The Streets Were Paved with Gold - Ken Auletta [18]
The Secretary’s dire words have been sounded by others. Often. Americans consume energy with the same abandon and unconcern for limits once practiced by New York officials toward their budgets. There is alarm—often exaggerated—that Arab oil interests will come to dominate the American economy and alter our traditional foreign alliances; that we will permanently bespoil the environment; that the planet itself is in danger. Despite the chorus of foreboding, despite President Carter’s cardigan sweater and proclamation that 1977 was “the Year of Energy,” the year ended with his energy proposals mired in Congressional committee.
The same cannot be said for the economy. It seems that no one knows what to do about the twin problems of unemployment and inflation, though President Carter, with a straight face, promised that 1978 would be “the Year of the Economy.” The federal government spends money to attack one problem—unemployment—and contributes to another—inflation. The government simply prints more money, and in 1978 the deficit was expected to reach $60 billion. After a brief lull, inflation in early 1978 was raging at a near-record pace. America’s trade imbalance also means we are exporting dollars. As the supply of dollars overtakes demand, the value of the dollar shrinks; investors switch to other currencies, driving down the dollar and America’s once-dominant economic role even further.
Not that other nations have answers. The new wave of wealthy immigrants flocking from Europe to Manhattan are seeking to escape their own economic plagues. These refugees, unlike earlier immigrants, do not flee famine or religious persecution. But, like their predecessors, they see their old world crumbling. They fear higher taxes, political instability, terrorism and kidnappings. The oceans offer safety. Manhattan offers tax havens, security, the good life. “In 1965 if I saw a friend from Paris, I would cross the street,” Jean de Noyer, owner of Manhattan’s fashionable La Goulue restaurant, told a reporter. “Now I just wave.…”
Wealthy Europeans view their tax laws as confiscatory and the labor unions as too powerful. The British Empire is preserved in history books. France, where the rich can often avoid paying their share of taxes, is beset by political instability. The Left captured 49 percent of the vote in the 1978 elections, and many business leaders fear the deep divisions between classes—not to mention the divisions within the ruling Gaullist party.
How Italy survives is one of the world’s wonders, though Orson Welles had as good an explanation as any. Italy, he said, is the home of 50 million actors, and the only bad ones were on the stage or in films. My forebears deceived Mussolini into believing they were grateful to be ruled by him, then, bless their souls, they hung him upside down. Today, the Red Brigades shoot people in the knees and kidnap and kill former prime ministers. The Italian inflation rate reads like a football score. As it does in Israel, where inflation hovered at 40 percent for two years. In Sweden, once hailed for its economic miracle, and its “middle way” between capitalism and socialism, the GNP declined 2.4 percent in 1977 and consumer spending dropped for the first time since 1931. Canada was lashed by 9 percent inflation and 8.3 percent unemployment in early 1978, and a major province—Quebec, which is larger than France—threatened to secede. Most Western European nations are sagging under the weight of decreased industrial investment,