Unpriming the Pump

Startling as it was, President Roosevelt's Price Control message fell short of the necessary all-out attack upon inflation. Justified by political expediency as a bridge to the inevitable full war economy, the administration's program will have the socially desirable effects of limiting war profiteering and redistributing the wealth. But unless radically altered to erase, at the source, the growing demand for consumers' goods, the entire burden of inflation control will be left in the already overloaded hands of the OPA.

With the production program finally over the hump, the nation is faced with a six-billion purchasing power increase which, combined with an even greater decrease in consumers' goods production, can produce a fifteen-billion dollar inflation balloon. Danger from rising prices and a dislocated economy can not be met by "soaking the rich" alone. The six-billion demand increase is almost entirely in the hands of members of the lower income brackets and is not touched by the government's tax on individual and corporate surpluses. Paradoxically, with everyone employed and every sign of prosperity, the nation at war must accept a universal decrease in the standard of living, for the available dollars can no longer purchase the non-existent products. No fiscal policy can remedy this situation, but a wise one, by preventing inflation, can decrease the cost of the war and facilitate the return to a sound economy in the post-war era.

Present plans envisage inflation control largely through manipulation of supply. The techniques--priorities, rationing, and price fixing--have worked and will continue to work in individual cases like rubber, gas, and sugar, but the economists from Hansen to Keynes are united in believing this one-sided attack inadequate to control, an entire price structure. Temptations to the bootleg "black market" are too severe; enforcement difficulties are overwhelming. Henderson himself has publicly recognized price control to be an interim measure, a temporary substitute for taxes that hurt.

Inflation control must hurt. Requiring a brake on demand, it necessitates a reduction of almost fifteen billions in the consumers' income, and only a program which siphons away the money that can bid up prices without increasing are taxation consumption can be effective. The methods are taxation and compulsory saving: taxation through a graduated downward extension of the income tax, compulsory saving through forced investment in public bonds. A jobs for the experts, such a program is primarily for economic control, not money raising. Effectively pursued it may save the nation, anything less will disrupt our entire economy.