The Great Rip-off
"Well, what are you going to do about it?"- Boss Tweed
You DON'T have to be an economist to know about the debilitating effects of inflation. The housewife at the grocery store, the small businessman scrounging for funds for the purchase of inventories, the parents trying to put their children through Ivy League schools - in short, the producers and consumers of almost all goods and services in this country have watched helplessly as the purchasing power of their dollars has shrunk at an ever-increasing rate. The cost of living, as measured by the Consumer Price Index, rose 8.8 per cent in 1973 and will climb another 12 to 14 per cent before the calendar is closed on 1974. In the meantime, President Ford's much-ballyhooed economic summit conference collapses into factional bickering and his new economic proposals, including a five per cent surcharge on middle and upper income taxpayers are labelled ineffective by leading economists and face stiff resistance from the Democratic Congress.
Consider the following effects of the great rip-off.
Inflation is costing American taxpayers more than $25 billion a year in higher tax bills, according to economist Milton Friedman. This includes pushing people up into higher tax brackets while their real income remains the same and the taxing of "paper" capital gains that are not gains at all when the rate of inflation is taken into consideration.
The price tag on a Dartmouth undergraduate education is approaching $25,000 when four years of tuition, room, board and books are added up. And, if We experience a future inflation rate of seven per cent, the price of a Dartmouth education - and most other prices - will dou-ble in ten years.
Inflation has cost savers and holders of life insurance nearly one trillion dollars since 1939, according to the Institute for Economic Research. That's one followed by 12 zeroes - and the amount is going up every day.
Oil-consuming nations will pay more than $62 billion to the Arab oil-producing nations and Iran in 1974 for the same amount of oil they purchased for just $15 billion in 1973. The fourfold increase in crude oil prices has inevitably been passed onto the consumer in the form of sharply higher oil and gas prices. Gasoline prices shot up than 50 per cent in the past year alone.
But the effects of inflation go far beyond increasing prices and destroying the value of savings. Double-digit inflation has sent jitters through the Wall Street community, resulting in the sharpest decline in stock prices since the Great Depression. The remark by Alan Greenspan, chairman of the President's Council of Economic Advisers, that Wall Street is the worst victim of inflation, although impolitic, may not have been far from the mark.
The Dow-Jones Industrial Average plunged below the 600 mark for the first time in 12 years last month. In January of 1973, the Dow stood at 1,051.
The Ford Foundation announced that its assets had declined in market value by over one third, skidding to less than $2 billion from over $3 billion two years ago. As a result, the foundation is considering halving all of its grants; its president speaks bleakly of dissolution.
Dartmouth College released figures indicating that its endowment had lost more than $35 million in market value in the last year and a half. The endowment, $170 million in 1973, now stands at less than $135 million.
So President Ford knows that there's a lot more than his political future at stake when he exhorts the American people to "Whip Inflation Now." But the President is something of a Johnny-come-lately in the area of inflation as far as Robert F. Weinig '25 is concerned. A retired businessman living in Naples, Florida, Weinig has been hammering away at the subject since early last spring when he organized a symposium in his community to educate the public at large on the dangers of galloping inflation. Now he's devoting much of his energy to forming a nationwide organization called Citizen Inflation Fighters that will work to promote a "sound total anti-inflation program.
CITIZEN Inflation Fighters aims to spread understanding of the causes and effects of inflation and to spur the public to do something about it. "Our basic plan," says Weinig, "is one of grass roots public education in the causes, effects, and corrective requirements needed to stop inflation, together with personal public participation which is so vital to bring about the corrections." Weinig plans a three-pronged program to educate the public. It includes lectures in layman's language to organized groups in every community, follow-up symposia, and lastly, "town meetings on inflation using national and local television and radio." The town-meetings-of-the-air will have a telethon format, with individuals asking questions of panelists and reporting on personal anti-inflation actions that reduce the cost of living.
Specifically, Weinig and his group call for: reduced government spending with annually balanced budgets at every level of government; non-inflationary control of money and credit by the Federal Reserve System, wage and salary increases related to attained increases in productivity; a foreign policy designed to end the importation of inflation; personally disciplined purchase of non-essentials to avoid excessive private debt; and personal conservation through the most efficient use of all natural resources.
Weinig realizes the magnitude of his undertaking is staggering, but he argues that this is precisely the reason that it will succeed. "We need a total anti-inflationary program," he stresses. "Monetary actions or fiscal actions alone won't solve the problem." The former general manager of a Zenith Radio Corporation division concedes that there will be some bad side-effects from the war on inflation, but he says that the federal government can combat them. If unemployment climbs and the economy stagnates, he proposes that the government institute "efficient public works programs, and I stress efficient."
Weinig and his fellow inflation fighters believe that President Ford is on the right track in attempting to combat inflation and in labeling it "Public Enemy Number One." But he feels that the President's new program does not get at the root cause of inflation - "inefficiency in government." "Ford's idea was right. We have to bite the bullet on inflation now, once and for all. But I don't think we're biting hard enough. As one writer for The Wall Street Journal put it, we're really biting the marsh-mallow."
As PART of 'his crusade, Weinig has had correspondence with a large number of public and private officials. (I'm a terrible typist," he laments. "I spend most of my day pecking away at the old typewriter.") But his letters have brought results. From Arch N. Booth, president of the U.S. Chamber of Commerce, came the following en-dorsement: "You are right. We need an enormous amount of person-to-person effort throughout the United States" to "bring inflation under control ... Keep up the fine work." Weinig has also received a letter from Senator Lawton Chiles (D., Fla.) praising his ability in the economic field: "It is definitely going to take some new approaches, non-partisan motivations, and keen insight into the inflation problem before any kind of single approach can be agreed upon." And a recent appeal to fellow alumnus William Seidman '43, President Ford's most trusted economic adviser, brought Weinig a meeting with White House anti-inflation coordinators last month.
Weinig's two major problems when he began were a lack of publicity and a lack of money. He's doing quite a job at alleviating the former by persistently badgering newspaper and magazine editors and by inviting members of the press to all of his speeches and symposia. "It's a timely subject and editors are quick to respond," he explains. "We got 77 column inches of publicity out of a speech to the Rotary in Littleton, N.H." Now he's embarked on a major fund-raising drive and hopes to tap corporate and public foundations for funding for Citizen Inflation Fighters. "They've got a lot at stake here," says Weinig, suggesting a hope that they will contribute generously.
"Of course," concedes the energetic Weinig, "fighting inflation is easier said than done. But I had a motto when I was in business that applies to the current situation: 'Don't say it can't be done. Do it!' "
In the 1870s Boss Tweed and Tammany, here exposed in Thomas Nast's famous cartoon, blithely took the public for millions Now, in the 1970s, there is another culprit, even more elusive than the Tweed Ring and of vastly more ferocious appetite.
Well, what are you going todo about it? Get moresleep, as the Presidentsuggests? Take a cut insalary? Join the grass-rootsInflation Fighters? Driveless? Cut governmentspending? Cut personalspending? Wear a WINbutton? The AlumniMagazine will publish thebest solutions - withcommentary by residenteconomists - in anupcoming issue. Send usyour ideas.
