Whip inflation again
Americans are bing told their recession is coming to an end with high unemployment having failed to make much of a dent in infaltion. The consumer price index has had some downs as well as ups, but Washington economists are said to expect 1980 to end with little improvement over 1979's 13.3 percent performance. In the circumstances it might have seemed symbolically counterproductive to let the administration's anti-inflation guidelines run out, though doubts persist about the efficacy of continuing them. By extending the wage and price standards from their expiration date of Sept. 30 only to the end of the year, the President's Council on Wage and Price Stability leaves some flexibility for fitting in with whatever administration may be elected.
The council probably understated the general public's reservation when it cited negative comments that "confirm our view that a thorough examination of the continued effectiveness of the program and possible alternatives is needed." It will be recalled that Barry Bosworth came out for mandatory controls after he had left his post as director of the council and shaper of the voluntary program. However, with Senator Kennedy, the principal political advocate of controls, out of the presidential race, what "possible" alternatives might be examined?
Among the noncompulsory options are simply abandoning the voluntary program, going to presidential jawboning in major instances of inflationary price and pay increases, or providing tax incentives for wage and price restraint. Unless the government is shown to have some concern for using its influence wisely and fairly, individual Americans might well wonder why they should volunteer to take less for their products or services than the traffic will bear.
The voluntary guidelines have had problems in reaching standards equally fair to prices and wages. Strong unions and companies have been able to bend the guidelines. Where employers have accepted the ceilings, employees have been tempted to avoid them by job-hopping. The wage and price council reports that the anti-inflation effort would be undermined by increasing opposition of the sort it has found.
For all the shortcomings, however, the council did calculate earlier this year that the guidelines had had some effect since they were announced in the fall of 1978. They were reckoned to have cut the overall rise of prices by one-half to three-fourths of a percentage point and the rise in pay by 1.8 to 2 percentage points.
The guidelines have at a minimum permitted the President a standard against which to criticize violators and praise compliers. They should not be allowed to fade away without some evidence of governmental anti-inflationary zeal in their place.