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These strains have bred North-South tensions that easily match in bitterness the East-West ideological clashes. At conference after conference, LDCs have demanded a "new international economic order" involving vaguely defined transfers of wealth from North to South. Sometimes these demands have focused on acceptance of cartels that would jack up the prices of raw materials, sometimes on insistence that rich countries give preferential tariff treatment to products from LDCs. Poor-country spokesmen have accused multinational companies of ripping off their resources and proclaimed a right to nationalize them, while contending that multinationals have some kind of obligation to step up investment in the LDCs. Through all these assertions has run a consistent theme: the rich countries are engaging in an economic version of imperialism, and have, in conscience, a debt to pay to the South.
Northern statesmen, with much justice, have regarded this rhetoric as a kind of impractical Robin Hoodism. But with no discernible justice, the industrial countries have kept a tight lid on their assistance to LDCs. Japan spends only 0.21% of its burgeoning G.N.P. on foreign aid, vs. a U.N. target of 0.7% for industrial nations; the U.S. figure is 0.27%. True, the U.S. carries the heaviest defense burden in the non-Communist world. But Congress has foolishly sought to forbid aid to countries producing goods that compete or even might compete with American products.
The Northern attitude is myopically stingy. Almost every industrial nation is caught in an economic bind. Unemployment is unacceptably high, yet efforts to bring it down by stimulating the domestic economy through tax cuts and heavier government spending might pump up already high inflation. Selling more goods to other industrial nations is no answer, either. It leads to furious charges that the exporting country is destroying jobs in the importing nation; witness the anger in the U.S. and Europe against Japan's export prowess.
Government leaders and a few private businessmen in the industrial lands are beginning to recognize that growth in the LDCs offers a way out of this box. Economic advance in the poor countries, so goes the argument, would open markets for steel, chemicals and other products now glutting the North, increase production and employment in the U.S., Europe and Japan—and do all that at little inflationary price.
Peter G. Peterson, chairman of the investment banking firm of Lehman Bros. Kuhn Loeb, points out that LDCs already receive more than one-third of U.S. exports, including more than 40% of foreign sales of commercial aircraft and electrical machinery. Even the industrializing LDCs that are competing effectively with Northern factories in such products as clothing and shoes, he asserts, buy more from the rich nations than they sell to them. He endorses much more aid to LDCs because he considers them to be potentially "important engines of less inflationary growth for the developed countries."