Settling in With Inflation
WHEREÛªS THE INFLATION coming from? The current surge of prices and anxieties tempts people to grasp at the one-sentence explanations and the short, snappy remedies. ThereÛªs the theory that blames it all on federal deficits. Another view holds that inflation is all diie to mismanagement of the money supply. A third attributes it to OPEC and oil prices.	'</br></br>WHEREÛªS THE INFLATION coming from? The current surge of prices and anxieties tempts people to grasp at the one-sentence explanations and the short, snappy remedies. ThereÛªs the theory that blames it all on federal deficits. Another view holds that inflation is all diie to mismanagement of the money supply. A third attributes it to OPEC and oil prices.	' -"All of those things have contributed to inflation fjrom time to time over the years. None of them is the single crucial source of the trouble. The technical economic analyses never quite reach the heart of the matter. At its present stage, the inflation is rooted mainly in public attitudes. Not only the government but Americans throughout the country want better performance out of the economy than it is capable of giving. They want lower employment and better housing and bigger pensions and faster growth, simultaneously, than the great machine can provide.</br></br>Living in, a highly organized society, Americans have become skilled at protecting themselves from inflation. The cost of living has risen 10 percent in the past year, and people think it only fair that their incomes should go up 10 percent to compensate them. To the extent that people succeed in recapturing that 10 percent, it will turn up again in the months ahead in somebody elseÛªs costs and the inflation will continue.</br></br>"To keep the inflation rate at zero, every rising price has to be balanced by a falling price somewhere else.</br></br>When any worker manages to push his wages up faster than his productivity, some other workerÛªs wage has to fall. But most American producers have a ratchet on their prices, and wage cuts are almost unknown. President CarterÛªs wage and price guidelines are a brave attempt to hold everybody to increases that are a little below the inflation rate, to distribute the burden as widely as possible. While the guidelines are better than nothing, they are hardly proving a miracle.