The Use and Abuse of Controls
WARS are periods during which governments of necessity greatly extend their controls over economic life both domestically and internationally. However, even before World War II, the peacetime period of the thirties saw a substantial increase in the use of government regulation and direction of economic activity as governments endeavored to cope with the unemployment situation. Since the end of the war, although many controls have disappeared like the rationing of consumer goods, most economies are still subject to widespread regulation.
In the previous chapter, controls over international transactions were discussed briefly in connection with their present use as an equilibrating device by a country in balance-of-payments difficulty (a permissible use of controls under both the International Monetary Fund and the General Agreement on Tariffs and Trade). This chapter will review some of the other justifications for and objections to controls and discriminations with respect to international transactions which are frequently put forward. More detailed analyses of particular types of controls will be found in later chapters.
The security problem today is not entirely a military problem. Security may require the deliberate non-optimum allocation of resources. With security in mind, it is surely not a matter of indifference whether war industries are located in one