Insight and Outlook Weapons Against Inflation
IT IS NO longer a question whether the Administration is going to seek new weapons against inflation. The only inter e s t i n g question now is what weapons it will choose.</br></br>In thinking about the choice, it is important to remem her that the inflation ary condition is not universal, either in the economy or the country. Some sectors of the economy, notably residential construction, are doing quite poorly. In the country at large, unemployment, at just under 4 percent, is too high. The more so since the jobless rate among Negroes and persons over 45 is much higher.</br></br>Because inflationary pressure is not generalized, but confined to pockets or bottlenecks, it follows that measures to restrict demand should be highly selective. The general rule is that every step to restrict demand should find expression in a commensurate cut in inflationary pressure.</br></br>EVERY DOLLARÛªS worth of medicine, in other words, should buy a dollarsÛª worth ,of cure. Otherwise, the restrictions will be ineffective: they will be applied, sometimes in a punitive, manner, to regions of the country and sectors of the economy that are generating inflationary pressures only indirectly, if at all.</br></br>Asit happens, the geographical locus of inflationary pressure is not hard to identify. In general, the tightest area of labor shortage in the country lies in the heavy Industrial belt running along the Great Lakes through Buffalo, Cleveland, Detroit, Chicago and Milwaukee. In these cities, unemployment is just above the 2 per cent mark; credit is tight; and in some industries orders are exceeding current demand.