Numerous measures for reducing the rate of inflation have been suggested in recent months. Among them are price controls, higher taxes, lower taxes, tight money, indexing the government, and so on. Some of these policies (e.g., indexing the government) can have desirable effects, some are likely to be as effective as holding a wetted finger to the breeze, while a few (e.g., price controls) can only refuel inflationary pressures.
The point to concentrate on is not so much what we think our leaders should do or hope they will do, but an appraisal of the relationship between the rewards expected by legislators and government officials, and the pattern of their behavior. The prevailing system of incentives in the public sector causes legislators and government officials to pursue inflationary policies, because they are conducive to tenure in office, promotions, prestige, and influence.
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