July 15, 1970

Need Production To Stop Inflation

The cure for inflation is simple!  Produce more for less.

Unfortunately this advice is akin to that for making money in the stock market (Buy low, sell high) or increasing your batting average (Hit 'em where they ain't).

Easier said than done.

Yet, there is a hard core of logic in such dictums that compels us to try them.

In fighting inflation, President Richard Nixon is on solid ground with appointment of a Productivity Commission which is to

1. suggest ways to boost our national output, and
2. issue "inflation alerts" when prices and wages are about to move ahead of the production index.

Never was so much expected of so few.

By coincidence - or was it - the commission started work on the day the United Automobile Workers launched its 1970 drive for a "substantial" wage increase.  The present UAW contract with the Big Three automakers guarantees a 26-cent per hour increase.  Leonard Woodcock, president of the huge labor union makes it clear this amount is just openers.

Woodcock promises a contract "far superior" to that recently won by United Rubber Workers and touted by the latter union as the "best ever."

The UAW approach has already cut out a big job of work for the Productivity Commission.  If the Nixon appointees know what they are doing we can expect an "alert" within the week.

Woodcock's method of putting the Big Three on notice was most curious.  He invited the auto negotiators to spend the day at the posh retreat being built by the union at Black Lake, Michigan.

A complex of lodge-type rooms, meeting halls and recreation facilities has cost $18 million so far.  Extreme economy will have to be exercised to finish the project for another $5 million.

It is hard to understand just how this display of affluence is supposed to persuade the auto negotiators that the union needs "a living wage."

My guess is that Woodcock will try to put the arm on the companies to bail out the grandiose retreat begun by the late Walter Reuther.  If, tucked away into the final settlement package, is a penny or so for Black Lake luxury, remember you read it here first.

The union is on hard times, to be sure.  Woodcock says the union's general fund has been operating at a deficit and is in an "almost desperate state."

He declares that the union was "$4 million in the red in June, and July could be worse."

To make up the loss, he proposes to dip into the $112 million strike fund, make "massive staff cuts," reduce travel to a minimum, and turn the screws on the printer.

Presumably, all this qualifies Woodcock to speak first hand about inflation.

"Our people are hurting financially very badly," he told a regional conference of union leaders in Akron recently.  "From the first quarter of 1969 to the first quarter of 1970, they are 7.4 percent worse off - primarily because of the drop in overtime.

"We had seven straight years of prosperity and lots of overtime.  And, of course, the budgetary levels of the workers were rising all the time.

"But now all they have are the debts incurred during that time," Woodcock concluded.

He said he planned to bring the auto manufacturers into line with the agricultural implement companies which last year granted a sweetheart contract to the UAW.

"The disastrous economic situation which the Nixon administration has led up down the path to has hurt the agriculture implement industry deeply.  And the farmers who buy their products are in increasing distress, too," he said.

I don't fault the UAW for going out for more money for its members.  All of us are pinched for money these days, and we must feed our own family and pay our own mortgage first.

At some time or other, however, the corporate worker has got to be convinced that prosperity comes only from regular-time production.  Overtime is fools' gold.  It glitters, but it is paid at an abnormally high rate and is pure inflation.  Overtime eats away at normal production.

Subsidies paid for non-production of crops is appreciated by the hard-pressed farmer but there is no real gain - indeed, a net loss in the form of inflation.

The UAW, URW, farmers and many other well organized and/or vital groups have been successful for two decades in wresting a larger slice of economic pie for their members.  Yet the pie doesn't get much bigger.

Those not so well muscled - pensioners, small businesses, municipal unions - have been robbed.

The cause of inflation rests squarely on the shoulders of big, monopoly unions - consequently the cure of inflation rests with them.

No one begrudges the worker more money - if the increase comes from increased production.

Prosperity comes with an excess of goods over labor.

Big labor will benefit most from big production.

And surely Woodcock et al will not begrudge the benefits of "disinflation" that will seep down to all the rest of us.

Author: Lindsey Williams