The Last Ten Years

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The Last Ten Years

We argued earlier that change in economic institutions is more rapid than we appreciate or like to believe.

In addition to the changes we just mentioned, corporations continued to get larger and stronger.

Unions became important in the United States in new fields, especially in the public services.

Governments, as an aspect of responsive democracy in which we all rejoice, came to the support of new groups - the old, the minorities, the dependent, the ill.

These were given, if not control of, at least protection for their income.

All of this contributed thither to the retreat from the market.

And the market, let us repeat once again, is essential for effective fiscal as for effective monetary policy.

Once people or organizations are in control of their own prices and incomes, there is no way that monetary or fiscal policy can keep them from increasing those prices and incomes except by creating unemployment and inducing a recession.

Mr Carter came to the presidency with a promise to reduce inflation sharply and to reduce unemployment.

He brought into office the pick of the Establishment economists; on grounds of reputation no one could fault his choice.

But, alas, until now, they have done almost nothing and nothing new.

After nearly a year, unemployment is still high and inflation is increasing.

It's an indication of how time has left the exponents of the traditional monetary or fiscal policy behind.

To be an economic adviser is still a prestigious thing; even to be a failed adviser is rather good.

We still hear constantly in the United States from Mr Nixon's and Mr Ford's economists on what we should do.

We am naturally proud of being an no-mist, and for that reason We would like to see our profession held to far higher standards of performance.

In fact, there are a fir number of non-official economists who are discussing new lines of policy.

But, as we talk, those in official position are still hoping that the old policies will work.

Or they are resorting secretly to prestidigitation, incantation, table-turning and other dubious practices to reconcile low unemployment with less inflation.

Interested in Asset Values in 2015

The Proper Policy

Again the inevitable lag behind events. In the aftermath of the Great Depression and after the Second World War, fiscal policy as we have described it did seem to work, for about twenty years. Inflation then was not seriously a problem. One can argue as to the reasons. Corporations were still being cautions in wage settlements. They had not yet realized how easily these increases could be passed along; there was still some tendency to resist the unions as a manifestation of old-fashioned capitalist conviction.

Unions, on their side, were less aggressive in their demands; there was still a residue... see: The Proper Policy

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