based upon Economist article
eeeeelOr reasons of domestic political diplomacy, men of more conser vative attitudes had been kept or installed in the actual offices of economic execution; the charp young radicals had whirred out their ideas in the “hite House in some imilation, with President Kennedy acting as the connecting wheel to keep things moving. He could act as 'governor™ in this fashion because he was able and willing te come to grips with the argument and grasp the technical issues; because he recomsed the need for a shrewi balance botween the best of established banking and financial opinion and the straining ideas of the modernists which he was disposed to sharos and because he fully saw the limits set to the pace of movement by the obligation to protect the dollar and not to upset the stability of world currencies, by the requirements of America's own aid and defence policies, and by economic prejudices of Congresasecee
The policy consisted of a moderately successful roflation of demand; a romarkabley successful direct assault against cost inflation (controver= sial though last year's steel showlown proved to be); and. however, uncertainly, the beginning of perhaps the first intellectual approach yet to a balance of payments problem — without oither unnecessarily deflating an economy, or devaluing an oxchange rato, or defaulting on oid and military commitments overseas, Now the connecting wheel which kept things moving, and in balance, has gone, The risk now is that the central engino for a progressive policy could become too stationary again.
This hazard impinges on three fields, First, the recovery in American industrial production is already noarly three years old, That recovery might, in the normal course of the trade cycle, soon be expected to lose some of its momentum. President Kennedy belonged to tho generation and = school who woule have wished to move swiftly, tut in his case safely too, to rostimulete demand, I+ has to be seen whethor President Johnson would be similarly spurred, and anyway the threat of = slowlowm, which is not in sight yet, may well not arise during his period of office, If it does, cutsiders can only hope that a post—Kennedy administration will be seized of the fact of how quickly even a temporary limp in tho American economy must become a major source of political as well as sconomic woakness to the whole free world,
Secondly, President Kennedy was in advance of his own Treasury ministers in recognising the need for improvement in the whole system of international payments, through a radical reform of the. International lionetary Fund. He had himself declared that “one of tho reasons that new sources of international liquidity may well be needed is that, as we close our payments gap, wo will cut down our provision of dollars to the rest of the world," The contingent risk is that the new administration might be even keener than the old on cutting Amorica's balance of paymemts gap, perhpps by blunter methods = and without at tha same time seeing the that large measures to increase world liquidity will then become quite vital.
& third major danger, already existing before President Kennedy was killed, is that the drive towards froer world trade may slow down, and that next year's round of tariff negotiations in Gatt (nm rownd which still bear President Kennedy's name) may decelerate into virtual ineffectiveness, Here again tho implication for Iritain is that it ought itself to take bold initiatives in an effort to maintain the inpotus towards more libsral international trading for which Prosident Konnedy would have stood.ese. The aching gap which has been blasted in the economic government of the free world could be 9 gap in innovating unorthodoxy...eses