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American Society of Personnel Administration, Miami, FL, May 19. 1966
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American Society of Personnel Administration, Miami, FL, May 19. 1966
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Gerald R. Ford Congressional Papers
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The original documents are located in Box D20, folder "American Society of Personnel
Administration, Miami, FL, May 19. 1966" of the Ford Congressional Papers: Press
Secretary and Speech File at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Speech Cards for Miami and Monterey
may 19 + 21
JOHNSON'S SO*CALIED PROSPERITY
1. Flows from such ideas as cutting taxes when government is running a
deficit.
2. Possible for Kennedy and Johnson Administrations to adopt B highly
expansionist policies because the Eisenhower Administration had wrung all the
inflationary pressuresmи out of the economy.
3. In 1965 everything changed because the economy became overheated.
a. Overheated because of annual budget deficits, increases in the
money supply, substantial increases in credit, and heavy spending on Great
Society programs and the Vietnam War.
b. The Eisenhower "legacy" had run out.
GERALD FORD
2/ Cards for Miami and Monterey
ECON_OMY OVERHEATED BUT...
1. Administration has adopted wait-and-see attitude
2. Administration admonishes *** housewives, busine ssmen, and state and
local officials to cutienback on spending.
BY While Administration marks time, industry is plagued by shortagesmix
of skilled workers and raw materials, increases in overtime, and the need to
use obsolescent facilities and equipment.
DEMAND, COSTS AND PRICES ARE GOING UP
1. Managers find wages and prices are being bid up; marginal machinery
has to be put into operation; overtime and maintenance costs are rising;
rate of productivity is falling off.
Digitized from Box D20 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
3/ Cards for Miami and Monterey
BOOM CARRIES WITH IT THE SEEDS OF RECE S SION
1. This boom is no exception.
2. Longer we wait to deal with it the more serious the consequences could be.
DEFICITS HAVE BECOME A WAY OF LIFE WITH THE JOHNSON ADMINISTRATION
1. It's shocking to find this administration headed toward large deficits
at a time when the economy is overheated and runaway inflation of the push-pull
variety is more than just a threat.
2. Policy of chronic deficits can only lead to financial disaster.
3. Prosperity in America does not depend on deficit spending.
a. Had prosperity in 20's without deficits--had surpluses then.
b. Had slump in 30's despite big deficit spending.
GERALD ADVHEIT
4/ Speech 6ards for Miami and Monterey
GOVERNMENT AN ART BUT ALSO A BUSINESS
1. What think of a business that goes into red every year?
2. What think of division in a business that serves fewer people each year
but keeps adding to its payroll?
a. That's Ag Dept, which has 20 per cent more employes today than
in 1960 although farm population has declined 20 per cent since then.
b/ Ag
Dept. has 22 per cent bigger budget for fiscal
1967 than it had in 1960.
5/ Speech Cards for Miami and Monterey
AIM'NS
CHIEF WEAPON AGAINST INFIATION HAS BEEN WAGE-PRICE GUIDEPOSTS
1. The guideposts are not really voluntary--stockphle dumping
threatened to blackmail such industries as steel and aluminum.
2. Government uses the guideposts to make villains of labor and management
and thus diverts attention from its own inflationary actions.
GUIDEPOSTS INEFFECTIVE WHEN INFLATION GATHERS ANY REAL FOR CE
1. Wholesale industrial price index has gone up 1.5 per cent in last
six months--an annual rate of 3 per cent.
2. The index covers ne arly 2,000 items--and there's hardly a major
category where prices have not risen.
GERALD 1848817
6/ Speech Cards for Mimmi and Monterey
ADM'N ALMOST CERTAINLY WON'T BE ABLE TO HOLD WAGE GUIDEPOST AT 3.2% FOR 167--
1. The 3.2 per cant is unrealistic wage guidepost for 167 because of
all the consumer price rises.
2. It's not only unrealistic but unfair and unenforceable. Could only
be called fair if prices were stable.
CRITICISM OF WAGE-PRICE GUIDEPOSTS DOES NOT MEAN IMBOR AND MANAGEMENT SHOULD
IGNORE THE PUBLIC INTEREST--
1. Labor and Management should consider public interest carefully B
whenever they make major decisionaf affecting wages and prices.
26 But lasting assurance of price stability can come only from the
discipline of a free market and from the responsible actions of business and
labor leaders acting in atmosphere generated by sound and impartial government.
Arr. 8 Virgin Pole
Bun of Int. Revenue
Mansfull
theat, great man
THURSDAY, MAY 19, 1966
SPEECH BEFORE AMERICAN SOCIETY OF PERSONNEL ADMINISTRATION, MIAMI, FLORIDA
It is often said in politics that "you can't beat prosperity."
This is not a political speech, but I'd like to talk a bit about
the status prosperity--the four 1 kind of overheating presperity we're in The experiencing 10mmg right now. you of amms
an fridar It with The Inv unemployment frgunds -the scarcity of labon. But, also
flowe-from the economic theories of one John Maynard Keynes, the The ancrease
Pithaps Arme 7 the good + prohap Ame of The bad we RM now Typenencing flows form
in the white
author of such unconventional ideas as cutting taxes at a time when a Price Index,
The Empremer Price
government is running a deficit.
Index,
The thinking behind such a tax cut, of course, is to stimulate the
economy by boosting purchasing power and generating job-creating forces
which ultimately also produce fresh tax revenue.
It is in line with Keynesian philosophy that the Administrations in
power since 1961 have pursued expansionary policies, allowing the supply
of money and credit to grow at rates in excess of the growth in national
productivity.
Beneficial tax changes were made in the last 5 years.
support
In 1962, the administration initiated and Congress enacted a speedup
FORD
n
(MORE)
GERALD
LIBRARY
-2-
AMERICAN SOCIETY SPEECH
in depreciation allowances to encourage capital investment and productivity
increases. This was based on a principle Republism leaders have advocated
many economists of some political
for decades. Obstacles to investment were reduced. The result was
increased economic growth and more jobs.
In 1964, the administration recommended an income tax cut and Congress
with i-partisan support
approved it. The tax cut was accompanied by temporary restraint in
monty spending. impored Again, by consumer Congressional demand action was in stimulated The Wouse and of curbs benate on
government
investment were loosened.
During the 1961-65 period, chronic balance of payments deficits and
outflows of gold tended to lessen inflationary pressures at home by
exporting them abroad.
But in 1965 all of this changed.
Inaderlatty
ranking specials in the Johnn almontation preatity confided
It changed because the economy became overheated. One of the highest
Prior to 1961, the Eisenhower Administration had removed all the
inflationary pressures from the economy. of It was this inflation-free were memod
from the end f The Korean war the cost of driving increases
economy that the Democratic administrations began to feed with expansionist,
Keynesian policies nearly 5½ years ago.
BERALD FORD LIBRABY
(MORE)
-3-
AMERICAN SOCIETY SPEECH
By late 1965, annual budget deficits, increases in the money supply,
substantial increases in credit, and heavy spending on Great Society
programs and the Vietnam War had created inflationary stresses and strains.
The Eisenhower legacy had run out.
The economy has become overheated, and the Administration had been
really effective to mut the growing crims,
unwilling to do anything but Valk about it. The Administration has
insisted on adopting a wait-and-see policy while admonishing housewives,
the businessmen, and state and local government officials to cut back on
The President reals with pride about reductions in his budget In F.Y.1967 totally about
spending. Belatedly, the Administration has also talked about cutting 1350 another in
He does not mention that the same badget, calls politically for $3.2 consitive Whom have
federal spending but hasn't done much about it. There are been thriats
of a second was time tax increase in 1966 but apparently mo from
What is happening in the country while the Administration talks and decision,
waits and ees?
Industry is plagued with shortages of people in various skill categories,
shortages of raw materials, increases in overtime, and the need to make
greater use of obsolescent facilities and equipment.
Managers find that wages and prices are being bid up; marginal, high-
cost, low-efficiency machinery has to be put into operation; overtime costs
(MORE)
-4-
AMERICAN SOCIETY SPEECH
are increasing; maintenance costs are going up as equipment is overused;
and the rate of productivity gains is beginning to fall off.
Demand is rising, and costs are going up.
inevitably mine,
When demand and costs go up, prices also have to go up.
speculate
tackle
I will not tell you why I feel the Administration is reluctant to
the Aerious crisis 2
to deal with inflation. This is not political speech.
But I don't think anyone can deny that we are now in the grip of
inflation because of the continuey excessively expansionary fiscal and monetary
policies of this Administration.
And I don't think anyone can deny that the longer we wait to cope with
inflation, the more serious its consequences can be both in the short pull the long hand
Every boom carries with it the seeds of recession. The boom we are The wally
Hestory tells no The higher the "peah" (the more the inflation), the deepers
(or the sharper
riding now is certainly no exception.
the decline)
This Administration relies heavily on government spending to stimulate
the economy, and The obviously does not fear deficits. In fact, this
Administration appears to look upon federah deficits as something desirable on the
basis
ground that they expand the money supply and stimulate the economy.
GERALD FORD LIBRARY
(MORE)
-5-
AMERICAN SOCIETY SPEECH
Fiscal policy--with government incurring a deficit or running up a
surplus--can be effective in encouraging or restraining the private economy.
The shocking thing is to find an administration headed toward ever larger
deficits at a time when the economy is obviously overheated and runaway
inflation of the classic push-pull variety is far more than just a threat.
also
Republicans have always favored flexible budget policies. A balanced
budget should not be given priority over the economic health of the country.
on the mething needs of the nation.
You may recall that the Eisenhower Administration incurred a deficit
in the recession year of 1958. This was a deliberate move to pull us out
of that recession as quickly as possible. The 1958 recession was relatively
short-lived, and this was no doubt due at least in part to the Eisenhower
Administration's decision to accelerate government spending as an anti-
recession tool.
But there is no reason to believe that prosperity in America must be
based on government spending by the federal pressument,
During the 1920's, the federal budget ran a surplus and federal debt
was retired every year. Yet this was a period of prosperity.
(MORE)
-6-
AMERICAN SOCIETY SPEECH
In the 1930's, the government operated in the red every year but was
of probably The most severe
unable to spend the country out of the longest economic slump in history.
Government spending is merely one tool of economic policy. It should
be used judiciously and with careful attention to timing.
A policy of chronic deficits can only lead to financial disaster. In The
past 6 years we have had 6- with The total being 35 billion with span
Government is an art but it is also a business business that
provides services to the people.
What would you think of a business that costs more and more to operate
every year and keeps going into the red?
What would you think of a division in a business which serves fewer
people each year but keeps adding to its payroll and to its overall budget?
The population of this country has grown tremendously since 1960, but
the number of farmers in the nation has fallen by 20 per cent.
WRL,
despite the fact that one out offive farm people have fled the farm since
1960, the Agriculture Department has 20 per cent more employees today and
a 22 per cent larger budget for fiscal 1967 than it had in 1960. Figure
that one out, if you can.
(MORE)
-7-
AMERICAN SOCIETY SPEECH
To me it also is fantastic that the present administration proposes
of 2 emphasize more
to spend $3.2 billion more on Great Society programs at a time when this
-
nation is fighting a billion-dollar-a-month war halfway around the world.
Mistakenly, many people believe that defense spending is the major
when the cash bulget-total uppenditures from all accunts no The
cost of government. This just isn't true And it's also not true that bench month.
non-military spending cannot be cut. It can be cut and cut sharply if this
hold the Airl m Total copenditures as it
Administration really wants to reduce its expenditures.
faces increased melitary costs in Vist Mam
But let's get back to Inflation and what this Administration has
professed to do about it.
This Administration's principal weapon against inflation has been its
wage-price guideposts.
The 1966 Economic Report of the President states: "The general guide-
post for wages is that the annual rate of increase of total employee
compensation (wages and fringe benefits) per man-hour worked should equal
the national trend rate of increase in output per man-hour."
The 1966 guidepost of 3.2 per cent is the same as for 1965 and for 1964.
The figures for the two earlier years were based on five-year moving averages
GERALD
LIBRAR,
of productivity improvement.
(MORE)
-8-
AMERICAN SOCIETY SPEECH
If the five-year moving average had been used for the 1966 guidepost,
the figure would have been 3.6 per cent.
It should be obvious why union officials got sore when the 1966 guide-
post was announced.
Some union leaders charge that the frozen guidepost is "morally
dishonest."
Some businessmen see the Administration emphasis on the guidepost as
a step toward wage and price controls that would suppress inflationary
pressures at the cost of economic freedom and efficiency.
There is no question that year-to-year variations in productivity
are rather erratic. This is true historically, and it is true in today's
guns-and-butter economy.
The truth is that wage and price controls, voluntary or mandatory,
They never have of never will,
just don't work. And, let's face it, wage-price
1
are
guidepostsis an informal, unofficial form of wage and price controls.
The fallacy in the wage-price guidepost form of control is that it
treats the symptoms of inflation and not the causes.
(MORE)
-9-
AMERICAN SOCIETY SPEECH
When demand is pumped up and the economy is running close to full
capacity, wages (the price of labor) and the prices for raw materials will
be bid up by the forces of competition. As a result, costs and prices
will rise.
The worst feature of the guidepost is that it does violence to the
economic and political principles of a free nation.
The guidepost isn't really voluntary--not when a President threatens
to dump a stockpiled metal on the market as blackmail to force an industry
to reverse a pricing decision.
The guidepost isn't really voluntary--not when the Administration
castigates individuals, or businesses, or unions.
The guidepost isn't really voluntary--not when the Administration
threatens anti-trust action or a tax inquiry against a company to force
it to roll back a price increase.
The guidepost sounds great in theory. In practice, it is employed
arbitrarily. It is used to whip certain industries and certain executives
into line.
(MORE)
-10-
AMERICAN SOCIETY SPEECH
The guidepost makes villains of labor and management and diverts
attention from government policies which feed inflation.
The Administration points the finger at industry and labor instead of
explaining why it does not reduce its heavy deficit spending.
increases in nm - oniting spending STATE
NION
So not only are the guideposts largely ineffective, but they provide
antiting + discrimunatory
the Administration with an alibi for its own excesses.
There is no question that this Administration has been unfair in
applying the guideposts.
Best proof of that is the fact that it blackjacked the steel and
aluminum industries into rolling back prices but did recent
nothing for shample about
increases in the price of sulphuric acid, coal, shoes and tires.
An Administration official recently commented that "we could not
possibly go after every price increase even if we wanted to."
of descrimunating
That is just the point; the wage-price guideposts are ineffective
when inflation gathers any real force.
The guideposts have little usefulness, if any, under conditions of
yord
excess general demand.
SARY
(MORE)
-11-
AMERICAN SOCIETY SPEECH
Take a look at what's been happening, as revealed by the wholesale
price index for industrial commodities--that is, all items other than farm
products and processed foods.
The wholesale industrial index has gone up 1.5 per cent in the last
six months. That's an annual rate of 3 per cent.
There is hardly a major category where prices have not risen--and the
index covers nearly 2,000 items.
The chief exceptions are automobiles
and some other consumer durable goods
Next year the Administration almost certainly will not be able to
continue the wage increase guidepost at 3.2 per cent. The 3.2 per cent
figure is generally regarded as entirely unrealistic for 1967 because of
all the rises in consumer prices.
It's not only unrealistic. It's unfair and unenforceable. It could
be called fair only if prices were generally stable. As you and I know full
well, they are not.
I do not mean to imply by these criticisms of the wage and price
guideposts that business and labor should blithely ignore the public interest.
(MORE)
-12-
AMERICAN SOCIETY SPEECH
On the contrary, I think labor and management should carefully weigh the
public interest every time they make a major decision affecting wages and
prices.
But it seems to me undebatable that lasting assurance of price
stability can come only from the discipline of a free market and responsible
actions by business and labor leaders acting in an atmosphere generated by
sound and impartial government.
###
In closing 1 Beng Franklin
Dante - The hottest places m hell are
reserved for there who in a period of moral
crisis remain nuctral
2 suggest - -give your time, talent, treased
2
RE: Guidelines of Guideposts
see miltish-speeches
for original with revisions.
THURSDAY, MAY 19, 1966
SPEECH BEFORE AMERICAN SOCIETY OF PERSONNEL ADMINISTRATION, MIAMI, FLORIDA
It is often said in politics that "you can't beat prosperity."
This is not a political speech, but I'd like to talk a bit about
prosperity--the kind of prosperity we're experiencing right now.
It flows from the economic theories of one John Maynard Kaynes, the
author of such unconventional ideas as outting taxes at a time when a
government is running a deficit.
which ultimately Office also produce fresh tax revenue.
The thinking behind such a tax cut, of course, Copy is to stimulate the
economy by boosting purchasing power and generating job-creating forces
It is in line with Keynesian philosophy that the Administrations in
power since 1961 have pursued expansionary policies, allowing the supply
of money and credit to grow at rates in excess of the growth in national
productivity.
Beneficial tax changes were made.
QERALD FORD VIBRARY
In 1962, the administration initiated and Congress enacted a speedup
(MORE)
-2-
AMERICAN SOCIETY SPEECH
in depreciation allowances to encourage capital investment and productivity
increases. This was based on a principle Republican leaders have advocated
for decades. Obstacles to investment were reduced. The result was
increased economic growth and more jobs.
In 1964, the administration recommended an income tax cut and Congress
approved it. The tax out was accompanied by temporary restraint in
government spending. Again, consumer demand was stimulated and curbs on
investment were loosened.
During the 1961-65 period, chronic balance of payments deficits and
outflows of gold tended to lessen inflationary pressures at home by
exporting them abroad.
But in 1965 all of this changed.
It changed because the economy became overheated.
Prior to 1961, the Eisenhower Administration had removed all the
inflationary pressures from the economy. It was this inflation-free
economy that the Democratic administrations began to feed with expensionist,
Keynesien policies nearly 54 years ago.
GERALD FORD HORRARY
(MORE)
-3-
AMERICAN SOCIETY SPEECH
By late 1965, annual budget deficits, increases in the money supply,
substantial increases in credit, and heavy spending on Great Society
programs and the Vietnem War had created inflationary stresses and strains.
The Eisenhower legacy had run out.
The economy has become overheated, and the Administration had been
unwilling to de anything but talk about it. The Administration has
insisted on adopting a wait-and-see policy while admonishing housewives,
the businessmen,end state and local government officials to cut back on
spending. Belatedly, the Administration has also talked about cutting
federal spending but heen't done much about it.
What is happening in the country while the Administration talks and
weits and sees?
Industry is plagued with shortages of people in various skill categories,
shortages of raw materials, increases in evertime, and the need to make
greater use of obsolescent facilities and equipment.
Managers find that wages and prices are being bid up; marginal, high-
cost, lew-efficiency mechinery has to be put into operation; overtime costs
(MORE)
-4-
AMERICAN SOCIETY SPEECH
are increasing; maintenance costs are going up as equipment is overused;
and the rate of productivity gains is beginning to fall off.
Demand is rising, and costs are going up.
When demand and costs go up, prices also have to go up.
I will not tell you why I feel the Administration is reluctant to act
to deal with inflation. This is not a political speech.
But I don't think anyone can deny that we are now in the grip of
inflation because of the excessively expansionary fiscal and monetary
policies of this Administration.
And I don't think anyone can deny that the lenger we wait to cope with
inflation, the more serious its consequences can be.
Every boom carries with it the seeds of recession. The been we are
riding now is certainly no exception.
This Administration relies heavily on government spending to stimulate
the economy and it obviously does not fear deficits. In fact, this
Administration appears to look upon deficits as something desirable on the
ground that they expand the money supply and stimulate the economy.
GERALD ANVERIT
(MORE)
-5-
AMERICAN SOCIETY SPEECH
Fiscal policy--with government incurring a deficit or running up a
surplus--can be effective in encouraging or restraining the private economy.
The shocking thing is to find an administration headed toward ever larger
deficits at a time when the economy is obvieusly overheated and runsway
inflation of the classic push-pull variety is more than just a threet.
Republicans have always favored flexible budget policies. A balanced
budget should not be given priority over the economic health of the country.
You may recall that the Eisenhower Administration incurred a deficit
in the recession year of 1958. This was a deliberate move to pull us out
of that recession as quickly as possible. The 1958 recession was relatively
short=lived, and this was no doubt due at least in part to the Eisenhower
Administration's decision to accelerate government spending as an anti-
recession tool.
But there is no reason to believe that prosperity in America must be
based on government spending.
During the 1920's, the federal budget ran a surplus and federal debt
was retired every year. Yet this was a period of prosperity.
(MORE)
-6-
AMERICAN SOCIETY SPEECH
In the 1930's, the government operated in the red every year but was
unable to spend the country out of the longest economic slump in history.
Government spending is merely one tool of economic policy. It should
be used judiciously and with careful attention to timing.
A policy of chronic deficits can only lead to financial disaster.
Government is an art but it is also a business--a business that
provides services to the people.
What would you think of a business that costs more and more to operate
every year and keeps going into the red?
What would you think of a division in a business which serves fewer
people each year but keeps adding to its payroll and to its overall budget?
The population of this country has grown tremendously since 1960, but
the number of farmers in the nation has fallen by 20 per cent. Well,
despite the fact that one out offive farm people have fled the farm since
1960, the Agriculture Department has 20 per cent more employees today and
a 22 per cent larger budget for fiscal 1967 than it had in 1960. Figure
that one out, if you can.
(MORE)
-7-
AMERICAN SOCIETY SPEECH
To me it also is fantastic that the present administration proposes
to spend $3.2 billion more on Great Society programs at a time when this
nation is fighting a billien-dollar-a-menth ver halfway around the world.
Mistakenly, many people believe that defense spending is the major
cost of government. This just isn't true. And it's also not true that
non-military spending cannot be cut. It can be cut and cut sharply if this
Administration really wants to reduce its expenditures.
But let's get back to inflation and what this Administration has
professed to do about it.
This Administration's principal weapon against inflation has been its
wage-price guideposte.
The 1966 Economic Report of the President states: "The general guide-
post for wages is that the annual rate of increase of total employee
compensation (wages and fringe benefits) per man-hour worked should equal
the national trend rate of increase in output per man-hour."
The 1966 guidepost of 3.2 per cent is the same as for 1965 and for 1964.
The figures for the two carlier years were based on five-year moving averages
of productivity improvement.
(MORE)
÷
AMERICAN SOCIETY SPEECH
If the five-year noving average had been used for the 1966 guidepost,
the figure would have been 3.6 per cent.
It should be obvieus why union officials got sore when the 1966 guidd-
post was announced.
Some union leaders charge that the frozen guidepost is "morally
dishonest."
Some businessmen see the Administration emphasis on the guidepost as
a step toward wage and price controls that would suppress inflationary
pressures at the cost of economic freedom and efficiency.
There is no question that year-te-year variations in productivity
are rather erratic. This is true historically, and it is true in today's
guns-and-butter economy.
The truth is that wage and price controls, voluntary or mandatory,
just don't work. And, let's face it, this Administration's vaga-price
guidepost is an informal, unofficial form of wage and price controls.
The fallacy in the wage-price guidepost form of control is that it
treats the symptoms of inflation and not the causes.
GERALD FORD LIBRARY
(MORE)
-9-
AMERICAN SOCIETY SPEECH
When demand is pumped up and the economy is running close to full
capacity, wages (the price of labor) and the prices for raw materials will
be bid up by the forces of competition. As a result, costs and prices
will rise.
The worst feature of the guidepost is that it does violence to the
economic and political principles of a free nation.
The guidepost isn't really voluntary--not when a President threatens
to dump a stockpiled metal on the market as blackmail to force an industry
to reverse a pricing decision.
The guidepost isn't really voluntary--not when the Administration
castigates individuals, or businesses, or unions.
The guidepost isn't really voluntary--not when the Administration
threatens anti-trust action or a tax inquiry against a company to force
it to roll back a price increase.
The guidepost sounds great in theory. In practice, it is employed
arbitrarily. It is used to whip certain industries and certain executives
into line.
(MORE)
-10-
AMERICAN SOCIETY SPEECH
The guidepost makes villains of labor and management and diverts
attention from government policies which feed inflation.
The Administration points the finger at industry and labor instead of
explaining why it does not reduce its heavy deficit spending.
So not only are the guideposts largely ineffective, but they provide
the Administration with an alibi for its own excesses.
There is no question that this Administration has been unfair in
applying the guideposts.
Best proof of that is the fact that it blackjacked the steel and
aluminum industries into rolling back prices but did nothing about recent
increases in the price of sulphuric acid, coal, shoes and tires.
An Administration official recently commented that "we could not
possibly go after every price increase even if we wanted to."
That is just the point; the wage-price guideposts are ineffective
when inflation gathers any real force.
The guideposts have little usefulness, if any, under conditions of
excess general demand.
(MORE)
-11-
IRICAN SOCIETY SPEECH"
Take a look at what's been happening, as revealed by the wholessle
price index for industrial commoditiss--that is, all items other than farm
products and processed foods.
The wholessle industrial index has gone up 1.5 per cent in the last
six months. That's an annual rate of 3 per cent.
There is hardly a major category where prices have not risen--and the
index covers nearly 2,000 items. The chief exceptions are automobiles
and some other consumer durable goods.
Next year the Administration almost certainly will not be able to
continue the wage increase guidepost at 3.2 per cent. The 3.2 per cent
figure is generally regarded as entirely unrealistic for 1967 because of
all the rises in consumer prices.
It's not only unrealistic. It's unfatr and unenforceable. It could
be called fair only if prices were generally stable. As you and I know full
well, they are not.
I do not mean to imply by these criticisms of the wage and price
guideposts that business and labor should blithely ignore the public interest.
(MORE)
-12-
AMERICAN SOCIETY SPEECH
On the contrary, I think labor and management should carefully weigh the
public interest every time they make a major decision affecting wages and
prices.
But it seems to me undebatable that lasting assurance of price
stability can come only from the discipline of a free market and responsible
actions by business and labor leaders acting in an atmosphere generated by
sound and impartial government.
# # #
TORD is LIBRARY 07V839
NEWS
CONGRESSMAN
GERALD R. FORD
HOUSE REPUBLICAN LEADER
RELEASE
FOR RELEASE MAY 19, 1966, THURS. - 6:30 P.M.
SPEECH EXCERPTS--AMERICAN SOCIETY FOR PERSONNEL ADMINISTRATION, MIAMI, FLORIDA
Wage and price controls, voluntary or mandatory, just don't work. And,
let's face it, this administration's wage-price guideposts are an informal,
unofficial form of wage and price controls.
The fallacy in the wage-price guidepost is that it treats the symptoms of
inflation and not the causes.
When demand is pumped up and the economy is running close to full capacity,
wages (the price of labor) and the prices for raw materials will be bid up by the
forces of competition. As a result, costs and prices will rise. That is what is
happening right now.
The worst feature of the guidepost is that it does violence to the economic
and political principles of a free nation.
The guidepost isn't really voluntary--not when a President threatens to dump
a stockpiled metal on the market as blackmail to force an industry to reverse a
pricing decision.
The guidepost isn't really voluntary--not when the Administration castigates
individuals, or businesses, or unions.
The guidepost isn't really voluntary--not when the Administration threatens
antitrust action or a tax inquiry against a company to force it to roll back a
price increase.
The guidepost sounds great in theory. In practice, it is employed arbitrarily.
It is used to whip only certain industries and certain executives into line.
The guidepost makes villains of labor and management and diverts attention
from government policies which feed inflation.
The Administration points the finger at industry and labor instead of
explaining why it does not reduce its heavy deficit spending.
So not only are the guideposts largely ineffective but they provide the
Administration with an alibi for its own excesses.
***
This administration has been unfair in applying the guideposts.
Best proof of that is that it blackjacked the steel and aluminum industries
into rolling back prices but did nothing about recent increases in the price of
sulphuric acid, coal, shoes and tires.
(MORE)
-2-
SPEECH EXCERPTS--INFLATION AND THE GUIDEPOSTS
***
An Administration official recently was quoted as saying, "We could not
possibly go after every price increase even if we wanted to."
That is just the point; the wage-price guideposts are ineffective when
inflation gathers any real force.
The guideposts have little usefulness, if any, under conditions of excess
general demand.
***
Take a look at what's been happening, as revealed by the wholesale price
index for industrial commodities (all items other than farm products and processed
foods).
The wholesale industrial index has gone up 1.5 per cent in the last six months.
That's an annual rate of 3 per cent.
There is hardly a major category where prices have not risen--and the index
covers nearly 2,000 items. The chief exceptions are automobiles and some other
consumer durable goods.
Next year the Administration almost certainly will not be able to continue
the wage increase guidepost at 3.2 per cent. The 3.2 per cent figure is generally
regarded as an entirely unrealistic wage increase yardstick for 1967 because of all
the rises in consumer prices.
It not only is unrealistic. It is unfair and unenforceable. It could be
called fair only if prices were generally stable. As you and I know full well,
they are not.
***
I do not mean to imply by these criticisms of the wage and price guideposts
that business and labor should blithely ignore the public interest. On the
contrary, I think labor and management should carefully weigh the public interest
every time they make a major decision affecting wages and prices.
But it seems to me undebatable that lasting assurance of price stability can
come only from the discipline of a free market and from responsible actions by
business and labor leaders acting in an atmosphere generated by sound and impartial
government.
***
Fiscal policy--with government incurring a deficit or running up a surplus--
can be effective in encouraging or restraining the private economy. The shocking
thing is to find an administration headed toward ever larger deficits at a time
when the economy obviously is overheated and runaway inflation of the classic
push-pull variety is more than just a threat.
###