Inflation And Policy

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Inflation And Policy

It is always easier and wiser in economic policy to retreat from a great effort than to go on from a small one. And economists are terribly susceptible to watered-down banality. President Ford wanted to fight inflation with WIN buttons - WHIP INFLATION NOW. And he established a highly fraudulent body in the Executive offices called the Council on Wage and Price Stability. Its only function was to watch things go wrong. Scholars who could not resist the appeal of public office lent their names to this ludicrous charade. They should have greeted it only with raucous and obscene laughter. Of late, though, some new hands have been urging our case very lucidly. We must be clear: we face a formidably difficult task, involving all groups that have taken control of their incomes and prices.

Few things can be accomplished without people. However, as we said earlier, the concentration of power that destroyed the market and made a CI PP necessary has also reduced the number of organizations with which the government must deal. It means regulating incomes that are already regulated by a few hundred unions and prices that are already regulated by a thousand or so corporations. There are a limited number of public bodies that now set farm prices, transportation costs, minimum wages. We don't think the additional bureaucracy need be all that large. Nothing certainly on the wartime scale.

You would no longer be using unemployment to restrain prices and incomes and thus to check inflation. That is what C IPP and its enforcement would now do. This accomplished, much more could be done for the unemployed. In the United States more jobs could be given to the young, black, unskilled, without intensifying the inflationary spiral. It comes down to yet another of those wonderfully obvious propositions that would have rejoiced the Coolidge soul: if you are not using unemployment to prevent inflation, you can operate the economy much closer to full employment without inflation.

Next - Planning Capital Expenditure

France And The United States

The same policy was reflected in Monsieur Barre's control of prices and is still reflected in his control of incomes.

In economics France usually does what is practical with a mini-mum of debate on the underlying theory.

France has been coming around to a pragmatic form of C IPP without anyone quite recognizing what is happening.

The United States is a more difficult case.

We have far more people who believe in the mystique as distinct from the reality of the market.

We also have more economic theology than any other country.

For such theologians the market... see: France And The United States

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