The Freeman 1972 - The Ludwig von Mises Institute

1972 SOCIAL INFLATION 675Goody. And Mr. Goody says to theboys, "Let's have some inflation;instead of the going wage of $3.00an hour, we'll demand $6.00." Butin Utopia there is no way to forcean employer to hire anyone at$6.00 an hour if' he doesn't wantto; ther'e's no way to force a consumerto buy labor or its productat $6.00 an hour. So Mr. Goodymight have some $6.00 unemployment,but no $6.00 labor; andthere's practically nothing laborerscan do to bring about wagepushinflation.In Utopia, when a businessmandecides to have a little inflation,rai~e his prices 5 per cent to doublehis: profits, a funny thing happens.Consumers decide they'll buy fromother suppliers instead, at the oldprice; and some businesses changeownership, but there isn't any' inflation.However, when the people ofUtopia ask the government to provideadditional services withoutincreasing taxes, and the governmentfinances its deficits by printingadditional money, then thereis inflation in Utopia, "social inflation"caused by pumping nothingbut money into the market.Inflation in Utopia is strictly amonetary phenomenon. If the governmentprints the money, it iscalled social inflation. If anyoneelse prints it, it is called counterfeiting.And that's the fact, theonly relevant fact pertaining to inflation- in Utopia, that is.We mentioned earlier the possibilitythat once we've identifiedthis new kind of "social inflation"that plagues the United States in1972, then pe'rhaps one' of the doctorsmight find a workable cure.Not bad for a, start is advicefrom Andrew F. Brimmer, memberof the Board of Governors ofthe Federal Reserve System:"Despite our obvious affluence as anation, we do not have the capacity toproduce enough so that' householdscan 'maximize their consumption ­while minimizing taxes; so that anadequate volume of housing can bebuilt; so that businesses can expandtheir production facilities, at a maximumrate - and also make the investmentneeded to abate pollution; sothat governments can meet the increasingdemand for public services ­while tax revenues lag behind spending."!What the good doctor seems tobe prescribing is exercise - ofself-reliance and will power. If wedon't like inflation then ask thegovernment to stop pampering usand tampering with the moneysupply and stick to its more appropriategovernmental functionof policing the market; otherwiseleave us alone. ~1 Quoted in U. S. News and World Report,June 12, 1972, p. 39.