European Stars And Stripes (Newspaper) - August 14, 1988, Darmstadt, Hesse                                Page 10 the stars and stripes Hobart Rowen world banking officials sorry to see Baker go Iree and a half years ago when James a. Out the special thrust Given it by Baker is an open any major Market reforms under a Bush admin. Til  to run a t Damn of Cor i tar of Nikac Firth at the Mem Pelt stration or Duke Kos Almini Siramon High Utt l three a half years ago when James a. Baker Iii succeeded Donald t. Regan As Secretary of the Treasury the International financial Community did t know what to expect from a Texas lawyer politician with no expertise in business and economic affairs. Last week when president Reagan formally announced Baker s resignation to manage George Bush s presidential Campaign effective wednesday european and japanese banking officials said they hated to see him go. The world Economy is on track and should Sta that Way for the rest of this year and that in no Small part is due to Baker s efforts on behalf of International coordination said Dietrich von Kyaw economics minister at the West German embassy. But almost universally financial experts Here an abroad predicted that the global Economy will be undisturbed by the shift of the management of american economic policy to Treasury Secretary designate Nich Olas Brady although Brady a prominent new Yor investment banker is almost an unknown Quantity in Europe and Asia. Baker earned the respect of the International Community in 1985 by abandoning Regan s policy of benign neglect of the Dollar replacing it with a hands on Effort to manage the International monetary system through intervention and manipulation of Exchange rates. At least in part because of Baker s initiative a highly overvalued Dollar was scaled Back and the major nations for the first time initiated truly coordinated eco nomic policies. Whether this process will survive with William f. Buckley out l t t question at the moment. At times during the past three years Baker ruffled feelings by his direct criticism of other governments notably of West Germany just prior to the Stock mar Ket crash last year. That open rupture was said by some to have contributed to the Market collapse. But that episode has since been largely forgiven and his current relations with All of the United states for  partners Are Good. Sam Nakagama of Nakagama and Wallace inc. Observed that the japanese especially will miss him. They think of Baker As one of them practical prag Matic and non ideological. They Hope he will be Back in a major capacity in a Bush  the possibility that his departure from the Treasury would upset the delicate balance in the global Economy has been worrying Baker he indicated in a recent interview. His preference was to stay at the Treasury and he would have done so if the Bush election Campaign had not encountered serious troubles according to a close associate. Now in the waning Days of the Reagan administration it is unlikely that Brady can pursue much More than a caretaker s role at Treasury. Despite Reagan s morale building suggestion Obrady that the next six months might be the most Active period of the administration Brady will find it difficult to generate new initiatives on the Domestic or International economic front. 1989 should Bush be elected president it is Likely that Brady would continue in the Treasury Job which could give Bush and Brady a head Start in generating eco nomic policy. The International reaction to the shift to Brady according to observers is Likely to be Calm for two reasons first the possibility of Baker s exit has been Well advertised for almost three months and Sec Ond the global Economy is moving along at a Good Pace with few major Short term problems the Possi ble exception being the debt overhang in a few major latin american  for assistant Secretary for International affairs David c. Mulford Brady will not find a Treasury team experienced in International economic affairs. Deputy Secretary Richard Darman who was Baker s alter ego left last year for a Job on Wall  successor former administrator Peter Mcpher son _ who will be acting Secretary pending Brady confirmation concentrated on administrative of  thing is certain the changing of the guard at the Treasury will turn next month s annual meeting of the world Bank and the International monetary fund in West Berlin Only six or seven weeks before . Election into even More of a routine event than it otherwise would have  question of How to Cope with the global debt problem insiders say is Likely to be bypassed at theims Bank meeting and postponed until after the elec Tion. C Washington Post when you add it All up Reagan did Good Job Here Are a few figures credit is owed to Manhattan inc s Edward Jay Epstein and to Michael j. Boskin s Rea Gan and the Economy published by the Institute for contemporary studies in san Francisco that May be useful to the season s cant busters. Begin with drugs. It is said that the Reagan administration is hypocritical because it is not spending enough Money to interdict the drugs that flow into the country. Well in 1967, when Lyndon Johnson was president the Federal Narco budget was less than $4 million. By 1987, when Ronald Reagan was president it had risen to $4 billion. The result the availability of cocaine has increased and the Price of cocaine is reduced. In 1984, you could get pure co Caine for $45,000 per kilo. At Christmas time last year you could get it for $ 15,000 per kilo. Here is a dramatic Datum from or. Epstein. The entire cocaine Market in the United states can be supplied for one year by a single cargo plane. Since there Are approximately 20,000 available planes on the cocaine route not to men Tion 17,000 ships the Odds Are that some narcotics traffickers will find some Means of delivering their  in order to mask the utter futility of our War against drugs the narc hyper use grand figures to depict their Success Ful strikes. When you see on television a Supply of drugs caught at an Airport or whatever a once tag is placed on it equal to the maximum Street Price not to the replacement Cost the difference be tween what it Cost a drug exporter to lose a shipment to our arcs and its Street value is about 2,000 percent. Thus we permit ourselves to speak about $40 Bil lion being made by Colombia from smuggled cocaine. But a Rand economist has calculated that the Revenue to Colombia from Export sales is about $300 million or one sixth of what Colombia earns from its Export of Coffee Beans. Conclusion we Are spending vast sums on drug interdiction and accomplishing nothing. More figures. Reagan s War against inflation has proved enormously successful by contrast with other efforts. George Perry of the Brookings institution con tended that inflation could be stopped Only at a punitive Cost arguing that each Point fall in inflation would mean a reduction of $200 billion in . Output. Thus Gerald Ford s anti inflation efforts which brought inflation from 12.2 per cent in 1974 to 4.8 percent in 1976yielded to a return to 9 percent inflation in 1978. By contrast Reagan has held inflation Down to around 3 percent for a full six  far from doing this at a Cost in output tax cuts and deregulation spurred Job creation spectacularly. From 1979-1986, while Industry lost 2 million jobs the service sector created 12 million jobs raising the employment rate to an All time High of More than 60 percent. The 12.7 percent increase in the . Gross National product Between 1982 and 1985was More than four times greater than that of France. The Federal government under Reagan is Penny pinching right Well its slice of the Gnu Rose from 22.7 per cent in fiscal 1981 Carter s last budget to 23.6 percent in fiscal 1986. And while yes the defense share of the budget Rose from $157 billion to $266 billions Cial Security spending Rose even faster from $179 billion in 1981 to $269 billion in 1986. Moreover there is the matter of state and local government surpluses. They have been using As steadily As the Federal budget deficit. In 1986, the Federal Bud get deficit was $202.8 billion or 4.8 per cent of the Gnu. But state and local governments produced a surplus of $59.3billion 1.4 percent of Gnu. Boskin concludes that these surpluses combined with foreign investment will allow time for National budget deficits to be brought under control without re igniting  As Ever the question is How to do it. Well not by trying to Stop the inflow of drugs. By reducing spending e.g., Agri cultural subsidies and social Security payments that Benefit the Well off. Plus Selling government owned transportation Energy and Utility firms. Michael Dukakis is pledged not to raise taxes except As a last  Well unless he plans to go to War there is no resort in sight that would require him to raise those taxes. All he would need to do if elected is appoint or. Reagan As his principal consultant. C Universal press Syndicate