Correspondents' Correspondence Funnny Economics

...Among other malignant effects, rising inflation encourages opec to raise prices...

...Presidential rhetoric has stressed the voluntary character of the program, but COWPS is in the process of writing detailed regulations for compliance with this volunteer effort...

...The blunt William ("Wimpy") Winpisinger of the Machinists has instructed his negotiators to ignore the guidelines...

...It may dawn upon his circle that it will be even easier for Jerry Brown and Ted Kennedy to whip Carter in the 1980 primaries on the issue of high unemployment and economic stagnation than on the persistence of inflation...

...Although I do not claim to understand what is going on in the very confused Administration, for the moment at least the President appears to have accepted the wisdom of the financial community and its invariable preference for recession as the solution to inflation...

...Yes, the President has said, I will reduce the present deficit of some $39 billion to less than $30 billion...

...Alfred Kahn, who must wish that he had stayed at the Civil Aeronautics Board, is struggling along as chairman of the Council of Wages and Prices with the aid of two part-time assistants and without anybody sophisticated in the ways of collective bargaining...

...Another amusing battle in the war against inflation is being fought on the budgetary front...

...But wait—at his news conference on November 30, Carter appeared to retreat from his Pentagon commitment...

...Funny Economics single innovation of President Carter's guideline scheme...

...The Administration is countering these problems with what looks like?comedy...

...The President, if few others, has said he is "satisfied with the way the anti-inflation program has commenced," and convinced that he is doing "exactly what the American people want...

...Meanwhile Barry Bosworth, who as director of the Council on Wage and Price Stability (COWPS) is held largely responsible for the wage and price standards, apparently overlooked the increasing cost of existing worker benefits, primarily medical...

...Since the guidelines, such as they are, do not cover farm prices or energy, even a truly miraculous adherence to them on the part of major unions and leading corporations would fail to check two of the major sources of inflation...

...Meany, my hero among political economists, may have slighted Gerald Ford and Dwight Eisenhower when he called Carter the most conservative President since Calvin Coolidge...

...the price hike fit snugly within the guidelines...

...it stimulates the Federal Reserve to aim at still higher interest rates, since astute borrowers and lenders substract inflation from apparent interest charges to compute the real cost of money...

...and it further damages the prospects for early and favorable Congressional action on wage insurance, the touch 3 per cent...

...Bosworth will have a fraction of one person to monitor each of the 500 large corporations...

...By his reckoning the country is not facing a recession, though next year's economic growth, may, it is true, fail to New York—Like meteorologists and radiologists, those statisticians who keep watch on the purchasing power of the dollar at the Bureau of Labor Statistics (BLS) prefer to deliver good news rather than bad...

...But the chances of unions strong enough to get more for their members accepting the proposed wage standard is close to nonexistent...

...Potentates like House Ways and Means Chairman Al Ullman (D.-Ore...

...As of this writing, the issue isstill upintheair...

...At the same time, in redemption of my pledge to nato and in the hope of getting a salt treaty, I will increase the Pentagon budget 3 per cent above the rate of inflation...

...The President hasn't helped matters by inviting state and local governments to boycott offenders, who are elusive: It turned out, for example, that the Administration's outcry over the increase in the cost of a Hershey bar was unjustified...

...Tut, tut said Jody Powell...

...Celebrated as a wit, he recently referred to the Arab oil producers as "schnooks" and hastily repented...

...And AFL-CIO President George Meany has become my ally in supporting mandatory controls over prices, wages and other forms of income in preference to the quasi-voluntary, quasi-mandatory contraption erected by COWPS...

...They also know, however, that the price standard will be exceedingly easy to evade because it is so complex and difficult to compute...

...Unhappily, if all of this is comedy, the joke is on everybody...

...Repeatedly the President has softened or even reversed his positions on almost everything from energy to interest rates and the scale of Pentagon appropriations...

...Small wonder, then, when overcome by one of his attacks of candor, Dr...

...In fact, the Laurel and Hardy propensities of the White House have seldom been in more embarrassing evidence than in recent days...

...Well, Merry Christmas and Happy New Year to one and all.—Robert Lekachman...

...Nevertheless, it is hard to say what else a self-confessed conservative chief executive might do in addition to cutting domestic programs, enlarging the defense budget, encouraging steeply rising interest rates and all but explicitly accepting high unemployment...

...What hope exists derives from Carter's inability to stay with any policy for very long...

...So now the word has gone out that the inflexible 7 per cent figure is after all subject to modification, after COWPS has figured out the details...

...cool to the notion to begin with, will now be inclined to reject it altogether because of the huge cost of rebating the difference between the 7 per cent wage standard and a 10 per cent rate of inflation...

...Kahn hesitates to label the whole effort either voluntary or mandatory...

...The mayors have been warned not to expect much in the way of Federal aid, and high-level sources leaked the news that the forthcoming welfare plan would be a drastically shaved version of the original Program for Better Jobs and Incomes...

...Messengers bearing ill tidings no longer are summarily executed, yet neither are they showered with dinner invitations...

...It didn't help, of course, that only a few days before the President's self-evaluation the voluble Kahn warned that if the guidelines failed, the country would stand in danger of a "deep, deep depression...

...None too generous to start with, PBJI will presumably shrink to Nixonian dimensions...

...As matters stand, the only near certainty is that 1979 will be a rough year of mingled unemployment and inflation...

...We don't use such language here...

...The news in this final month of 1978, though, has been bad indeed: Not only has the BLS found itself having to report that the cost of living has doubled since 1967, but the present inflation rate—extrapolating from the November reading of .8 per cent—has climbed to the double-digit level...

...I should hate to be in Charlie Schultz's position, writing the President's Economic Report...

...On this matter of monitoring hangs a tale...

...Large corporations have taken a more cooperative public attitude, in part because professions of patriotic support make good public relations...

...Thus I harbor the possibly foolish expectation that our frequently born President may yet be reincarnated one more time—as a liberal Democrat...