They don't forget inflation
Thanks, we needed that. It is good to be shaken awake again to the long-term inflation gnawing at America when the temptation is to linger in a dreamland of falling interest rates and slowing price rises.
The present awakeners have names like Burns, Blumenthal, Simon, Schultz, McCracken -- adding up to a distinguished bipartisan roster of 13 former government economic officials. They have formed the Committee to Fight Inflation for concerted action against the "chronic inflation at unprecedented levels" which is "a serious threat to the stability of our system -- economic, social, and political." They know that the assault on inflation must continue and prevail or the emergence from the present recession will find an economy accelerating from a higher inflationary plateau than before.
Not every specific policy advocated by these experts will win agreement. On some points they disagree among themselves.
But their recognition of past mistakes during the administrations they served , their call for basic governmental reforms now should not be ignored by the public any more than by the public's representatives. For individual Americans can usefully examine their own actions, as well as their government's, to see whether they are part of the problem or part of the solution.
The committee raises a question inviting self-scrutiny by each American when it concludes:
"While our inflation is largely a consequence of government actions, those actions in turn reflect excessive public demands for the good things of life -- rising living standards, better provisions for income security, more assistance to the disadvantaged among us, a cleaner environment, fuller protection of the public's health and safety, and special benefits for a growing number of interest groups."
Except for the last item, special benefits for interest groups, the litany sounds like a recipe for that sense of abundance which has always been part of the American outlook. Has it been "excessive" as the committee says? This is where individuals are put to the test. Has their approach been a selfish, materialistic drain on the resources that must serve everybody -- or a responsible reflection of constructive qualities of aspiration, service, and achievement in a realm where the laborer is worthy of his hire, the businessman of his profit? Unless Americans can come up with the right answers in those diverse, individual lives which form the strength of their country, all the Committee to Fight Inflation policies in the world cannot have their full effect.
Americans do not need to wait for the committee's controversial policy on energy, for example, to exercise the energy efficiency it is designed to promote. The committee would speed the decontrol of oil prices and perhaps add consumption taxes to hasten the day of substantial energy independence for America.
Nor do businesses need to wait for government action to undertake much of what the committee suggests to increase that productivity whose decline is a root of inflation: steps including larger outlays for research and development and increased cooperative efforts between labor and management such as the productivity councils in which employers and employees pool ideas for improving efficiency.
Among promising policies for the government are the ending or at least the reducing of such price-raising measures as tariffs, import quotas, marketing agreements, and other restraints on international trade. And, domestically, it is encouraging to see Congress passing legislation to begin the deregulation of the trucking industry almost simultaneously with the committee's recommendation against restrictions on competition in the transportation and numerous other industries. The House did not go as far as the Senate in exempting all foodstuffs from federal trucking regulations. But it did go along with limiting the antitrust immunity that has allowed competing trucking companies to agree on what prices to charge.
In the "psychological" realm of anti-inflationary policy, Congress would do well to consider the committee's suggestion for something more than a simple majority, perhaps a two-thirds vote, to authorize budget deficits; and for a congressional resolution stressing the importance of the kind of restrictive monetary policy that has been effective recently.
When it comes to dealing with the present growing unemployment, the committee's galaxy of economic talent could provide a signal service by going beyond its first policy statement with humane and effective ideas. It warns against highly stimulative fiscal and monetary policies. And it says that "if we are to rout inflationary psychology we must act with determination to see the matter through despite the short-run costs that will be incurred by some, perhaps many, of our citizens." Yet, for the unemployed who are not cushioned by union contracts or special aid for layoffs owing to foreign imports, the costs can hardly be said to be fairly borne. There should be ways to fight inflation while maintaining employment or easing these costs rather than simply "despite" them. Each unemployed worker represents an inflationary impact on the federal budget both through reduced tax revenue and increased unemployment outlays.
As for tax policy, the committee takes the course of targeted business tax cuts to spur investment and of reduced expenditures rather than increased taxes to bring about balanced federal budgets. Such suggestions come at a time of intense political discussion on the tax positions of the candidates, a large question to which we will devote more space on a future page.
Suffice it to say now that all the matters brought up by the committee, whether one's views are pro or con its particular positions, merit the attention of a public and government that must not lapse into the complacency about inflation toward which recent developments have invited them.