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P L A N N I N G F O R S C A R C I T Y Remarks by Hugh D. Gal u s h a , J r . P res i den t Federal R es er ve Bank o f M i n n e a p o l i s at the C o nf er ence on Computing In Montana Governments H e l e n a , Montana O c t o b e r 8, 1970 PLANNING Three weeks ago we h e l d Federal the f i r s t o f a s e r i e s R es er v e Bank o f M i n n e a p o l i s range p l a n n i n g e f f o r t priately this first communi cati on s e m i n a r was ideas d e v el o p ed What d a t a survival instrument o f i mp u ls e is answered. institutions. w ill It to t r y to a p p l y any d a t a e s s e n t i a l its For example, sim pler to the f o r m s, it is i n s t e a d o f a check as With item c o s t o f a c r e d i t cents, the per and t h a t o f a check a t form, pro duc ed ahead o f the f a c t o f techniques and model the a s s e m b l y o f h i s t o r i c a l data - - equations relationships ba se d upon t h e i r o f d iffe re n t action twenty c e n t s , card the seven fund t r a n s f e r by e l e c t r o n i c most complex and s o p h i s t i c a t e d is be an e l e c t r i c a l incentive. r e f e r r i n g to s im u la t io n t r a n s f e r r i n g and the t r a n s a c t i o n . be t h a t w h ic h pain o f actu al is In one o f c e n t s per i tem c o s t o f a d i r e c t its like meeting, t h e re w i l l a po wer ful In in t h i s from A t o B, at f i f t y and o n e - h a l f Quite appro o f computer and l i k e yours I'd long- t r a n s f e r o f f unds i mp u ls e t o s e t t l e transaction l a s t year. the in o u r s t u d y . data a bou t o w n e r s h i p o f money c l a i m s . the this In t h e s e few minutes is e a s i l y o f man o r h i s at d i f f e r e n t pa r ts o f our d evoted to an a n a l y s i s That d i s c u s s i o n , o f seminars the w h a t , how, w h y , and who o f s t o r i n g , r e t r i e v i n g economi c d at a . some o f the to d i s c u s s t h a t has been underway technology. was concer ned w i t h FOR S C A R C I T Y alternatives experience. This that is, the d at a to be h a n d l e d it s occurrence. building, both o f which I'm involve f a c t s which have o c c u r r e d - - to each o t h e r , so that the results in the f u t u r e can be s i m u l a t e d w i t h o u t is not Buck R o g e rs s p e a k i n g ; in the most o f the great c o r p o r a t i o n s o f the worl d now use t h es e t e c h n i q u e s , wh et h e r i t be to simulate the p er f or ma nce o f a pi ane o r a r o c k e t , o f supply modeling and demand f o r thei r p r o d u c t s . is becoming i n c r e a s i n g l y the a l t e r n a t i v e s f o r c ou r s e th at a c t u a l this correction i mportan t? experience is p r ob le ms , This as p r e c i s e l y It's teacher - - the b e s t t e a c h e r i s b eca us e f o r many o f economi c and a c c u r a t e l y b ec aus e t h e r e now i s in f a c t , d et er mi ne as NASA teacher. a reali zation And c e r t a i n l y i f we c o n t i n u e to turn o ut to be t he l a s t it r e l y on a c t u a l in a p p r o a c h i n g many o f o u r s o c i a l e x p e r i e n c e might v er y w e l l levels strides. an e x t r e m e l y e x p e n s i v e can no l o n g e r be o u r o n l y e x p e r i e n c e as I n the p u b l i c s e c t o r , soph i s t i c a t e d , and w h i l e we c a n ' t can a s p ac e s h i p , we a re maki ng g r e a t Why i s o r t o match d i f f e r e n t and ec onomi c t e a c h e r we have. t h e se t h e r e may be no s ec o n d chance to try for a n o t h e r answer. We have become a c o u n t r y o f s c a r c i t i e s . resources, and above a l l , time, a re in s h o r t enough o f any one o f t h e s e to go a ro und, wh et he r y o u r example m o b i l e W o rk er s, that escapes projections is the f e d e r a l the p i n c h . f o r the next In f a c t , supply. states. it is is i t was waste that resources difference the U n i t e d A u t o no U. S. r e g a r de d as an i n d i v i d u a l f r o n t i e r was s l i p p i n g away, more c o m p l i c a t e d . the in frontiers b eca us e the s u p p l y o f The p r i c e o f f a i l u r e was low concern. two ways. institutions The i n v es t me n t At the same ti me the p h y s i c a l o f o u r s o c i e t y were becoming a in money, t a l e n t and time to make them work has been e x p l o d i n g , wh et he r they a r e o r g a n i z e d institution the e x p a n d i n g p h y s i c a l seemed l i m i t l e s s . But we have been p i n c h e d g r e a t deal s i m p l y no t the one common a s s u m p t i o n a l l p e r m i t t e d o v e r much o f o u r h i s t o r y was p o s s i b l e o n l y b ec aus e little A T & T , There is financial two decades a g r e e upon. The k i n d o f p r o d i g a l human and n a t u r a l Ther e and i t makes government, o r any o f the f i f t y Human t a l e n t , f o r p u b l i c or 2. private purposes. s l o w e r has it, t oo , sector, The p r i c e o f failure come the p u b l i c a wa rene ss is now r a p i d l y increasing. started that relates is not understand at a l l . S u f f i c i e n t p er ha p s by a pa r ade o f e x p e r t s from IBM, H o n e y w e l l , our own computer p e op l e t h a t t h e r e e x i s t s thing presently factors. in the p r i v a t e solving The f i r s t v er y a dv an c ed , to s a y that Control the hardware o f t h e se and which I do I have been c o n v i n c e d Da ta , the c a p a b i l i t y the B e l l Labs, and to do a l m o s t a n y c o nt e m p l a t ed . C o s t s o f the hardware can be enormous, the c o s t / b e n e f i t ratios is the MHowM i n q u i r y . What made o f is after in the s y st e m. but l o s e s when management f a i l s , two a s p e c t s ; o f the c o s t / b e n e f i t the s t a t e o f t e c h n o l o g y , which it much c a n n ot be made up. and the a n a l y s i s to be Penn C e n t r a l e v e ry o n e How the d at a a re to be h a n d l e d has pr obl em, a go; pays p a r t o f t h a t p r i c e , Whether i t o r Vi etn am in the p u b l i c s e c t o r , and the l o s s e s it to c l i m b y e a r s it really so e v a lu a t i o n o f the more i m p o r t a n t o f the two p r on gs o f information in hand, t h o ug h , is to be g a t h e r e d , and the uses to be s h o u l d be the d e t e r m i n a n t s o f the i n v e s t m e n t Ther e a r e now e x i s t i n g computer and communi cati on mixes to s e r v e a l m o s t e v e r y k i n d o f a u s er . The how p ro bl em i s M a t c h i n g the q u a l i t y a p e o p l e p robl em, and s k i l l and m o t i v a t i o n o f the u l t i m a t e " g o / n o go1 on 1 is the b a s i s Who w i l l but that u s e r s o f the d at a - is an e x c e e d i n g l y it no l e s s t h e re are o n l y the knowledge d i f f i c u l t one, and have to be c o n c e n t r a t e d . few woul d q u a r r e l -- na mely, c o n t i n u e t o be an economy o f s c a r c i t i e s . I think one. the p e o p l e who must s ay use the d a t a and f o r what p u r p o s e? a s s u m p t i o n w i t h which w ill o f the computer t e c h n i c i a n s w i t h o f the dat a - - r e a l l y where o u r e n e r g i e s and not a t e c h n o l o g i c a l defensible, two d i r e c t i o n s I have o f f e r e d one t h a t we have been and Ther e m ig ht be l e s s on the second a s s u m p t i o n — possible a gr eement , which f o r human i n s t i t u t i o n s : is, up and 3. down. The re are no s o c i al and economi c vacuums in which be con ti nued wi t h o u t e f f o r t , f o r f r i c t i o n ope r a t e s men ts and bus i n e s s e s as it does a g ai ns t mat te r. move ahead toward d e f i n e d o b j e c t i v e s is f o r w a r d mot i on can as s u re 1y aga i ns t g o v e r n - Not to c o n s c i o u s 1y pi an to to have un c o n s c i o u s ly d ec i d e d to f a l 1 beh i nd. There has to e x i s t a set o f ob j ec ti ves f a i r l y well a g r e ed upon among the u s e r s o f complex i n f o r m a t i o n exist, marks on the w a l l and an abacus systems. are enough. s ys te m t o s e r v e c o n f l i c t i n g o b j e c t i v e s is It is the s t a t e , ruinously expensive. reasons. g a t h e r i n g becomes an e s s e n t i a l make the d e c i s i o n s necessary I I, too, lived continue wealth and r e l a t i v e l y in free access there has the c o m p l a i n t government is not true, is private side. a plus, If it But data, been a net exporting state side th is the s t a t e . it is in a d d i t i o n for the p e o p l e who must like But did n't l a t e John S t e i n b e c k , I have n e v er been matter, is, it's upward s h i f t frequently are not a l l suffered the the that well in in from net o u t - m i g r a t i o n , the age d i s t r i b u t i o n . voiced t h a t Montana to a t a l e n t e x p o r t i n g one. generally given than some o f the o t h e r a r e a s o f still than a minus, i t was a r e s o u r c e s w i t h which I sense th in g s it the b eca us e the b a l a n c e o f payments w i t h rather they want to be For many y e a r s really fared b e t t e r in the 1970 census Further, capital and, to the n a t u r a l good Lo rd had endowed the s t a t e . I suspect leadership of to the a t t a i n m e n t o f the o b j e c t i v e s . c o u l d a f f o r d b eca us e W h i l e the s t a t e b u t the the m a t t e r o f d at a t o have a lo ve a f f a i r w i t h Montana. the s t a t e and function in Montana much o f my l i f e luxury the d i s t r i c t Once d e f i n e d , supportive conscious o f a sense o f d ir e c t i o n Montana now. impossible, t o d e c i d e what th ese a computer incumbent upon the th ro ug h w h a t e v e r agency e x p r e s s e d , i nfor med about and f o r what Unless To d e s i g n not o n l y att empt would be d e f i n e d and but I suspect it is a On the p u b l i c the f e d e r a l is tr ue on the b eca us e the owners o f t h a t c a p i t a l k. believe it can be more p r o f i t a b l y employed e l s e w h e r e . to curb the m o b i l i t y have a d i s ma l social of ca p ita l, r e co r d. like Ecological and econ omi c c o u n t e r p a r t ; be j u s t as commi tt ed disastrous in is In t h i s It its can sense, out-m igration t o be a s c a r c i t y of capital, to underemployment economy, human and f i n a n c i a l f l o w where they can be most p r o f i t a b l y employed. Christian martyrs seems to me the c e n t r a l individual u p s e t t i n g that balance no pr obl em but a s o l u t i o n I s h o u l d know b e t t e r at t h i s o f the e a r l y the " b a l a n c e o f n a t u r e , " has and a r t i f i c i a l l y l o n g as we c o n t i n u e resources w i l l to curb the movement o f p e o p l e , equilibrium , the name o f p r o g r e s s . As attempts to an economy as some o f the b i o l o g i c e v i l s we have l i k e o u t - m i g r a t io n o f people, o f b oth. attempts In o u r economy, Montanan, is is issue alm ost deep point in than but the s p i r i t the marrow o f the Federal f o r M o nt ana ns, totally to c o n t i n u e , the q u a l i t y of life o bs cu re d by the smoke o f the R e s er v e. f o r the rhetoric coming from the two ex tr eme s. At one end are t h o s e who e x t o l l R ous se au w r o t e a bo ut . call These p e o p l e , w i t h the Nobl e S a v a g e s . f o r care packages, areas, provided It is the v i r t u e s apologies t h e i r ambition appropriately o f the s i m p l e to Mr. to p e r f e c t e fficien tly In the o l d as p o s s i b l e w i t h d a ys , stick neo-colonials now t a l k t o both b l e s s i n g s noble undertaking, a sk what from the s o i l , don't a great and p r o g r e s s , and i t the f u t u r e s o c i a l in the t r a d i t i o n air, as q u i c k l y and w a t e r , en listed were the about p r o g r e s s . n e a r l y ev er yone is easy Th es e, l o ng . as of c iv iliz a t io n deal a round too view the s t a t e s the a i d o f the n a t i v e s the b l e s s i n g s s y st e m the p a c k a g e s th o se d e l i v e r i n g to be e x t r a c t e d a delivery from the more p o p u l a t e d from the Mother Co un tr y ev er ywh er e, raw m a t e r i a l s Ro us se a u, we can f i l l e d w i t h money, At the o t h e r extreme a r e the n e o - c o l o n i a l s . o f those life to e m b a r r a s s feels and one way o r a n o t h e r rewards There a source o f is for the n a t i v e s a satisfyin g they are j o i n e d ring in a i n t o s i l e n c e - - t h o s e who t i m i d l y and economi c c o s t s w i l l be t o t h o s e left behind. Random n o n - g r o w t h , But we are s t y m i e d and a s s i m i l a t i o n ment o f t h e s e is in t h i s is techniques techniques Together, state. a l u x u r y no one can a f f o r d . the p u b l i c s e c t o r is I recall, little the a d v a n c e S t a t e and l o c a l The s e co nd government I suspect government. -- This session w ill per haps more s e r i o u s proportions. a l s o caused a s h o r t f a l l than any o f the the m i d d l e , in and t h e i r The power t o t a x i s different working with grant, truly reasonable constituencies, l i g h t o f those facts. rates is pitch ratios I suspect. in a p p r o p r i a t i o n economy o f the s t a t e ? to l i s t e n the p rograms the power t o d e s t r o y . to v a r i o u s at what a pp ea r s lim its the o b j e c t i v e and then How much b e t t e r to be i t w o ul d be impact o f t a x measures on t a c k l e the p o l i t i c a l question in the f u l l and f i n a n c e d by a Ford F o u n d a t i o n has been d e v e l o p i n g a computer pr ogr am c a l l e d targets, to an i n f o r m a t i o n s y s t e m c o u l d be p l u g g e d , has awesome f o r e x p e r i e n c e t o j ud ge the wi sdom o f the d e c i s i o n . the U n i v e r s i t y o f M i n n e s o t a , computer c a p a c i t y f o r much The Upper Mi dwe st R es ea rch and Development C o u n c i l , they meet t h e i r s c h e d u l e d access in Montana has been lobbyists, of decade. income t a x c o l l e c t i o n s , i mpact o f t a x p r o p o s a l s on the t o t a l and then w a i t t o know w i t h i n last money ma rk ets How can a l e g i s l a t o r p o s s i b l y measure the c o s t / b e n e f i t constituencies A definition I s u s p e c t the b a c k l o g o f p u b l i c p r o j e c t s immemorial t h e re be g r a p p l i n g w i t h s e r i o u s f o r c e d you o ut o f n a t i o n a l so The way s i n c e time g ov ernment ; are s t a r t e r s . o f the b ie n ni u m , It the f e d e r a l than a g r i c u l t u r e you can do about s t a t e and l o c a l one example. the is they employ more p e o p l e to work w i t h gathering to keep up w i t h the f e d e r a l economi c p o l i c i e s measures - - information you can do about b u d g e t a r y problems National in in Montana. and the t o o l s Just is in the p r i v a t e s e c t o r . as There a g r e a t deal objectives random gr o wt h , in v a r y i n g d eg re es by the f a i l u r e o f the b i g g e s t b u s i n e s s government. like RAFT to do j u s t the M i n n e s o t a l e g i s l a t u r e d et er mi ne d. If th is year w ill i n t o which d i f f e r e n t p a t t e r n s o f and t h e i r consequences this. taxation have and At the h e a r t o f and t e c h n i q u e s o f a h i g h o r d e r . 6. it Wi t h o u t t h e s e , and the w i l l b e i n g d e v el o p e d k i n d s o f human applied in d i f f e r e n t p a r t s in stitutio n s, p olitical p r oblem. is easy States, public When I reflect Wi th and o n l y ab ou t 3% o f few c i t i e s of warring c it y -- and p r i v a t e , work b e t t e r , its to u n i t e S i o u x F a l l s little together. Add to the political subdivisions, intercity plus ca nn o t be and the o b s t a c l e s regional It enough t a l e n t o r any o t h e r . Thes e may s oo n, in a a collection city states. and Gr ea t to g et S p a r t a inter-state school authorities, Ther e are examples t h e re is d istricts and o t h e r and a g e n c i e s on the Yet t h e re are s u c c e s s metropolitan to g i v e though, the a s p i r a t i o n s government us h e a r t . is in state o f t he p u b l i c for to d e l i v e r . f o r many i n f o r m a t i o n s y s t e m s , care. this the c o s t o f the economi c a s p e c t s o f to e d u c a t i o n and h e a l t h councils, no t enough money and not but more f u nd a m e n t a l , about Falls, and Ath ens r e c o g n i t i o n o f common s e l f - i n t e r e s t have I have t a l k e d e x c e s s i v e l y like or B i l l i n g s may seem i n s u r m o u n t a b l e . and the c a p a c i t y o f t h a t than the a p p l i c a t i o n s looks in stitu tion s i n e v i t a b l e w i d e n i n g o f the gap between systems. D istrict, concentrated random e x p a n s i o n o f computer f a c i l i t i e s Less o b vio u s, government , R es er v e Da kota o r Montana ca us e counties, s h o u l d be o b v i o u s to permit and t h a t than e f f o r t s rivalry, gov ern me nt s. ce rtainly — d ifficu lt l a n d a r ea o f the U n i t e d and R a pi d C i t y , the a r r a y o f and p l a c e s where p u b l i c intra-state F ed er al in a common Sout h more s u c c e s s u n i t e d w a r r i n g c om mu n i t i e s , their to make a l l I am reminded o f a n c i e n t Greece and i t s often level, upon the N i n t h population two e xa mp le s, seem t o have be an e x c e e d i n g l y 13% o f the c o n t i n e n t a l to s i n g l e o u t j u s t the and d e s i g n e d the Upper Mi dwe st too o f t e n states. Efforts stories o f the w o r l d , among the u s e r s w i l l to d e s p a i r . relatively state the k i n d s o f computer p rog rams in Montana. Coordination it to use them, be l e s s Ther e is information important a rea l risk 7. in any t a l k up s i m p l y a bo ut computer and c ommuni ca ti ons reinforcing the u n i v e r s a l human b e i n g no l o n g e r m a t t e r s , be more wrong. human judgment data, is available. is fast health care the S t a t e ; issues in Montana than e v e r b e f o r e to go b e h i n d the to a s s u r e have common p u r p o s e s fairly infatuated with and the d e l i v e r y today. Montana a l l Growth v e r s u s the c o s t s in my l i f e t i m e , life , no g r o wt h ; f undamental and a g r e a t e r w i l l i n g n e s s of politician s The p u r p o s e o f t h e s e s e s s i o n s b e t t e r ways o f e x p o s i n g and m e a s u r i n g t h e s e his and d e l i v e r y o f I s e n s e a g r e a t e r p u b l i c awa rene ss o f o f now. the b e s t and e f f i c i e n t . r h e t o r i c o f the a n c i e n t p o s i t i o n s realities is are t r e a t e d the s hape and r e qu i r e m e nt s o f h i g h e r e d u c a t i o n ; tions of the s y s t e m a t i c g a t h e r i n g o f these steps individuals a t some k i n d o f a w a t e r s h e d t o the Nothing could to enhance the c a p a b i l i t y A statement o f g o a l s , To an o b s e r v e r who has been groups the i n d i v i d u a l is o b s o le t e . i n t e r e s t o f a world o f s c a r c i t y time o f government pr ogr ams in the s p e a k e r may end in human a f f a i r s . in p u b l i c p l a n n i n g t o make s u r e is that audience that and human judgment the development o f p l a n s o f a c t i o n ; the S t a t e in h i s Inform ation systems e x i s t o nly The s p e c i a l use o f what fear technology realities in a l l is their and power to f i n d im plica t o b e t t e r s e r v e the p u b l i c . 8.
