Winter deepens recession

From my high vantage point over Central Park, which is rather like that of a plane just coming in for landing, I notice that the trees, after a surprising burst of weather in the 50s, suddenly seem to have sprung to attention. They bristle with fuzz and with the first hint that with another warm spell, they might even sprout a leaf and at their base may be even a tiny blossom of some sort.

This ridiculous hope only shows how much we hunger and thirst for an end to this appalling winter. I must say that this city, New York, has been luckier than most. By a freakish movement of the usual west winds, we've escaped the Siberian storms that have buried scores of cities in the Midwest and had their inhabitants waking up 30 and more degrees below zero.

Two-thirds of this continent, in fact, is quite used to near-Arctic climate throughout the winter, but this has been the worst winter this century. Over 1500 miles of the Midwest and the north being dumped with snowfalls that most of us really cannot imagine. The worst we've ever had in New York, in the city that is, was 17 inches on Boxing Day 1947 and I well remember the beautiful silence of the following days, the double-decker buses buried up to their second-storey windows, the parked cars buried, the only people up and about sledding or padding down the very centre of Fifth Avenue where the snow ploughs had made a narrow lane.

Well, the stories out of the Midwest are unimaginable. St Louis got 21 inches one day and seven the next. Minneapolis 40 inches in three days and everywhere such perishing cold that in many cities the mayors warned people to stay indoors. If you stand out for a minute in 35 below zero Fahrenheit, your ears and nose freeze and your head feels like a block of ice. Over 500 people across that middle of the country have died and very few city councils care to count the old people who, in the slums, froze and died indoors from lack of heat.

Now I bring this up again because of two consequences that don't occur to you unless they're pointed out. One is the fact, which has puzzled some sociologists and brought sighs of relief to some city councils, the fact that the poor and the blacks have been extraordinarily quiet in the wake of the president's arresting the rate of increase in welfare, food-stamp programmes, job-training programmes and the like. Of course, I've told you this story the wrong way round. You can see now that nobody's had the stamina to start protesting against the government.

The main enemy since the middle of December has been the weather. I've noticed that this tends to be so, in a milder way, in a normal winter. My daughter's friends in Vermont who are, for the most part, young, educated people, alert as any of us to the politics and issues of the time, they don't talk much about these things in winter. Survival is all. Beating the snow and the cold and the flu. When their late spring comes in May, they start to organise and get indignant.

The other consequence of this historically ferocious winter has been to deepen the economic recession, farm costs ballooning, farm prices crawling up, farmers going bankrupt, the cows even don't eat so much, they huddle for warmth – the ones, that is, that have managed to stay alive. And because these perishing winds, instead of blowing out across New England, have, in the past few years, started to duck south from the Midwest, even Florida has had winds icy enough to ruin half the citrus crops.

Across one half of the country, the construction industry has been rudely halted, 46 per cent of all building of new houses, office buildings, factories, whatever, have been stopped in their tracks which has meant the laying off of 100,000 and more building workers. Same with the embattled automobile industry; the weather is not, of course, the main reason for its doldrums but the freezing of transport has kept workers, as well as raw materials, from the factories. The Japanese and the Germans are the villains here and Detroit, the once proud world capital of the motor car and the healthy barometer of the American economy is now, with nearly 40 per cent of its workers laid off, in the worst slump since the Great Depression of the early 1930s.

Comfortable people on the outside – I mean those of us who live in comparatively cosy climates, whether here or in Europe or wherever – will appreciate the bleakness of Detroit's ordeal if I say that an agreement just reached between the Ford Motor Company and the Automobile Workers' Union is unlike anything we've known or anticipated since the Second World War.

Anybody who's lived for any length of time in an industrial country in the past couple of decades will have no trouble recalling the usual pattern of such labour-management contracts. First, a demand for 15 or 20 or higher per cent increase in wages, the company's refusal, the threat of a strike, a compromise counter-offer, another refusal. The strike. And then, at last, smoky midnight sessions and a settlement of, say, a 12 per cent wage increase with new health and holiday benefits, followed by a lamentation from the economists and the government that the spiralling smoke of inflation had received another powerful pump of the bellows.

I seem to recall industries whose workers in the giddy Sixties and early Seventies managed to get wage increases of 20, 25 per cent. Well, at Ford there was not even the threat of a strike. All it took to bring the two sides sitting down together in an uncommonly sober mood was the news that Ford, in the last two years, has lost two and a half billion dollars. The issues to face were not new wage proposals or the company's plea of poverty, they were the fact of a three-year, tobogganing, slump and the laying-off of one-third of Ford's 105,000 production workers.

Management, the company, acknowledged that all it could offer on its side was something it had learned from the Japanese – worker representatives on the board not merely to watch out for the workers' interests, but to figure out profit-sharing plans and to journey to Japan, as one delegation did a month ago, to journey there with the company's men to discuss such matters as new designs and production techniques.

What the workers agreed to was an actual suspension of the annual three per cent salary increase, the elimination of six paid personal holidays a year and – this is unprecedented – a nine-month freeze on what we now call indexing, that's to say pay will not be raised to meet changes in the cost of living as defined by the consumer price index. This sort of agreement would have been inconceivable ten, even four or five years ago, but the local leaders of the auto workers, 144 of them, voted on Wednesday to accept it by a vote of 132 to 12.

Meanwhile, there was sorry news from the banks reacting, it's assumed, to the president's firm decision to stick to his drastic policy of cutting taxes next year, as this, and not to trim a dollar from the immense defence budget. The banks put their interest rates on borrowing up to 17 per cent the same day that the New York Times featured as the quotation of the day Chancellor Helmut Schmidt's warning, 'Europe is in greater danger than the Americans have understood so far'. He's been in Washington recently. He tried to warn the administration about the danger of high interest rates, didn't get very far and went home to say the fabric of the economy and the society is endangered by the deepest recession since the middle 1930s.

Well, his protest against American high interest rates, like that of most of the West European allies, is nothing new. What was new was his warning about the political dangers that might flow from it. 'What I fear,' he said, 'is economic and social and, therefore, political unrest.' He believes, and he must have said this in private to President Reagan, is that the United States is too obsessed just now with foreign political dangers at the expense of worrying about its economy. And when he was asked what he would have the United States do, he was refreshingly undiplomatic. Reduce deficits? 'That's exactly what I have in mind.'

Well, if he'd been in Washington this week and sitting in on some hearings of the House budget committee, he would have taken heart. House committees have a majority of Democrats, since the Democrats have a majority in the House of Representatives and the committee chairmen are Democrats. On Wednesday the budget committee called before it Mr David Stockman, the administration's budget director. Mr Stockman is in his thirties and he's the whizz-kid of the Reagan economic advisers.

He got into some unfortunate trouble last year when an interview he'd given to a famous American monthly was published months after the conversation in which he expressed wry doubts about the workability of Reagan economics, the so-called supply-side theory. He said then he'd come to think that they got the numbers wrong in devising the budget. But he was the architect of it and he'd pleaded for its magic before this same committee.

Well, the other day, he was not allowed to forget it. The Democrats went for him tooth and nail, hammer and tongs, and with any other idiomatic weapons you care to think up. But apart from this nasty skirmish, what came out was the Democrats' alarm, verging on outrage, about the frightening magnitude of the $91 billion deficit projected by the Reagan budget. The feeling is not restricted to Democrats. Many Republicans, many Wall Streeters, a lot of Mr Reagan's most vocal supporters – vocal a year ago – are staggered to see what has happened to Mr Reagan's most resounding campaign promise, to balance the budget. That is, to have no deficits at all.

However unsatisfactorily Mr Schmidt may have argued with Mr Reagan, he would, I think, if he'd been listening to that House committee, he would have been sure of one thing – Mr Reagan may hardly recognise his budget by the time it goes through Congress. The consensus in Congress now, at any rate, is that there will be, somehow, new taxes and, probably, a sizeable, if not a whopping cut in the defence budget.

This transcript was typed from a recording of the original BBC broadcast (© BBC) and not copied from an original script. Because of the risk of mishearing, the BBC cannot vouch for its complete accuracy.

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