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Ralph Nader > In the Public Interest > Freezing the Consumer

With all the flap about the Pay Board, too little attention has been given to the Price Commission. Headed by amiable C. Jackson Grayson, a former business school dean, the Commission is crucial to any attempt to cool the fires of inflation. Yet it is failing.

Since Phase II began last November, all components of the Wholesale Price Index have been accelerating faster than before the 90 day freeze imposed in mid-August. For example, prices of finished goods have increased during Phase II at twice the rate observed before the freeze while industrial commodities are galloping along at a 6 percent annual rate. This wholesale bulge is passed on to consumers at retail.

Predictably, corporate profit forecasts for 1972 are up as well. A little-noticed study done last December by the New York investment banking firm, Goldman, Sachs and Co., analyzed Price Commission profit margin and price guidelines and concluded that corporations will be able to boost their after-tax profits by 17 to 22 percent in 1972. Since few industries are boasting about their productivity increases, it is clear that the consumer will pay for the Price Commission’s rubber-stamping of industry price increases.

Figures put out by the Bureau of Labor Statistics show that despite inflation, the average worker during the six months preceding the freeze got a 2.8 percent increase in real earnings. But during the past half year of economic controls, real worker‑earnings declined .34 percent. Since Phase II started, the Consumer Price Index has gone up at an annual rate of almost 5 percent — twice the goal of the President’s stabilization program. (During the six months before the freeze, the Consumer Price Index was up at a rate of 4.1 percent.) The Wholesale Price Index during Phase II has increased at an annual rate of 7.7 percent.

Consumers need these unfeeling statistics only to confirm what everyone is observing in the supermarkets and department stores. It’s not just meat prices and other fresh foods that are climbing; many other products and services are, too. Some businessmen like to blame it all on unions. The facts contradict them. The large majority of American workers are not unionized and do not receive the highly publicized percentage wage increases that a few relatively strong unions get. Moreover, families earning less than $6900 a year are bearing the brunt.

The Price Commission’s closed door procedures make it almost impossible for a citizen to know what it’s doing, or why. Companies submit information to back up their price increase requests. The Commission keeps the information secret and releases its one-line price decisions without substantiation. The Commission has refused to hold any formal public hearings on any proposed change in prices, rents, interest rates or corporate dividends, though the law urges it to hold such hearings “to the maximum extent possible.”

There is no consumer participation in the Price Commission’s work. Only companies participate. When companies make contacts with Commission staff on the sly, the public cannot find out about it.

In addition, there is no disclosure of price increases made in violation of the law. So despite nearly 20,000 cited violations, consumers don’t have specific information on which to base demands for rebates, but which might total millions of dollars.

Unless the Price Commission throws open its doors to consumers it will continue to be the captive of special corporate pleaders who routinely get the price increases they want.