The attention being given to the unemployment figure is the most concentrated since the approach, by Henry Aaron, to a new world record as a home run hitter. Every day, the figure inches up. And we are training ourselves to say that when it hits 7 per cent, a drastic change will occur in economic policy. At that point, the pundits are saying, we will reflate – giving to this operation precedence over curbing inflation.
Mr. Milton Friedman, the wise and learned economist, made recently a throwaway observation, to which I think insufficient attention has been paid. It is that for perhaps the first time the number of people in America who stand to be hurt by inflation greatly exceeds the number who stand to be hurt by anti-inflationary measures. That being so, it would appear that the majority would work their way on the minority. And that anti-inflationary measures would continue to prevail, over against inflationary measures. That is the political logic of the observation, but it is unsafe to predict that that which is politically logical is that which will happen.
For one thing, there is a lack of common understanding. If – let us use some raw figures – it damages strategically 80 per cent of the American people to do something which will bring tactical relief to 20 per cent of the American people – then one needs to inquire exactly into the nature, on the one hand, of the relief for the minority, and the sacrifice of the majority. Using such Benthamite specifications, the pleasure-pain principle would suggest that it obviously hurts the middle class less to suffer a 10 per cent erosion in their savings by more inflation than it hurts the lower class to suffer unemployment.
But that is the easy formulation, most popularly resorted to by demagogic politicians and socialist doctrinaires. The tough-minded contemporary analyst will insist on a closer specification of the pains and the pleasures involved.
For instance: unemployment today is not by any means the same thing as unemployment in the 1920s, or even in the 1930s. Unemployment once upon a time meant a close brush with extreme physical hardship. It could mean hunger, even starvation; the tota1 neglect of the family; life without necessary medical aid; without shelter.
As a practical matter, the unemployment we have today means less than that. There is a variety of relief, coming in from federal, state, and local organizations, covering food, shelter, medicine; even clothing. Granted, the longer one is unemployed, the more attenuated the relief, depending on the state one lives in. On the other hand, it is also true that one can find, without looking very hard, hardy specimens of Americans who have been unemployed for years, and look not that much worse for the experience. It is also true that every issue of every newspaper offers employment of various kinds, day after day, to those willing to do the less attractive work of the society: the menial work.
All the resources of national sobriety are greatly needed now.
At the other end of the picture, the erosion of 10 per cent, say, in the buying power of the middle class is not merely a one-time erosion of its savings. It must be viewed as the refranchising of a mechanism which cannot be aborted merely by switching gears. It is a process that does more than deduct 10 per cent from the purchasing power of a dollar. It influences myriad decisions of huge strategic consequence. Mr. Alan Greenspan, chairman of the Council of Economic Advisers to the President, has said that if we reflate within the next year, it may require twenty years before economic equilibrium is restabilized.
The new Congress is raring to go, and when that figure of 7 per cent unemployed is reached, we are likely to see – or, better, to be overrun by – a huge splurge in Washington, aimed at reducing that figure. All the resources of national sobriety are greatly needed now: to devise practical means of helping the 7 per cent, without institutionalizing that inflation that cost them their jobs in the first place. The wonder of it is that we have at this odd and crucial moment in American history probably the best oriented tight circle of men who ever held influence and power around the Executive. A conservative President, surrounded by tough economic conservative advisers. Greenspan, Simon, and Burns. If they cannot publicize the case for sobriety, it is unlikely anyone else ever can; and possible that no one will ever again have the opportunity.