Even with a malt, economic outlook hard to stomach


November 13, 1991|By ROGER SIMON

We are in Fields of Pikesville on Reisterstown Road drinking a chocolate malt.

We are in Fields of Pikesville on Reisterstown Road drinking a chocolate malt because Fields, which has been here since 1892, is one of the last places on earth that serves malts properly:

The large silver container in which the malt is mixed, and which contains a second helping, is always placed next to the glass in which the malt is served. There should always be beads of moisture on the silver container.

The consumption of a chocolate malt is not our primary purpose for being in Fields, however. We are in Fields to have a meeting of my Council of Economic Advisers.

My Council of Economic Advisers is currently made up of Jeff Levin, general manager of Fields, who has an M.B.A. degree from Columbia University. (He also has a law degree from Columbia University, but I do not hold this against him.)

The only other member of my council, my barber, was recently asked to resign when her solution for solving the nation's economic woes -- charging $500 for a haircut -- was dismissed as impractical and self-serving.

Levin, on the other hand, is a very practical and also a caring individual. He has created a family atmosphere among his employees at Fields, but he is a very worried man today.

I spoke to him a year ago, when he found it bitterly amusing that most people were speaking of the "coming recession."

"We're in a recession right now," he said. "If you take a look at the financial headlines of the last three or four months, you have to go back to the 1930s to find comparable headlines."

Levin also made a prediction: "In this economy, the white-collar element is going to take it as hard or harder than the blue-collar workers ever did."

Levin's prediction has come true. Yesterday, as I drove to Fields, I turned on a talk radio station and listened to an engineer, who a few months ago was making $48,000 a year, describe how he has been laid off and is now working for $5 an hour "two or three hours a day" when he can find that much work.

Since Levin accurately predicted the recession a year ago, I asked him to describe the state of the economy today.

"We're in a depression," he said flatly. "A very serious depression."

Wait a second, I said, the figures don't show that.

"As many are now recognizing," Levin said dryly, "the federal government's statistics are not accurate. We are entering a long-term downtrend that will see our material standard of living decrease continually for a long period of time."

What does that mean? I asked. (The trouble with councils of economic advisers is getting them to talk in terms even a child, or even I, can understand.)

"It means," Levin said, "that 20 years from now the value of your house won't be worth what it is worth now."

That I could understand. I didn't like it, but I could understand it.

"It means that people will no longer be able to buy a new car every four or five years," Levin said, "and that people with two cars no longer will be able to afford two cars."

Such things have a ripple effect. If people buy fewer cars, auto dealers go out of business, which means they can't place ads in newspapers, which means newspapers lay off their columnists, which mean life on earth ends.

"For most of us," Levin continued, "just keeping what we have now will be very tough. Most of us will not be able to do that."

But what about George Bush's statement of a few weeks ago that now is a great time for Americans to buy a new house or a new car?

"That won't work unless George Bush also gives people the money to do it," said Levin, who voted for Bush last time. "People don't have the money. And I'll tell you one reason why."

He produced a back issue of Barron's, a financial publication he studies very carefully. "In 1960," he read, "it took 24 percent of your personal income to pay taxes, interest, medical costs and Social Security. In 1991, it takes 40 percent of your income."

In other words, money Americans used to spend on goods and services now goes for taxes, skyrocketing medical insurance and the interest on their Visa and MasterCard bills.

"It is not a lack of confidence that is keeping consumers from spending," Levin said. "It is a lack of hard cash."

Levin believes this is why raising taxes will not work. "People won't be able to shoulder the burden," he said. "Want to bury the Maryland economy? Want to bury the U.S. economy? Then raise taxes."

My stomach was starting to feel queasy (it could have been the chocolate malt, but I didn't think so), and so I asked Levin for his solutions.

They include allowing massive numbers of new immigrants into the United States ("Immigrants do not take jobs away from the people already here. We need more population to make the economy grow. Immigrants are hard-working and create wealth"), a repeal of last year's tax increases, including the luxury tax, a reduction in what it costs businesses to do business, a dramatic streamlining of governmental bureaucracy and "enormous energy and hard work at all levels of society."

And if we do all that, I said, what can we expect?

"If we do all that and more," Levin said. "I think we may be able to pull out of the depression. In about five years."

And that settled it: No more malts for me. My stomach just can't take them.

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