Galbraith and Inflation

Experiencing Professor John Kenneth Galbraith is always a personal pleasure, though one must be on one’s guard, and the Republic is wise to steel itself to resist his seductive nostrums. Most recently I met with him to discuss on the Today show the disappearance of Richard Nixon. He took huge delight, in a telephone conversation the day before, telling me how much he had enjoyed a column I wrote about deteriorating airline service. Mr. Galbraith’s sarcasm is never obscure, and his point was that while Nixon was resigning, I was writing about airline food, and so would he be doing if he had been so retarded as to have backed Nixon in other days. I expected he would bring up the subject on television and am somewhat disappointed he did not, as I was prepared to tell him that there are those of us who, when relaxing, write about the airlines, while others write economic textbooks. But the subject did not arise, and before going on we sat for a minute or two in the little ante-chamber listening to a lady theologian. I do not doubt that during those two minutes Professor Galbraith doubled his knowledge of theology.

And then it began. Strangely, the subject of Mr. Nixon’s perfidies did not wholly occupy Mr. Galbraith, a man of personal generosity not always visible through his polemics. His generosity is most pronounced, come to think of it, when dispensing other people’s money (he calls it public money) hither and yon, to improve on the works of nature, and nature’s God. And in a matter of moments he was agreeing with Today’s attractive new host Mr. Jim Hartz who was agreeing with President Gerald Ford that the country’s most urgent problem is inflation. The formulation usually has it: “The Number One Problem.”

Professor Galbraith then said that everybody knows what it is that should be done about inflation. The only problem, he says, is to develop the Will. As a matter of fact, this is not correct. Most economists will agree that certain measures would be deflationary in their impact, but by no means could one get most economists to agree on the stresses that are properly put on one as against another anti-inflation measure.

Here, highly compressed, would be Mr. Galbraith’s recommendations: 1) Raise taxes immediately, particularly on persons earning $20,000 or more per year, and on corporations. 2) Use the money on public works projects. 3) Impose wage and price controls on critical industries. 4) Stand by to target a lot of help to groups that are afflicted in the course of shaking off the inflationary fat, provided these groups aren’t held together by corporations. For instance, be prepared to help out Lockbeed employees, but not Lockheed. If you want to keep Lockheed alive, nationalize it.

This is something one might call classical-1930s-liberal. I fear it is very full of holes. Obviously of a political and social character; but even of an economic character; and, of course, there isn’t time, ever, to get deeply into the subject. It is perhaps easiest to observe that there are many countries in the world suffering from an inflation even though dominated by one man, or a group of men. Lenin used to say that revolution plus electricity would bring Communism. Will plus expertise won’t bring deflation: not in the absence of government restraint.

It is, of course, the government that is responsible for inflation. Mr. Nixon, during his years in office, spent $70 billion more than he raised in taxes. The difference between a dollar spent by Washington and a dollar spent by the taxpayer isn’t the difference between one more maple tree at Yellowstone Park and one less empty beer can at the roadside, as Mr. Galbraith likes to leave us thinking. It is the difference between a dollar spent or invested with airy notions of where the common good is or ought to be, and dollars spent with very clear notions of individual preference. These last have a more resonant effect: in causing homes to be built, or skyscrapers, or hospitals – or schools.

The public dollar, beloved of the socialists, is both difficult to target (60 million Americans can now qualify for food stamps), and difficult to restrain (a conservative President overspends by $70 billion). Inflation is indeed the number one domestic problem, and indeed it is true that marshaling the Will is required to contain it. But the will to do what? One fears that Professor Galbraith and other centralizers look on the current mess, which resulted from an overindulgence in their own nostrums, as an ideal opportunity to proceed with their vision of a socialized economy.