Franklyn D. Holzman

A Survey of Inflation Theory

Since 1945 the geographical extent and temporal stubbornness of The Great Inflation 2 have shaken many economists’ faith in the orthodoxies of preceding generations. Neo-orthodoxies, including restatements, are only dimly in evidence. Our survey is accordingly more of a guide through chaos than a history of received doctrine or a systematic critique of a few rival positions.

Comecon: A "Trade-Destroying" Customs Union?

Abstract In traditional theory the nations forming a customs union reduce barriers among themselves but maintain tariffs against nonmembers at the pre-customs-union level. This leads to trade creation and/or trade diversion. It is argued here that the formation of Comecon led to trade destruction and that this resulted because the members of Comecon were poorly suited to trade with each other and increased significantly barriers to trade with nonmembers. Thus trade with nonmembers that could not be replaced at low-enough cost at home or by member trading partners was eliminated.

The Military Sector

It has been 35 years, more than a generation, since the first nuclear explosion was released over the New Mexico desert. The most we can say is that mankind has continued to survive the increasingly ominous chain of moves and counter-moves that have flowed from that war-born measure. But at what cost?The whole world is increasingly afflicted by the threat of nuclear war. An insane and ever-intensifying arms race has bred violence in every lesser form, carried hunger and disease in its train as needed resources were devoted elsewhere, and has deepened the insecurity even of those who were arming themselves to the teeth. Are we condemned to a race in which the only conceivable end is assured mutual destruction today or tomorrow?As Americans enter the decade of the 1980s, they may expect to spend over one trillion dollars in the first five years on their defense. In the name of national security, the U.S. Congress has permitted the military a stranglehold on an immense sector of government expenditure.In thi...

CMEA’s Hard Currency Deficits and Rouble Convertibility

Over the past fifteen years, the CMEA countries† have consistently run hard currency deficits in their trade with the West. I will first consider very briefly the extent and causes of these deficits. In Sections II and III, various Eastern convertible-currency proposals, which are related to financing these deficits, will be discussed. The policy issues will be summarised in the final Section. Because of the limitations of space, some of the issues discussed below will be considerably oversimplified.

The real economic costs of granting foreign aid

Summary Scholars interested in assessing the comparative economic burdens assumed by advanced nations in their loans and grants to the L.D.C.s have pointed out that adjustments are necessary for many factors such as rate of interest charged (if any), time pattern of repayment (if any), whether or not interest and repayment is in hard or soft currency or in kind, rate of return on capital invested at home, and so forth. Clearly, a loan or grant is more burdensome to the donor, if, for example: the interest charged is low, the rate of return at home is high, and repayment is in soft currency or in kind and extended over a long period of time. In this paper, an additional important adjustment is suggested. It is argued that a grant or loan involves a social cost to the donor only if the donor is deprived thereby of the use of current output for domestic purposes. To the extent that aid is provided by (i.e. results in) the employment of otherwise unemployed labour and other primary factors, it may be viewed a...