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Yale University Commencement (June 11, 1962)

John Fitzgerald Kennedy

President Griswold, members of the faculty, graduates and their
families, ladies and gentlemen:

Let me begin by expressing my appreciation for the very deep honor
that you have conferred upon me. As General de Gaulle occasionally
acknowledges America to be the daughter of Europe, so I am pleased to
come to Yale, the daughter of Harvard. It might be said now that I
have the best of both worlds, a Harvard education and a Yale degree.

I am particularly glad to become a Yale man because as I think about
my troubles, I find that a lot of them have come from other Yale
men. Among businessmen, I have had a minor disagreement with Roger
Blough, of the law school class of 1931, and I have had some
complaints, too, from my friend Henry ford, of the class of 1940. In
journalism I seem to have a difference with John Hay Whitney, of the
class of 1926 and sometimes I also displease Henry Luce of the class
of 1920, not to mention also William F. Buckley, Jr., of the class of
1950. I even have some trouble with my Yale advisers. I get along with
them, but I am not always sure how they get along with each other.

I have the warmest feelings for Chester Bowles of the class of 1924,
and for Dean Acheson of the class of 1915, and my assistant, McGeorge
Bundy, of the class of 1940. But I am not 100 percent sure that these
three wise and experienced Yale men wholly agree with each other on
every issue.

So this administration which aims at peaceful cooperation among all
Americans has been the victim of a certain natural pugnacity developed
in this city among Yale men. Now that I, too, am a Yale man, it is
time for peace. Last week at West Point, in the historic tradition of
that Academy, I availed myself of the powers of Commander in Chief to
remit all sentences of offending cadets. In that same spirit, and in
the historic tradition of Yale, let me now offer to smoke the clay
pipe of friendship with all of my brother Ells, and I hope that they
may be friends not only with me but even with each other.

In any event, I am very glad to be here and as a new member of the
club, I have been checking to see what earlier links existed between
the institution of the Presidency and Yale. I found that a member of
the class of 1878, William Howard Taft, served one term in the White
House as preparation for becoming a member of this faculty. And a
graduate of 1804, John C. Calhoun, regarded the Vice Presidency, quite
naturally, as too lowly a status for a Yale alumnus and became the
only man in history to ever resign that office.

Calhoun in 1804 and Taft in 1878 graduated into a world very different
from ours today. They and their contemporaries spent entire careers
stretching over 40 years in grappling with a few dramatic issues on
which the Nation was sharply and emotionally divided, issues that
occupied the attention of a generation at a time: the national bank,
the disposal of the public lands, nullification or union, freedom or
slavery, gold or silver. Today these old sweeping issues very largely
have disappeared. The central domestic issues of our time are more
subtle and less simple. They relate not to basic clashes of philosophy
or ideology but to ways and means of reaching common goals to research
for sophisticated solutions to complex and obstinate issues. The world
of Calhoun, the world of Taft had its own hard problems and notable
challenges. But its problems are not our problems. Their age is not
our age. As every past generation has had to disenthrall itself from
an inheritance of truisms and stereotypes, so in our own time we must
move on from the reassuring repetition of stale phrases to a new,
difficult, but essential confrontation with reality.

For the great enemy of the truth is very often not the lie --
deliberate, contrived, and dishonest -- but the myth -- persistent,
persuasive, and unrealistic. Too often we hold fast to the cliches of
our forebears. We subject all facts to a prefabricated set of
interpretations. We enjoy the comfort of opinion without the
discomfort of thought.

Mythology distracts us everywhere -- in government as in business, in
politics as in economics, in foreign affairs as in domestic
affairs. But today I want to particularly consider the myth and
reality in our national economy. In recent months many have come to
feel, as I do, that the dialog between the parties -- between business
and government, between the government and the public -- is clogged by
illusion and platitude and fails to reflect the true realities of
contemporary American society.

I speak of these matters here at Yale because of the self-evident
truth that a great university is always enlisted against the spread of
illusion and on the side of reality. No one has said it more clearly
than your President Griswold: "Liberal learning is both a safeguard
against false ideas of freedom and a source of true ones." Your role
as university men, whatever your calling, will be to increase each new
generation's grasp of its duties.

There are three great areas of our domestic affairs in which, today,
there is a danger that illusion may prevent effective action. They
are, first, the question of the size and the shape of government's
responsibilities; second, the question of public fiscal policy; and
third, the matter of confidence, business confidence or public
confidence, or simply confidence in America. I want to talk about all
three, and I want to talk about them carefully and dispassionately --
and I emphasize that I am concerned here not with political debate but
with finding ways to separate false problems from real ones.

If a contest in angry argument were forced upon it, no administration
could shrink from response, and history does not suggest that American
Presidents are totally without resources in an engagement forced upon
them because of hostility in one sector of society. But in the wider
national interest, we need not partisan wrangling but common
concentration on common problems. I come here to this distinguished
university to ask you to join in this great task.

Let us take first the question of the size and shape of
government. The myth here is that government is big, and bad -- and
steadily getting bigger and worse. Obviously this myth has some excuse
for existence. It is true that in recent history each new
administration has spent much more money than its predecessor. Thus
President Roosevelt outspent President Hoover, and with allowances for
the special case of the Second World War, President Truman outspent
President Roosevelt. Just to prove that this was not a partisan
matter, President Eisenhower then outspent President Truman by the
handsome figure of $182 billion. It is even possible, some think, that
this trend may continue.

But does it follow from this that big government is growing relatively
bigger? It does not -- for the fact is for the last 15 years, the
Federal Government -- and also the Federal debt -- and also the
Federal bureaucracy -- have grown less rapidly than the economy as a
whole. If we leave defense and space expenditures aside, the Federal
Government since the Second World War has expanded less than any other
major sector of our national life -- less than industry, less than
commerce, less than agriculture, less than higher education, and very
much less than the noise about big government.

The truth about big government is the truth about any other great
activity -- it is complex. Certainly it is true that size brings
dangers -- but it is also true that size can bring benefits. Here at
Yale which has contributed so much to our national progress in science
and medicine, it may be proper for me to mention one great and little
noticed expansion of government which has brought strength to our
whole society -- the new role of our Federal Government as the major
patron of research in science and in medicine. Few people realize that
in 1961, in support of all university research in science and
medicine, three dollars out of every four came from the Federal
Government. I need hardly point out that this has taken place without
undue enlargement of Government control -- that American scientists
remain second to none in their independence and in their
individualism.

I am not suggesting that Federal expenditures cannot bring some
measure of control. The whole thrust of Federal expenditures in
agriculture have been related by purpose and design to control, as a
means of dealing with the problems created by our farmers and our
growing productivity. Each sector, my point is, of activity must be
approached on its own merits and in terms of specific national
needs. Generalities in regard to federal expenditures, therefore, can
be misleading -- each case, science, urban renewal, education,
agriculture, natural resources, each case must be determined on its
merits if we are to profit from our unrivaled ability to combine the
strength of public and private purpose.

Next, let us turn to the problem of our fiscal policy. Here the myths
are legion and the truth hard to find. But let me take as a prime
example the problem of the Federal budget. We persist in measuring our
federal fiscal integrity today by the conventional or administrative
budget -- with results which would be regarded as absurd in any
business firm -- in any country of Europe -- or in any careful
assessment of the reality of our national finances. The administrative
budget has sound administrative uses. But for wider purposes it is
less helpful. It omits our special trust funds and the effect that
they have on our economy; it neglects changes in assets or
inventories. It cannot tell a loan from a straight expenditure -- and
worst of all it cannot distinguish between operating expenditures and
long term investments.

This budget, in relation to the great problems of Federal fiscal
policy which are basic to our economy in 1962, is not simply
irrelevant; it can be actively misleading. And yet there is a
mythology that measures all of our national soundness or unsoundness
on the single simple basis of this same annual administrative
budget. If our Federal budget is to serve not the debate but the
country, we must and will find ways of clarifying this area of
discourse.

Still in the area of fiscal policy, let me say a word about
deficits. The myth persists that Federal deficits create inflation and
budget surpluses prevent it. Yet sizeable budget surpluses after the
war did not prevent inflation, and persistent deficits for the last
several years have not upset our basic price stability. Obviously
deficits are sometimes dangerous -- and so are surpluses. But honest
assessment plainly requires a more sophisticated view than the old and
automatic cliche that deficits automatically bring inflation.

There are myths also about our public debt. It is widely supposed that
this debt is growing at a dangerously rapid rate. In fact, both the
debt per person and the debt as a proportion of our gross national
product have declined sharply since the Second World War. In absolute
terms the national debt since the end of World War II has increased
only 8 percent, while private debt was increasing 305 percent, and the
debts of State and local governments -- on whom people frequently
suggest we should place additional burdens -- the debts of State and
local governments have increased 378 percent. Moreover, debts, public
and private, are neither good nor bad, in and of themselves. Borrowing
can lead to over-extension and collapse -- but it can also lead to
expansion and strength. There is no single, simple slogan in this
field that we can trust.

Finally, I come to the problem of confidence. Confidence is a matter
of myth and also a matter of truth -- and this time let me take the
truth of the matter first.

It is true -- and of high importance -- that the prosperity of this
country depends on the assurance that all major elements within it
will live up to their responsibilities. If business were to neglect
its obligations to the public, if labor were blind to all public
responsibility, above all, if government were to abandon its obvious
-- and statutory -- duty of watchful concern for our economic
health-if any of these things should happen, then confidence might
well be weakened and the danger of stagnation would increase. This is
the true issue of confidence.

But there is also the false issue -- and its simplest form is the
assertion that any and all unfavorable turns of the speculative wheel
-- however temporary and however plainly speculative in character --
are the result of, and I quote, "a lack of confidence in the national
administration." This I must tell you, while comforting, is not wholly
true. Worse, it obscures the reality -- which is also simple. The
solid ground of mutual confidence is the necessary partnership of
government with all of the sectors of our society in the steady quest
for economic progress.

Corporate plans are not based on a political confidence in party
leaders but on an economic confidence in the Nation's ability to
invest and produce and consume. Business had full confidence in the
administrations in power in 1929, 1954, 1958, and 1960 -- but this was
not enough to prevent recession when business lacked full confidence
in the economy. What matters is the capacity of the Nation as a whole
to deal with its economic problems and its opportunities.

The stereotypes I have been discussing distract our attention and
divide our effort. These stereotypes do our Nation a disservice, not
just because they are exhausted and irrelevant, but above all because
they are misleading -- because they stand in the way of the solution
of hard and complicated facts. It is not new that past debates should
obscure present realities. But the damage of such a false dialogue is
greater today than ever before simply because today the safety of all
the world -- the very future of freedom -- depends as never before
upon the sensible and clearheaded management of the domestic affairs
of the United States.

The real issues of our time are rarely as dramatic as the issues of
Calhoun. The differences today are usually matters of degree. And we
cannot understand and attack our contemporary problems in 1962 if we
are bound by traditional labels and worn-out slogans of an earlier
era. But the unfortunate fact of the matter is that our rhetoric has
not kept pace with the speed of social and economic change. Our
political debates, our public discourse -- on current domestic and
economic issues -- too often bear little or no relation to the actual
problems the United States faces.

What is at stake in our economic decisions today is not some grand
warfare of rival ideologies which will sweep the country with passion
but the practical management of a modern economy. What we need is not
labels and cliches but more basic discussion of the sophisticated and
technical questions involved in keeping a great economic machinery
moving ahead.

The national interest lies in high employment and steady expansion of
output, in stable prices, and a strong dollar. The declaration of such
an objective is easy; their attainment in an intricate and
interdependent economy and world is a little more difficult. To attain
them, we require not some automatic response but hard thought. Let me
end by suggesting a few of the real questions on our national agenda.

First, how can our budget and tax policies supply adequate revenues
and preserve our balance of payments position without slowing up our
economic growth?

Two, how are we to set our interest rates and regulate the flow of
money in ways which will stimulate the economy at home, without
weakening the dollar abroad? Given the spectrum of our domestic and
international responsibilities, what should be the mix between fiscal
and monetary policy?

Let me give several examples from my experience of the complexity of
these matters and how political labels and ideological approaches are
irrelevant to the solution.

Last week, a distinguished graduate of this school, Senator Proxmire,
of the class of 1938, who is ordinarily regarded as a liberal
Democrat, suggested that we should follow in meeting our economic
problems a stiff fiscal policy, with emphasis on budget balance and an
easy monetary policy with low interest rates in order to keep our
economy going. In the same week, the Bank for International Settlement
in Basel, Switzerland, a conservative organization representing the
central bankers of Europe suggested that the appropriate economic
policy in the United States should be the very opposite; that we
should follow a flexible budget policy, as in Europe, with deficits
when the economy is down and a high monetary policy on interest rates,
as in Europe, in order to control inflation and protect goals. Both
may be right or wrong. It will depend on many different factors.

The point is that this is basically an administrative or executive
problem in which political labels or cliches do not give us a
solution.

A well-known business journal this morning, as I journeyed to New
Haven, raised the prospects that a further budget deficit would bring
inflation and encourage the flow of gold. We have had several budget
deficits beginning with a $12 1/2 billion deficit in 1958, and it is
true that in the fall of 1960 we had a gold dollar loss running at $5
billion annually. This would seem to prove the case that a deficit
produces inflation and that we lose gold, yet there was no inflation
following the deficit of 1958 nor has there been inflation since then.

Our wholesale price index since 1958 has remained completely level in
spite of several deficits, because the loss of gold has been due to
other reasons: price instability, relative interest rates, relative
export-import balances, national security expenditures -- all the
rest.

Let me give you a third and final example. At the World Bank meeting
in September, a number of American bankers attending predicted to
their European colleagues that because of the fiscal 1962 budget
deficit, there would be a strong inflationary pressure on the dollar
and a loss of gold. Their predictions of inflation were shared by many
in business and helped push the market up. The recent reality of
non-inflation helped bring it down. We have had no inflation because
we have had other factors in our economy that have contributed to
price stability.

I do not suggest that the Government is right and they are wrong. The
fact of the matter is in the Federal Reserve Board and in the
administration this fall, a similar view was held by many
well-informed and disinterested men that inflation was the major
problem that we would face in the winter of 1962. But it was not. What
I do suggest is that these problems are endlessly complicated and yet
they go to the future of this country and its ability to prove to the
world what we believe it must prove.

I am suggesting that the problems of fiscal and monetary policies in
the sixties as opposed to the kinds of problems we faced in the
thirties demand subtle challenges for which technical answers, not
political answers, must be provided. These are matters upon which
government and business may and in many cases will disagree. They are
certainly matters that government and business should be discussing in
the most dispassionate, and careful way if we to maintain the kind of
vigorous upon which our country depends.

How can we develop and sustain strong and stable world markets for
basic commodities without unfairness to the consumer and without undue
stimulus to the producer? How can we generate the buying power which
can consume what we produce on our farms and in our factories? How can
we take advantage of the miracles of automation with the great demand
that it will put upon highly skilled labor and yet offer employment to
the half million of unskilled school dropouts each year who enter the
labor market, eight million of them in the 1960's?

How do we eradicate the barriers which separate substantial minorities
of our citizens from access to education and employment on equal terms
with the rest?

How, in sum, can we make our free economy work at full capacity --
that is, provide adequate profits for enterprise, adequate wages for
labor, adequate utilization of plant, and opportunity for all?

These are the problems that we should be talking about -- that the
political parties and the various groups in our country should be
discussing. They cannot be solved by incantations from the forgotten
past. But the example of Western Europe shows that they are capable of
solution -- that governments, and many of them are conservative
governments, prepared to face technical problems without ideological
preconceptions, can coordinate the elements of a national economy and
bring about growth and prosperity -- a decade of it.

Some conversations I have heard in our own country sound like old
records, long-playing, left over from the middle thirties. The debate
of the thirties had its great significance and produced great results,
but it took place in a different world with different needs and
different tasks. It is our responsibility today to live in our own
world, and to identify the needs and discharge the tasks of the
1960's.

If there is any current trend toward meeting present problems with old
cliches, this is the moment to stop it -- before it lands us all in a
bog of sterile acrimony.

Discussion is essential; and I am hopeful that the debate of recent
weeks, though up to now somewhat barren, may represent the start of a
serious dialog of the kind which has led in Europe to such fruitful
collaboration among all the elements of economic society and to a
decade of unrivaled economic progress. But let us not engage in the
wrong argument at the wrong time between the wrong people in the wrong
country -- while the real problems of our own time grow and multiply,
fertilized by our neglect.

Nearly 150 years ago Thomas Jefferson wrote, "The new circumstances
under which we are placed call for new words, new phrases, and for the
transfer of old words to new objects." New words, new phrases, the
transfer of old words to new objects-that is truer today than it was
in the time of Jefferson, because the role of this country is so
vastly more significant. There is a show in England called "Stop the
World, I Want to Get Off." You have not chosen to exercise that
option. You are part of the world and you must participate in these
days of our years in the solution of the problems that pour upon us,
requiring the most sophisticated and technical judgment; and as we
work in consonance to meet the authentic problems of our times, we
will generate a vision and an energy which will demonstrate anew to
the world the superior vitality and the strength of the free society.

SOURCE
http://millercenter.org/president/speeches/detail/3370?ModPagespeed=noscript