Defense, Controls, and Inflation.pdf - The Ludwig von Mises Institute

4 Defense, Controls, and InflationSome felt that there was no occasion for direct controls exceptpossibly for some limited priorities. Others argued that theywere required to promote the transfer of resources, to preventinflation, or to prevent inequities. Still others felt that they wererequired simply to assure the public that the government ,vastaking its responsibilities seriously. 5The folloVtring summary concentrates attention on the unresolvedissues in the hope that an attempt to sharpen theseimportant issues of public policy by relating them to three importantcriteria of a mobilization progam-efficiency, preventionof inflation, and equity-may serve to delimit areas of apparentdisagreement and make further di.scussion of them more significant.I. EFFICIENCY OF MOBILIZATIONMobilization involves the efficient and rapid marshaling ofthe human and natural resources required for national defense. 6Under current conditions, with high levels of employment andproduction, there is little slack in the economy. Consequently,dominantly opposed to any sole, or even major, reliance on money manipulationas a means of controlling inflation or furthering our defense effort.I find it impossible to understand why advocates of monetary "controls"and a "free" market-a sharp inconsistency in itself-:-are so sure direct controlscannot succeed because no one is smart enough to make the complicateddecisions which are required in a system of direct controls. Surely,if the conscious decisions which constitute the "market" itself can be madeby mere men, so could other distribution decisions.5. MR. HITCH: My view is that there is no general categorical answerto this question; that the need for direct controls (or expenditure rationing,which is hard to classify as direct or indirect) depends upon themagnitude and speed of mobilization.6. MR. MORISON: The attorney-general, in his second report to thePresident and the Congress under the Defense Production Act of 1950,which was subn1itted on April 30, 1951, pointed out that a primary objectiveof the act and the directives of the President is to attain our defenserequirements \vithin the framework of our competitive enterprise system.He emphasized that this objective can be met only by broadening the baseof our procurement program so as to utilize all of our production facilities,small as well as large.The attorney-general's second report under the Defense Production Actemphasized the need for the introduction into our mobilization programof the essential element of over-all central planning, which "will makepossible considered decisions in the execution of the nation's procurement,