PROBLEM OF BALANCED GROWTH
In the preceding chapters a number of possible drives and deterrents to growth were discussed and a number of problems indicated that we are likely to encounter. A general feeling of optimism was expressed that each sector of the economy could expand under proper policies and that no limiting bottlenecks need arise, although acknowledgment was made of the existence of areas in which growth could be slowed unless conscious effort is directed toward solving certain problems. Water supply and education are cases in point.
Although the necessary expansions appear likely to result, some uneasiness must be felt as to whether we will have balanced growth and whether the economy will have the flexibility to adjust rapidly enough to changing events to bring rapid growth. Although imbalance and lack of flexibility can act to slow our rate of growth, it is becoming recognized that an economy can adjust to change in many ways and that a surprising degree of tolerance in economic relationships exists in the economy. If this is true, our chances of adopting policies appropriate to growth are reasonably good.
"Balance" is a popular word in describing desirable growth. The economy is looked upon as a growing organism with a necessity to keep all the parts in a desirable relationship. It is true that one major part of an economy cannot get far out of line with that of other parts, for example, planned saving with planned investment, without creating difficulties and perhaps either serious depression or inflation. However, it is not necessary to have such major areas as income, savings, investment, and output always in the same proportion. The body, for example, does not always keep the same proportions. As one area grows, compensatory changes may occur in the other parts, although at times change in one way may be too great to be offset by changes in others and growth is limited. Increased productivity of capital, for example, may be offset by an increasing consumption function. If