Hidden Inflationary Pressires

Before it is possible to expect effective anti-inflationary policies to come out of Washington, the Ford administration will have to ask itself if it is willing to oppose some old or proposed pro-inflationary practices.

Here is a handy checklist of pro-inflationary directions which many elected and appointed politicians would rather not talk about with citizens back home:

1. Campaign contributions are a major pro -inflationary force. By buying or renting the White House and Congress, industries can obtain tax privileges, subsidies, inflated contracts or lax enforcement, all of which fuel inflation. Less than $2 million in contributions by the Milk cartel in 1971 led to a reversed decision by the Department of Agriculture to raise price supports for milk. The result: an increase in the retail price for milk of $500 million the following year.

2. Weak or non-enforcement of the anti-monopoly laws permit anti-competitive practices and monopolistic tie-ups to keep prices artificially high. Where anti -monopoly enforcement is successful, prices have droppedin the affected areas, sometimes dramatically. Although both the Justice Department and the Federal Trade Commission believe there is rampant anti-competitive behavior and monopoly in industry and commerce at national, regional and local levels, their budgets for investigation and enforcement are ridiculously low. Their combined budgets for anti-monopoly actions are less for one year than General Motors grosses in fifteen hours.

3. Tax subsidies, cash subsidies and hidden subsidies pour out of Washington to America’s large corporations in the profligate, unchecked style of an all-powerful business welfare system. The profit-glutted oil industry, for one, has been on tax welfare for years, paying in percentage terms about one-third in federal taxes of what a steel worker has to give to the Treasury.

The Joint Economic Committee of Congress filled a volume with descriptions of many kinds of subsidies to various industrial, maritime, agribusiness, banking and commercial interests. Most of these subsidy programs are exacted by determined lobbyists with White House connections and plenty of money for the responsive legislators’ campaign
and other needs. Huge defense contracts, replete with renegotiation for waste, prop up corporate goliaths too mismanaged to float on their own.

4. Certain forms of regulation by such agencies as the Interstate Commerce Commission and the Civil Aeronautics Board keep freight rates and airline rates going higher and higher. The U. S. Chamber of Commerce, which says it is against federal regulation, really means that the only federal regulation it is against are the few laws protecting the consumer.

The ICC truck freight rate and the CAB airline rate approvals foster price fixing which the truck and airline industries favor. And so does the Chamber of Commerce. Industry-supported regulation of transportation and communications by the federal government has cost consumers between $16 and $24 billion annually in the form of higher prices and waste, based on the best scholarly estimates of our regulated sector.

One form of deregulation which would gouge consumers out of $10 billion a year, according to estimates of Federal Power Commission economist David Schwartz, isending price controls over new natural gas. Wall Street emissary William Simon, masquerading as Treasury Secretary, is the leading advocate in the Ford administration for getting this superinflationary legislation through Congress.

As if repeated price increases granted recently by the Federal Power Commission to the lushly profitable natural gas companies (mostly owned by the oil companies) were not high enough, Simon’s latest anti-consumer craze would result in natural gas prices tripling in less than a year from their present record high level. Simon also wants to decontrol “old domestic oil, which now sells for a record $5.25 per barrel, so that it can go, he says, to $11 or $12 a barrel. Imagine what results these two moves would have in gasoline and home fuel prices.

None of these hyperinflationary recommendations has anything to do with cost pressures or return on investment; they have everything to do with satisfying corporate greed of epic proportions.

5. Although the Ford administration, like its predecessor, talks about curbing waste in energy andbureaucracy, it is reluctant to apply the necessary muscle.

Reducing energy waste in industry, commerce, and products like automobile engines means reducing sales of the oil, gas, coal and utility companies. In choosing between corporations or consumers, the White House wastes little time in being servile to the former.

6. The one move which Gerald Ford can make for helping consumers is to urge the Senate Republicans like Senator Robert Griffin (R-Mich.) to stop the filibuster and pass the Consumer Advocacy Bill, 5.707. Thus far, President Ford has been silent. So he needs to hear from consumers who are gritty enough to become active citizens and put this and other questions to their President and congressional representatives.

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