Nixon's Economic Game Plan

...For on the average, since Richard Nixon became our President unemployment has risen about 0.1 per cent each month...

...As I can testify from personal recollection, the suburban, tract house which in 1965 cost $24,000, in 1970 comes unashamed with a price tag of $35,000...

...But far more influential are the large corporations, Fortune's first and second 500 industrials, and their power is partially paralleled by the major unions...

...For anyone but the social and economic illiterates who manage our national affairs, the policy's consequence is entirely predictable...

...It can jettison ideology and make a stab at imposing wage and price discipline upon concentrated industries and major unions...

...Events reinforced expectations...

...The responsible father of a family must pray either for good health or a speedy death, for his medical insurance is increasingly unlikely to cover the costs of extended illness...

...Assured of Washington's lack of interest, plumbers, carpenters and electricians escalate their rates...

...Even this event might have been tolerable if overtime had not vanished, layoffs spread, and real income so noticeably failed to increase...

...During the eight Kennedy-Johnson years, unemployment dropped steadily until by the end of 1968 it hit a low of 3.3 per cent...

...every 30 days an additional 80,000 men and women have lost jobs...

...For ordinary people, what distinguishes the 1970s from the 1950s is the 1960s...

...An odd way to encourage the union to settle for moderate wage gains...

...Obviously, what renders the 1970s intolerable to unemployed whites and disappointed blacks is the memory of things so recently past...

...It is not merely simple Yahooism that defeats increasing numbers of suburban school budgets...

...More disconcertingly, a former Chairman of the Council of Economic Advisers (in the Johnson era) rebutted some of my most acerbic comments on the present Administration with the observation that by comparison with the 1950s, the current recession does not amount to so much...

...The 6 per cent mortgage that used to accompany it has been superseded by the new instrument carrying an effective rate of close to 9 per cent (when account is taken of the points...

...Middle-class Americans rightly fear personal catastrophe...

...Blacks came to anticipate a continuous improvement in their condition and a constant narrowing of the gap between their incomes and the incomes of whites...

...it is aggressive blacks and young men with low seniority who bear the brunt...

...The Administration game plan emphasizes nonintervention in corporate pricing, labor union negotiations, and the affairs of such private monopolies as the ama and the construction unions...

...If that rate of progress had continued, by the end of this decade blacks would have been receiving nearly 90 per cent of white incomes...

...There are indeed some hundreds of thousands of small businessmen in desperate competition with each other...

...During 1963-67, the ratio of black to white income also rose from 51 to 62 per cent...

...Those who already own their homes face annual hikes in property and school levies they can ill afford...

...Economists inhabit an odd world...

...The aggregative tax, expenditure and monetary policies favored by the Nixon Administration on free market principle, to the exclusion of all else, cannot control large corporations and large unions, unless the Administration is prepared to pay a price in unemployment, reduced sales and shrunken profits high enough to shake the resolution and alter the habits of giant corporations and unions...

...The afflicted men and women who believe the situation is worse than ever are quite right--and it continues to deteriorate...

...Then there is housing...

...In the cities unemployment has moved above 6 per cent for 38 communities...

...Suppose construction volume contracts because of exorbitant costs...

...Mortgage money is said to be more profuse than it was a few months ago, but who can afford the monthly payments...

...I write here a lament, a cri de coeur, rather than a full-dress effort at policy prescription...

...Since 1960, physicians' fees have soared 59 per cent, dentists' charges 47 per cent, and the cost of a hospital bed an astounding 160 per cent...

...But any administration which, either out of social compassion or electoral calculation, is unwilling to pay such a price for the pursuit of economic virtue, must then resort to other policies...

...Not now...

...Presumably there is some variety of sales disaster that will make corporations cut prices...

...In the Administration's first 19 months, the cost of living ascended over 9 per cent...

...That decade's experience lured white, blue-collar Americans into the expectation of permanent prosperity, rising real incomes, and expansion without cease...

...Nevertheless, I can go no further without a comment upon the sheer idiocy of the Nixon Administration--advised, as Galbraith has noted, by the most disastrous economic team since the Hoover days...

...White Americans are remarkably calloused to the special pains of the black minority...

...In the last month or two I have shared a platform with a Deputy Assistant Secretary of Commerce who solemnly argued that inflation is slowing, and unemployment will surely drop soon if we are patient--certainly by mid-1972...

...No doubt there is some unemployment level--8, 9, 10 per cent?--that will scare unions out of seeking new wage improvements...

...With true egalitarianism, however, Nixon economics damages whites too...

...The ama will not console them...

...among black teenagers unemployment has reached a horrifying 35 per cent...

...if the Fed is more lenient and feeds in additional money at a 5 per cent rate, then unemployment will rise by the same date "only" to 6.2 per cent...

...The blunt fact of American industrial organization is a division of the economy into two sectors...

...Moreover, during the 1950s unemployment averaged over 5 per cent, not dramatically different from current measurements...

...There was a time when the auto companies consulted Washington before raising the prices of new models...

...Louis Federal Reserve Bank--a wholly owned subsidiary of Milton Friedman and his Chicago cohort of monetarists--which contains an econometric projection of events in the next two years...

...I write just before Election Day...

...If the Federal Reserve expands the money supply 3 per cent annually, unemployment will mount to 7.2 per cent by mid-1972...

...A splendid prospect...

...Although Japanese and German imports are collaring increasing shares of the domestic market, the Big Three have calmly raised prices by several hundred dollars before the gm-uaw settlement...

...Or it can follow what appears to be the preferred electoral strategy of this autumn: offering the voters other diversions in the shape of rioting students, rampant criminals, and hordes of drug users--the "social problem...

...This is not just the conclusion of a chronic anti-Nixon pessimist...

...It can quietly decide that inflation is better than unemployment and allow prices to rise still more rapidly...

...Unemployment among engineers, scientists, advertising men, and Wall Street specialists is approaching crisis dimensions...

...At issue is more than the daily upward creep of supermarket prices and the endless evening reiterations of pained dialogues between wives and husbands over household budgets...

...On the last score, a Department of Commerce survey revealed that 13 per cent of American households had less real income in 1970 than in 1969...

...As economists like to recall, when John F. Kennedy entered the White House unemployment approximated 7 per cent, and now it is a mere 5.5 per cent, just about what it was in that distant autumn when Richard Nixon and John Kennedy were jostling each other for the Presidency...

...The contractors who employ them, after pro forma resistance, raise their prices...

...It is supported by the September report of the St...

...more often the operative cause is the desperate financial condition of average householders...

...By the time this article is printed, you and I will be able to judge how successful Richard Nixon and Spiro Agnew have been in their attempt to substitute circuses for bread...

...An adequate recipe, in brief, for the 1 per cent monthly hike in construction costs of the last two years...