Common-Sense Economics

INTERRUPTING President Carter's televised talk on the economy last Friday night, a home appliance commercial alerted Americans to "National Hoover Week." Carter's words underscored the sponsor's message. Unlike Hoover, however, this president is perhaps overly reconciled to his historic role. "Depression," Carter assures us. "is just around the corner."

President Carter's choice of recessionary tactics to chip away at 18 per cent inflation is both cruel and futile. It is cruel to propose credit controls and budget cuts aimed at bringing down prices by throwing more Americans out of work. The program is doubly cruel because the budget will hit those who are already victims of hard times. Expenditures targeted for the axe include energy assistance for the poor, health care money for children, aid to the cities, revenue sharing--in great part educational funds--for states, cost-of-living adjustments for food-stamp recipients, and spending for public works and youth job programs. The Pentagon is dodging serious scrutiny.

At the same time, this display of fiscal firmness is failing to impress its intended audience. The program's goal is to prove to the business world that Carter is man enough to grit his teeth and make the helpless bite the bullet--thereby reversing self-fulfilling inflationary expectations. But the consensus on Wall Street is that not enough old people will freeze, too few children will go hungry and, in short, stricter discipline is necessary.

With the psychological thrust of the plan blunted, very little remains. Even the administration does not anticipate the budget cuts will reduce the cost of living in the near future. The credit controls apply to a fraction of consumer borrowing too small to be significant. And the 10 cents a gallon fee on gasoline will actually boost the consumer price index an estimated seven tenths of one per cent. Carter seeks to show voters he is doing something now; they will feel the pain later, the benefits never.

The economists Carter is listening to, are as confused as the public. They have had their chance to manipulate the economy using indirect tactics based on complex theories. The time has come for direct action. A wage-price freeze will cut short the inflationary spiral--but it will only work as a breathing space in which to restructure the economy on sounder foundations.

Permanent price controls on oil will stop profiteering by American-based distributors for OPEC. An end to the current crazy policy of high interest rates will put home costs back in touch with reality. Pruning subsidies to agribusiness will yield cheaper food. National health insurance coverage will calm fevered medical costs. Above all, we need to outgrow our dependence on foreign oil. Shifting money from the war budget to mass transit and energy efficiency programs will at once create more jobs and lower costs. We ought to be able to attack inflation without inviting depression. Economics isn't so complicated if you set out to help the average American.