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Executive View by Marshall Loeb: Of Freedom and Inflation

4 minute read
Marshall Loeb

Executive View

The Big Man who wasn’t there at the Camp David hair-down sessions, let alone when the Cabinet-level jobs were handed out, was America’s premier banker, Walter Wriston. His absence was unsurprising if unfortunate because, along with being the most innovative of moneymen, the Citicorp chairman delivers outspoken opinions with a rapier tongue that belies his early career as a State Department diplomat. In a glass house 15 stories above Park Avenue, he sits at a circular desk (the better to gather aides around to chew over ideas) and, eyebrows arched and wisecracks flying, tosses out some sharp-edged stones. His main concern: “I think that we are steadily losing our freedoms.”

Narrow, single-interest groups are preventing the compromises that are essential to democracy, Wriston says. Nobody, not even the President, is empowered to make a tradeoff, to decide that the nation will incur some risks and costs and unpleasantness to build the productive base and acquire the energy that is needed to head off unemployment and prevent the lights from going out.

Because various groups have blocked the projects, the U.S. has built no oil refinery on the East Coast since 1957, no deepwater port that can take a 300,000-ton tanker. Given the power of the many single-issue factions, given the complexity of the restrictions, how can the U.S. ever develop its energy?

The solution, Wriston argues, would be to grant the President and a panel of four or five wise people the absolute authority to suspend all restrictions in order to permit the construction of five to ten huge energy projects. “By limiting the number of projects, we would limit damage to the environment. We have to be prepared to say, ‘The steam shovel starts tomorrow morning, and the snail darter will go the way of all flesh, but the lights won’t go out.—” If, on the other hand, the U.S. remains unwilling to compromise, it will be plagued by no growth.

“The victims will be the latest entrants into the economy, those who have the least job seniority, meaning women and blacks and other minorities. No growth is another way of saying dying.”

Freedom is also being eroded, he contends, because Government guidelines are trying artificially to hold down wages and prices. Wriston has the intriguing idea that those prices and wages represent an essential form of economic speech, that money is a form of information. Thus, the Government is sore at business because it has been the bearer of bad tidings.

“The bad news that business has been reporting is inflation. So we find Government spokesmen telling the people that the real villains in this inflation story are the businessmen who are raising their prices and the labor unions that are raising wages. When any Government tries to eliminate inflation by controlling wages and prices, what it is really doing is asking all of us to suppress the bad news that it has printed too much money. The reason we have inflation is that since 1967 the Government has caused the money supply to grow three times as fast as the goods and services that can be bought with it.”

To a large group of editors, Wriston has criticized the press because “it often remains silent, or sometimes greets with approval the steady infringement of any right that does not involve free speech. One of the great unreported stories of the past 30 years is the steady erosion of individual rights that is turning us into a different kind of country. If we put a floor under wages and a ceiling over prices, a free man cannot long stand erect. Someone has to make it clear that the collision course between Government price and wage controls and personal liberty is inevitable because, in the end, Government allocation of economic resources requires force.” So, he continues, when considering any form of price and wage restrictions, the question should not be “Will it work?” but “How does it affect individual liberty?”

Wriston’s argument overlooks that, rightly or wrongly, many Americans believe that the free market no longer is really free, that in fact it is manipulated not only by Government but also by large private corporations. Also, he ignores that in the battle against inflation, people seem quite willing to sacrifice at least some of their individual liberty. But the danger is that as inflation roars on, they may be willing to sacrifice so much more of it that the Republic could become a totally different kind of society. For Wriston is quite right when he argues that economic freedom is essential to all freedom. As he puts it, “To think that the bell does not toll for academic freedom or freedom of the press if economic freedom is shackled is a dangerous illusion.”

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