1gDdM7w

The Mirage of Inflation 153sophisticated proponents of inflation believe that this is now politicallyimpossible. Sometimes they go further, and charge that all proposalsunder any circumstances to reduce particular wage ratesdirectly in order to reduce unemployment are “antilabor.” But whatthey are themselves proposing, stated in bald terms, is to deceive laborby reducing real wage rates (that is, wage rates in terms of purchasingpower) through an increase in prices.What they forget is that labor itself has become sophisticated; thatthe big unions employ labor economists who know about index numbers,and that labor is not deceived. The policy, therefore, under presentconditions, seems unlikely to accomplish either its economic or itspolitical aims. For it is precisely the most powerful unions, whosewage rates are most likely to be in need of correction, that will insistthat their wage rates be raised at least in proportion to any increase inthe cost-of-living index. The unworkable relationships between pricesand key wage rates, if the insistence of the powerful unions prevails,will remain. The wage-rate structure, in fact, may become even moredistorted; for the great mass of unorganized workers, whose wagerates even before the inflation were not out of line (and may evenhave been unduly depressed through union exclusionism), will bepenalized further during the transition by the rise in prices.5The more sophisticated advocates of inflation, in brief, are disingenuous.They do not state their case with complete candor; and theyend by deceiving even themselves. They begin to talk of paper money,like the more naive inflationists, as if it were itself a form of wealththat could be created at will on the printing press. They even solemnlydiscuss a “multiplier,” by which every dollar printed and spent by thegovernment becomes magically the equivalent of several dollarsadded to the wealth of the country.In brief, they divert both the public attention and their own fromthe real causes of any existing depression. For the real causes, most ofthe time, are maladjustments within the wage-cost-price structure:maladjustments between wages and prices, between prices of raw