by Haberler
[Title Page and Institutional Information]: Title page and organizational overview of the American Enterprise Institute, including its mission, advisory board, and senior staff members in 1971-1972. [Publication Credits, Prefatory Note, and Table of Contents]: Copyright information, a prefatory note explaining the essay's origin from a larger study titled 'Stability and Growth', and the table of contents. [Prologue as an Epilogue: The New Economic Policy of August 15, 1971]: Haberler analyzes the Nixon administration's 1971 New Economic Policy, specifically the 90-day wage and price freeze. He argues that while such freezes might douse inflationary expectations temporarily, they are unsustainable and distort the economy. He contrasts 'Incomes Policy I' (generalized guidelines) with 'Incomes Policy II' (market-strengthening measures favored by Arthur Burns), advocating for the latter to curb union power and eliminate market imperfections. [Introduction and Summary of Conclusions]: The author introduces the distinction between demand-pull and cost-push inflation, asserting that wage push is a modern reality. He defines two types of incomes policy: Type I involves generalized guidelines that often fail or distort markets, while Type II involves structural reforms to restore competition. He concludes that the only effective way to check inflation without high unemployment is to curb the excessive power of labor unions. [Demand-Pull Versus Cost-Push Inflation]: Haberler explores the theoretical differences between demand-pull and cost-push inflation, noting that both require monetary expansion to be sustained. He critiques the view that unions have no power to raise wages, citing the 1933-1937 period as evidence of cost-push during high unemployment. He distinguishes between industrial monopolies (one-shot price effects) and labor unions (continuous upward pressure) and argues that unions generally fail to increase the long-run real income of labor as a whole due to efficiency losses. [Wage Guideposts: Incomes Policy I]: This section critiques 'Incomes Policy I'—the use of generalized wage and price guidelines. Haberler argues that while the target of linking wage increases to productivity is theoretically sound, implementation is impossible without distorting relative wages and necessitating bureaucratic price fixing. He reviews the failure of U.S. guideposts in the 1960s and warns that such policies lead to repressed inflation and economic inefficiency. [Incomes Policy II: Restraining Union Power and Market Reforms]: Haberler details 'Incomes Policy II', which focuses on structural reforms to reduce the monopoly power of unions. Proposed measures include removing legal immunities for unions, repealing or modifying minimum wage laws, ending public subsidies for strikers (welfare/unemployment benefits), and liberalizing imports to increase competition. He also critiques 'excess-wage taxes' and price freezes, arguing they are either ineffective or as damaging as direct controls. [Appendix: The Phillips Curve]: The appendix provides a critical analysis of the Phillips Curve. Haberler discusses the 'trade-off' view versus the 'equilibrium' view (associated with Milton Friedman). He argues that while a short-run trade-off may exist due to money illusion, there is no stable long-run relationship because expectations of inflation eventually cause the curve to shift upward. He concludes that the Phillips Curve is an unstable tool for long-term policy making. [Selected AEI Publications and Bibliography]: A list of American Enterprise Institute publications from 1974, covering national energy studies, balance of payments, private pensions, and Middle East policy.
Title page and organizational overview of the American Enterprise Institute, including its mission, advisory board, and senior staff members in 1971-1972.
Read full textCopyright information, a prefatory note explaining the essay's origin from a larger study titled 'Stability and Growth', and the table of contents.
Read full textHaberler analyzes the Nixon administration's 1971 New Economic Policy, specifically the 90-day wage and price freeze. He argues that while such freezes might douse inflationary expectations temporarily, they are unsustainable and distort the economy. He contrasts 'Incomes Policy I' (generalized guidelines) with 'Incomes Policy II' (market-strengthening measures favored by Arthur Burns), advocating for the latter to curb union power and eliminate market imperfections.
Read full textThe author introduces the distinction between demand-pull and cost-push inflation, asserting that wage push is a modern reality. He defines two types of incomes policy: Type I involves generalized guidelines that often fail or distort markets, while Type II involves structural reforms to restore competition. He concludes that the only effective way to check inflation without high unemployment is to curb the excessive power of labor unions.
Read full textHaberler explores the theoretical differences between demand-pull and cost-push inflation, noting that both require monetary expansion to be sustained. He critiques the view that unions have no power to raise wages, citing the 1933-1937 period as evidence of cost-push during high unemployment. He distinguishes between industrial monopolies (one-shot price effects) and labor unions (continuous upward pressure) and argues that unions generally fail to increase the long-run real income of labor as a whole due to efficiency losses.
Read full textThis section critiques 'Incomes Policy I'—the use of generalized wage and price guidelines. Haberler argues that while the target of linking wage increases to productivity is theoretically sound, implementation is impossible without distorting relative wages and necessitating bureaucratic price fixing. He reviews the failure of U.S. guideposts in the 1960s and warns that such policies lead to repressed inflation and economic inefficiency.
Read full textHaberler details 'Incomes Policy II', which focuses on structural reforms to reduce the monopoly power of unions. Proposed measures include removing legal immunities for unions, repealing or modifying minimum wage laws, ending public subsidies for strikers (welfare/unemployment benefits), and liberalizing imports to increase competition. He also critiques 'excess-wage taxes' and price freezes, arguing they are either ineffective or as damaging as direct controls.
Read full textThe appendix provides a critical analysis of the Phillips Curve. Haberler discusses the 'trade-off' view versus the 'equilibrium' view (associated with Milton Friedman). He argues that while a short-run trade-off may exist due to money illusion, there is no stable long-run relationship because expectations of inflation eventually cause the curve to shift upward. He concludes that the Phillips Curve is an unstable tool for long-term policy making.
Read full textA list of American Enterprise Institute publications from 1974, covering national energy studies, balance of payments, private pensions, and Middle East policy.
Read full text