some insight into the question posed. It emphasizes, by contrast, the value of having access to a sample of individual tax returns as is the case for the analysis of Delaware data. And finally, it permits the writer to correct some of the confusion of interpretation and inference that has arisen. After the digression, a comparison of aggregate and per capita variants using Delaware data is presented and an analysis is attempted showing why the income shares received by the different income groups are affected in the particular directions noted. The paper then concludes with a few observations about the per capita approximation method employed by Professor Kuznets in constructing his income size distributions.

reserves, which was compounded by the Christmas seasonal pressures upon bank reserve positions, including an unexpected high volume of dividend payments and tax disbursements. The lesson to be drawn from this experience seems clear. A flexible monetary policy,4 about which the present Reserve Board has exuded so much pride, requires flexible monetary instruments rather than a dogmatic subservience to a single rigid mechanism for implementing credit objectives. Dealing in all market sectors, as the occasion warrants, can alone serve central banking ends. Confinement to the bills sector will inevitably create a Hobson's choice of acknowledging doctrinal inconsistency or policy impotency in a situation such as that which developed in early December I955.

THE wording of Section 2 of Employment Act of I946 -its declaration of policy -is notoriously vague. There is, even today, widespread disagreement as to whether or not it is really a law or even what courses of action a full employment policy would entail for government or require from business community. The negotiated language of act suggests both ends and means that are breath-taking in their implications and also includes artfully contrived restrictions that might be so construed in practice as to paralyze action. It thus devolved upon President, his executive heads, and his economic advisers to interpret new law so as to vitalize it or perchance sterilize it and upon Joint Economic Committee of and two Houses to review executive interpretation and to implement or perchance to correct or frustrate it. We are now ending tenth year of this interpretative experience, and it would seem timely to look back over developments of these years to see what light they throw on question what goals of employment are in fact coming to expression or acceptance as a feature -perhaps a preponderant feature -of our national economic life. Prefatory to such an analysis it will be helpful to consider some concepts of employment problem and beliefs as to what should be expected by way of its solution which were entertained in business and academic circles where problem was considered in years just preceding passage of Employment Act. That review will shed considerable light on what was the intent of Congress as it reflected Congressional reading of will of people.

THE purpose of this paper is to review the trend of economic growth of the last ten years in the three most important parts of the free world: the countries of Western Europe and North America, of Latin America, and of Southeast Asia.' It focuses on the factors bearing most directly on long-run economic growth in these areas, including the volume of savings and investment, the role of international trade and capital movements, and the effects of price changes. An attempt is made to assess the prospects for growth in the years ahead and to draw some general lessons from the experience of the last decade. Since this paper is primarily concerned with discerning the long-run trend, year-to-year changes, and differences between individual economies, particular sectors of the economies could not be treated in more than a cursory way. For the same reason, it does not purport to present an economic survey of the three regions; nor does it constitute a world economic survey, since it does not cover the countries of the Far East, the Near East, the South Pacific, South Africa, or, excepting Malaya, any of the dependent territories. Developments in these areas differed so much from country to country, and from those of the areas discussed in this report, that most of the findings of this study presumably do not apply to them, although the growth trends of the North Atlantic area, of Latin America, and of the countries of Southeast Asia obviously have an important bearing on the growth of economic activity in all other regions. The data on which much of the discussion is based are summarized in Tables i and 2 below.