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

16 Defense, Conttols, and InflationIII. FAIR SHARING OF MOBILIZATION COSTS 15Fair and just allocation of the burdens of a mobilization programis an objective on which one would scarcely expect tofind disagreement. Discussion of what constitutes fair distributionof the rewards and penalties in a defense mobilizationprogram becomes to a considerable extent a restatement ofgeneral convictions about the equity of the distributive processat any time. The very strong and almost unanimous convictiongoods, whose largest buyer is the government. Wage increases in theseareas would.surely spread throughout the economy, unless prevented byso heavy a dose of fiscal and monetary medicine as to create substantialunemployment. And people do not like to be unemployed. (Perhaps theycould avoid unemployment by moving, accepting wage cuts, or not tryingto get wage increases which others have received; but people unfortunatelybehave in a very human way.)Most absurd were the statements of those who argued that, even if thegeneral level of prices could not be controlled through indirect means, theadvantages of market allocation were greater than the cost of inflation.Surely it cannot be argued that ~he market operates efficiently in allocatingresources when all prices are galloping upward, when anyone canmake profit on anything if he merely withholds it from use, when thespeculator rather than the producer is rewarded. It is not even clear thatthe government could win out in a race of competitive bidding when onerecalls that government procurement must of necessity be surrounded bysubstantial "red tape." And the argument ignores the plight of the fixedincomerecipient, the interruption to production and social unrest arisingfrom the necessity for constant revision of wage contracts, the effects of inflationin impairing willingness to make long-term contracts, the permanentdamage to the social fabric from the destruction of nliddie-class assets.We believe that indirect controls, both fiscal and monetary, must havea major role in inflation control. But if the magnitude of the mobilizationis great, direct controls are needed, too.15. MR. BRUBAKER: I find it difficult to understand why such a lo\vplace is given to equity considerations in the summary, almost as thoughequity were something of which one should be ashamed or for which oneshould feel it necessary to apologize. Certainly, efficiency and inflationcontrol are entirely proper goals in a mobilization program, but any suchprogram will fail miserably of its purpose in a democratic economy unlessequity considerations are given not only a place but the major and controllingplace. This problem of the economics of mobilization is not oneto which we can or should give the usual academic treatment if we areinterested in practicalities and equities which comprise the political frameworkin which the program must function.