Mr. Nixon's "System of Constraints"
If imprecision is an unavoidable characteristic of national economic policy-making, President NixonÛªs on-again, off-again ÛÏnational emergency" decisions having to. do with wages and prices in the construction industry might qualify as logical moves in the overall attempt to curb inflation.</br></br>After all, the PresidentÛªs Council of Economic Advisers laid the groundwork earlier this year for an ill-defined but all-out attack on the problem which, with luck and public relations and a few political breaks, was supposed to work. ÛÏWhat is called for,Û said the advisers, ÛÏis a policy of doing what "can effectively be done, wherever it can be done, and not pretending to do more.Û</br></br>Given this solid commitment to unspecified government action, the administration set about exploring ways, short of out-and-out controls, to curb the wage-cost spiral in construction. After some talk about a wage-price freeze, the President decided instead to suspend the Davis-Bacon Act dealing with wages on federal construction projects, a move based on declaration of a ÛÏnational emergency."</br></br>This action lifted provisions requiring government contractors to pay prevailing wages as determined by the Labor Department for geographical areas. The President's argument was that scales under this process frequently had been ÛÏset to match the highest wages paid on private projectsÛ ÛÓthough nobody really explained why the Department did it that way in the first place.</br></br>That was a month ago, when Labor Secretary Janies D, Hodgson said ÛÏwe had to acknowledge that any voluntary action by them (union leaders) to restrict wage increases was not in the cards, certainly not in the immediate future.Û The idea, though it failed to deal with prices and profits in any convincing way, was to ÛÏencourage industry people themselves in their efforts to do something about this problem,Û Mr. Hodgson explained.