Anti-Inflation Policies
The economic and social costs of inflation have been enormous. Inflation is a tax that erodes the income of our workers, distorts business investment decisions, and redistributes income in favor of the rich, Americans on fixed incomes, such as the elderly, are often pushed into poverty by this cruel tax.
The Ford administration and its economic advisors have been consistently wrong about the sources and cures of the inflation that has plagued our nation and our people. Fighting inflation by curtailing production and increasing unemployment has done nothing to restrain it. With thecurrent high level of unemployment and low level of capacity utilization, we can increase production and employment without rekindling inflation.
A comprehensive anti-inflation policy must be established to assure relative price stability. Such a program should emphasize increased production and productivity and should take other measures to enhance the stability and flexibility of our economy.
The see-saw progress of our economy over the past eight years has disrupted economic growth. Much of the instability has been created by stop-and-go monetary policies. High interest rates and the recurring underutilization of our manufacturing plant and equipment have retarded new investment. The high cost of credit has stifled small businesses and virtually halted the housing industry. Unemployment in the construction industry has been raised to depression levels and home ownership has been priced beyond the reach of the majority of the people.
Stable economic growth with moderate interest rates will not only place downward pressure on prices through greater efficiency and productivity, but will reduce the prospects for future shortages of supply by increasing the production of essential goods and services and by providing a more predictable environment for business investment.
The government must also work to improve the ability of our economy to respond to change. Competition in the private sector, a re-examination, reform and consolidation of the existing regulatory structure, and promotion of a freer but fair system of international trade will aid in achieving that goal.
At times, direct government involvement in wage and price decisions may be required to insure price stability. But we do not believe that such involvement requires a comprehensive system of mandatory controls at this time. It will require that businesses and labor must meet fair standards of wage and price change. A strong domestic council on price and wage stability should be established with particular attention to restraining price increases in those sectors of our economy where prices are "administered" and where price competition does not exist.
The federal government should hold public hearings, investigate and publish facts on price, profit, wage and interest rate increases that seriously threaten national price stability. Such investigations and proper planning can focus public opinion and awareness on the direction of price, profit, wage and interest rate decisions.
Finally, tax policy should be used if necessary to maintain the real income of workers as was done with the 1975 tax cut.