Beginning at the Bottom

The fight against inflation has begun belatedly and has only begun. The ranks of labor and the farm bloc have not been split, but only temporarily subdued, by the presidential directive, and they may yet help turn the tide towards inflation. Congress did its inflationary bit with the Debt Extension Bill by over-"riding" the demands for a $25,000 ceiling on wages. But price and wage ceilings are essentially "therapeutic" and not "prophylactic" measures. They are the pound of prevention that is not worth an ounce of cure. The forgotten factor of anti-inflation policy is the curbing of spending by taxes and saving. Although the presidential order, hopes for a sixteen billion dollar reduction in consumer spending budgets by Congressional action, that augustly contentious body has proved its disinterest by shelving tax legislation with the Ways and Means Committee.

The inflationary gap is not a price or wage increase; it is the real value difference between consumer purchasing power and consumer goods and services left to be purchased when most productive resources have been diverted to building up the war machine. The gap is the root of the price and wage rises, which accompany inflation. The potted plant in the Hellzapoppin show grew no more quickly than does inflation; stabilizing prices and wages only lops off its branches, and does not prevent the rapid growth of the trunk. Unless the roots are killed, more and bigger branches are bound to grow. Obviously the only sound procedure for eliminating the inflationary gap is through taxes and voluntary, if need be compulsory, saving.

If the Ruml plan is a criterion, the Congress is afraid of war-time novelties, especially those that are not its own creation. But if inflation is going to be controlled not only simple income taxation, but other measures even more daring than Ruml's will have to be considered. A general sales tax would be effective in touching war-fattened pocket-books and in reducing the inflationary gap. A tax on mass consumption may be justly shied away from in peace-time but is unjustly feared under unusual war conditions. Compulsory saving also might be weighed thoughtfully, if not tried. It too gets at the heart of inflation, and does not merely slow down the circulation in one arm or leg.

This is not the hour to avoid real issues. If the psuedo-crusaders are going to take their task seriously they will have to attack inflation, and not merely defend themselves against it.