It's global inflation -- and it's due to too many people (all 4.5 billion of us) chasing the world's too few goods. That's the conclusion of Robert Fuller, one-time president of Oberlin College and now senior researcher at Worldwatch Institute, a nonprofit organization. It is made in a 48-page study: "Inflation: The Rising Cost of Living on a Small Planet." According to the Fuller interpretation, inflation is a symptom, not a cause of economic trouble. It has probably come to stay; it is the means of sharing the discomfort of too few goods, like petroleum, among the peoples of the world.
Mr. Fuller tells what to do about it as well as the cause. One thing is to control population growth. Anothers is to give peasants more land to produce more food; another is to cut down the world's extraordinary military spending, amounting to approximately $500 billion a year (larger than the income of the poorest one-half of humanity). Still another is just to live more simply.
Current global inflation "is a symptom of deeper problems that desperately need attention," the study says. "The world is faced with exploding demand, rising cost curves for essential commodities, stagnating productivity, and a leveling off -- if not an actual decline -- in the real standard of living."
Centrally planned economies like the Soviet Union's feel inflation, too. Their inflation is about 5 percent a year. A sampling of countries, comparing average consumer price rises in the last three decades with the year 1979, indicates almost universal jumps.
Samples (comparing the average rate of inflation in the 10 years 1950-60 with the single year 1979):
France, 3.4 percent up to 12 percent; Japan, 2.7 up to 8; United Kingdom, 2.4 up to 16; the United States, 1.4 up to 13; West Germany, 1.1 up to 5.
Mr. Fuller offers unconventional findings about whom inflation hurts most. In the US, he argues, "most people's incomes have been rising faster than the general price level." He quotes a Brookings Institution study to indicate that "in contemporary American society those in the upper income brackets are, as a class, inflation's only significant losers." This contradicts the idea that inflation makes the rich richer, the poor poorer.
Don't blame inflation on a single culprit. It's a "process," Mr. fuller says. The oil wells dry up, for example, and the energy price rises but instead of costing jobs of a particular class "inflation distributes the increased costs over the whole society." Furthermore, governments have put income floors under nearly everyone; they even prevent corporate bankruptcies like Lockheed or Chrysler Corporation. Society foots the bill.
The new study contradicts alike "monetarists," who think the prices can be controlled by the amount of money in circulation, and activists who want direct wage-price controls.
In probably the only kind thing said about inflation in recent times, he declares:
"Inflation is the only politically feasible way that democratic governments have found for allocating increased real cost or, what is the equivalent, for reducing people's standards of living or at least retarding improvements in them."