THE WASHINGTON POST, FRIDAY, APRIL 18, 1980
ÛÏItÛªs the darnedest thing,Û the cabbie said. ÛÏI always thought recessions were bad news, something to be avoided. Now President Carter is deliberately trying to cause a recession, and all the experts are praising him for it.Û</br></br>ÛÏItÛªs the darnedest thing,Û the cabbie said. ÛÏI always thought recessions were bad news, something to be avoided. Now President Carter is deliberately trying to cause a recession, and all the experts are praising him for it.Û ÛÏWhat Carter is trying to do,Û I told him, ÛÏis to cool this awful inflation that is killing us all.Û ÛÏBy creating a recession?Û he asked. I couldn't see his raised eyebrows, since I was sitting behind him, but I could hear them in his tone.</br></br>ÛÏWould you please be so kind as to tell me how heÛªs going to improve the economy by making it worse?" ÛÏThe nice thing about a recession,Û I told him, ÛÏis that when a lot of people are out of work, those who are still working tend to ease up on their demands for higher pay. And if wages stop rising, businesses are able to stop increasing their prices. Ergo: inflation is slowed.Û</br></br>ÛÏI donÛªt know about this guy Ergo,Û he said, ÛÏbut I do remember reading in the papers that this inflation is not what you call your wage-led inflation. According to the papers, prices are increasing a lot faster than wages.Û I thanked him to stop interrupting, and went on: ÛÏAs I was saying, when more people are out of work, there is less demand for goods and services, so the people who sell goods and services lower their prices to increase business.Û ÛÏWell, that isnÛªt what you were saying,Û the cabbie said, "but IÛªll let that slide. As I understand you now, youÛªre saying that, in a recession, businesses will lower their prices.Û ÛÏCorrect,Û I said.</br></br>ÛÏAnd when their business increases, they will have to hire more workers, which will ease unemployment.Û