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Eighty-four gears of editorial freedom
Edited and managed by students at the University of Michigan
i
-In la iond- sum :relie
By ALAN RESNICK
Tuesday, October 1, 1974
News Phone: 764-0552
420 Maynard St., Ann Arbor, Mi. 48104
Riehard Nixon, go home
ONE OF THE CRUELEST -legacies
of the Nixon presidency is that
despite his 1962 avowal, the man is
still in the public eye to be kicked
around. Anyone else so monumentally
disgraced would have started to look
for a house in the South Seas, re-
fused to talk to reporters for the next
20 years, and only emerged after he
was reasonably sure that half the
population no longer wished to see
him behind bars.
But not Richard Nixon. Apparently
this unfathomably twisted and oddly
driven man prefers anything - even
clear public scorn and abuse - to ob-
scurity. Something in his darkly tor-
mented soul refuses to accept that
power and glory are no longer his.
Two particularly outrageous exam-
ples of Nixon's passion for visibility
come immediately to mind. One con-
cerns the pardon. Here Nixon admit-
ted guilt for only "mistakes in judge-
ment" and not criminal behavior,
for which he presumably needed the
pardon. He clearly could have accept-
ed the pardon without issuing a
statement and thanked his lucky
stars he wasn't in prison making lit-
tle rocks out of big ones.
A NGRY AS I WAS about the par-
don, my wrath was increased by
another self-serving bit of drivel
from this despised charlatan. His out-
break of phlebitis again cast doubt
on his credibility. Normally one would
ABomb: w
WHEN INDIA FIRST announced the
development of an atom bomb,
the official reaction all over the
world was "horrors." When we, and
even when the Russians, had the
bomb, it was considered safe be-
cause hopefully we (and even they),
would have sense enough to refrain
from using it unnecessarily. After all,
who knows when some power-crazed
leader in one of the lesser nuclear
powers -- they still don't have as
many as we do - decides to show the
world what his or her atom bomb
can do.
What we should really be concern-
ed with is the relative ease with
which our thousands of nuclear
bombs, stored all over the world,
could be stolen and used by terror-
ist groups or guerrilla organizations.
The danger is two-fold. First, who
knows what any of these groups
might do with an A-bomb once they
got hold of it? Also, what is there
to prevent a minor allied nation from
forcing outnumbered American
troops to flea its territory, leaving nu-
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Zam ms.A
accept the excuse of sickness as valid
and reasonable enough. But not with
Richard Nixon. He had carefully cul-
tivated rumors that he was deeply
depressed in order to gain the par-
don. The clear hint was that if he
was not let off the hook, he would
soon take his own life. Do you want
that on your national conscience?
Yet a story appearing in the New
York Times the week before the par-
don quoted visitors as saying he
looked fine.
So I find myself dubious about his
actual medical condition. It's true,
phlebitis is potentially fatal, and I
can't in honesty say I want him to
die for lack of adequate care. But
surely the state of the medical sci-
ences is such that some system of
treatment could be devised that
would permit Nixon to testify at the
trials in which he is scheduled to
appear as a witness and not suffer
adverse affects.
IF THE PHLEBITIS incident is not
merely an elaborate ruse to sub-
vert justice once again, then there's
no reason to force his testimony. The
spectacle of Nixon collapsing in the
witness stand is not one I wish to
see. But in the light of Nixon's re-
peated tendency to resort to mendac-
ity, it's hard to believe anything he
says, ever. And that's not fair. Why
won't he just go away?
-STEPHEN SELBST
Editor's note: The following
analysis is the first in a series
of contrasting viewpoints on
inflation and the economic
summitnwhich will appear on
the Editorial Page. Readers'
responses in the form of arti-
cles or letters are welcomed.
NOT SINCE Barnum and Bad-
ey have the American peo-
ple witnessed a three-ring cir-
cus like the economic summit
held last weekend. The captains
of labor, industry,heconomics
and politics converged on the
Washington Hilton, each giving
their advice in five minutes or
less on how to solve the prob-
lem of inflation.
The summit was not more
than a recap of the "mini-sum-
mits" held during the past
month - those were useful and
rendered the major conference
redundant and unnecessary.
Nothing mentioned over t h e
weekend represented any view-
point or detail not already
known. In economic terms, the
summit was not worth the cost
of the participants' airfares.
Rober Weingarten, publisner
of Financial World, recently
commented that "economics is
a theoretical science - the
practical application of wiich
is called politics." This w a s
dramatically illustrated during
thesconference as industry re-
presentatives suggested cuts in
government spending, yet offer-
ed vital reasons why th'eir
group should be exempt from
the budget cuts. One must re-
member that statistics are by
no means objective in n iture,
and as the old line goes - "sta-
tistics have shown that sta istic-
ians are the nicest people in the
world."
ACCORDING to economist
Paul Samuelson, inflation is
simply defined as "a time of
generally rising prices for
goods and factors of produc-
tion." The causes, however, are
AP Photo
Secretary of Agriculture Earl Butz, left, and William Seidmmn, director of the economic sum-
mit on inflation, listen to critics' testmony at the conference.
to take, the 3.9 per cent incre'ise
in wholesale prices in August
along with the 7.6 per cent in-
crease in wholesale food Prices
which will be felt in the months
to come will make pst ptc.es
much easier to stomach.
Since early 1973, the pr i of
Middle East crude oil has ir:-
creased about 400 per ent The
effect of this has been a ratid
increase in fuel costs though-
out the world. Last veek in De-
o-fold danger'
clear arms behind.
W1HAT ARE THE CHANCES of this
happening? The official position
of the government is that there real-j
ly is no problem; the electronic armsr
and the troops that guard the bombs
should enable the United States to
resist any such attempt.
Gene LaRogue, a retired admiral
who is presently director of the Cen-
ter for Defense Information, thinks
otherwise. He recently told a Con-{
gressional Committee that many of
the bombs are loosely guarded, and
that it would be fairly simple for ter-
rorists to seize one and escape with
it by helicopter.
NUCLEAR WEAPONS under the cus-
tody of the United States are
stored in Spain, Korea and Asia and
aboard aircraft carriers and other
Navy surface vessels. All these wea-
pons are under the control of the De-
partment of Defense, and according
to a 1974 departmental directive,
there are specific criteria on how
the weapons are to be stored and pro-
tected. This protective system was
supposedly established to guarantee
the safe-keeping of the bombs from
unwarranted use by the nations they
are stored in. Maybe so, but the safe-
guards were not set up to be tested
by fanatics who care little about the
cost or results of a raid in lives:
theirs or any others.
-SUE WILHELM
MC
" o-<
- -t
In old-time economics, monetary and fiscal
policies had a definite cause-effect relation-
ship with inflation. As Galbraith suggests,
the "old-time religion" must be abandoned.
In fact, many of the old theories no longer
seem to hold.'
the decrease in profits from the
mandatory lowering of dmesi-ic
ol prices. In this step is not
taken, taxcs on 'heir i'rofits
l hauld be drastically increased.
This tax increase could be re-
scinded only by an equay dras-
tic increase in their amount of
domestic oil explor'auion ar d
drilling, thereby praviding a
forced incentive. Finally, no
f mily should be allowed to
own a second car that Its less
than 20 miles to the gal'on.
FOR THE most par:, the in-
fl"ion-stiflingecom ea on
ro uce;=d by the u-rit t'ealt
with demand inflatin, S'oce
the present problems oncer
supply more than d -man , the
recommendations do not deal
effectively with them. In the
old-time economics, mi-neary
and fiscal policies had a defin-
ite cause-effect relati,)riship with
inflation.
As Galbraith su1t,4the
"ld-time religion' nK Ie
abandoned. In fact aln- of the
old theori s no longer seem to
hold. The Phillips curve, for
e lesho that as inffi -,11
iacreases,1employment wrcces
e-. Yet in reali;ty nour eploy -
mient rate in dlecreAsig while
inflation is increasing .( ld-
time economics also states that
prices and wages rase durirg
inflation and decrease during re-
cessron. -e are curre ily i a
recessionyet prices an! wages
are rising.
(ld-time economics
tha t thecre IS a dlirectly p'rav.r-
tinal relationship beween de-
mand and price.'\s a r'Ailt,
when demand for cars wa; in-
creasing, G;eneral Mors r. sod
its prices, also. -l .v ver, l.'st
year the demand for cars di op-
ped and GM increased car p.i-
es an average of $40.
THIS IS AN intern,>ing de-
velopment, as any economics
student will attest. When de-
mand increases, prices irrease,
and when demand decre0esV
prices continue to rise,
The old cures, then, rray not
be as efficient in conraling in-
flation as they were once
thought to be.
trols, Galbraith and Serator
Mike Mansfield (D-Mont.) two
major proponents of such a sys-
tern. Most business leaders op-
pse controls because it hin-
ders their ability to orofit at
the expense of the 'Xmerican
public.
Solomon large, speaking fLr
consumers in an honest and
straightforward sneech, u I d
the President tnat "many con-
samrers are economic ignorants"
whlo do not understand economic
-policies and know only that they
cannot afford the increase in
prices. The poor, the aged, and
those on fixed incomes are rot
conicerned with supply and de-
mand graphs but with prices
that make it nearly unbearable
for them to exist. Only a freeze
1 all components of the cy-
cle will remedy this.
Many economists opoose nian-
datory controls on the grounds
that they interfere with the free
mnrket system. It is rio con-
trols that interfere with t h e
system, but rather big c:rpora-
tions.
IONOPOLIES and olig }polies
oaerate in collusion with one
another and are the cause for
the distortion of our "free mar-
ket" structure. If, indeed, a
free market system existe'l, he
need for. an economic iummit
would not even exist.
it is this imperfect comnaeti-
ti;n that distorts the normal
equilibrium between consumer
demands and supply. When GM
decided to raise the price of its
cars by $500, the ebjet:0ens of
government and consumers lead
to a rollback of $54 - hardlly an
equilibrium between con.mi~xier
and producer. In the words of
Galbraith, "Controls only sub-
stitute public price anI wage
fixing for private price and
wage fixing.'
When asked their opinion on
controls, conservative econom-
ists comment that demand will
otoace supply and shortages
will occur. But with industrial
products, controls act not as a
prelude to shortages, but as a
means of increasing efficiency.
As an example, if Mobil gar o-
far more complex. The first
cause for our current inflation
can be traced back to the John-
son-Vietnam years. As always,
a wartime economy necessita-
tes increased production a n d
employment. This, of course,
leads to an overall increase in
demand for goods and services,
traditionally the reason for high-
er prices.
The problems created by over-
expansion of industry were ex-
acerbated by the absence of
wartime wage and price con-
trols. As prices increased wag-
es followed suit which, in turn,
led to a further increase in
prices. This wage-price spiral
has intensified and continues to
be a menace to our economy.
Second, the demand for bank
loans has continued at high lev-
els. When thisdmoney is spent
it increases demand, pulling
prices even higher. Third, the
government has been adling
to the total purchasing power of
the economy. In other words,
government policy has been
more inflationary than anti-in-
flationary.
THE FOURTH factor is more
psychological than economic.
John Kenneth Galbraith h a s
stated that mood is often more
important than the ra-e of in-
terest or supply of credit. The
current mood in thernation is
one of fear that inflation will
continue. Asta result, the de-
cision is often made to invest
in facilities and inventory to-
day rather than waitng for to-
mnorrow's higher costs. T h i s
means more current spending,
which leads to increased de-
mand, again resulting in higher
prices.
While these are all factors in
our current inflation, the ob-
vious question that follows is:
Why didn't these same factors,
all of which existed for the past
several years, lead to double-
digit inflation before this year?
The reason, which also account-
ed for the major shortcoming of
the summit, is the failire to see
that our current intlationary
rate is not due to a problem
>f excessive demand, but one
>f decreased supply.
THE PAST vear has been
troit, President Ford warned
that "such exorbitant prices can
distort the -world economy, run
the risk of worldwide d1pres-
sion, and threaten the break-
down of world order and safe-
ty ."
THIS STATEMENT is by no
means political jargon, and is
an accurate prediction of the
future of the economies !f mtoist
nations. The World Bank esti-
mates that the Orgauzation of
Petroleum Exporting Count iies
(OPEC) could accumulate x12
trillion by 1985. In comparison,
the international reserves of
foreign exchange and gold own-
ed by the U.S. iow amount
to $14 billion.
The skyrocketing cost of oil
is not only a major cause of
inflation, but has resulted in
balance-of-payments instanility.
Nations with weak econ4)iies
are facing a breakdown of their
economic institutions, and a r e
unable to pay for oil. The high
cost of fertilizers and o:timer
petrochemicals will be a canse
for starvation in countries like
India, where governments can
no longer afford the cost of
importing such products.
THE OPEC countries h a v e
been blessed with a scar:ce and
vital resource. They have every
right to build their econom1'es
for both the present and the fu-
ture. They should u-e their
funds to raise the welfare of
their people to a standard as
high as anywhere in the world.
They do not, however, have
the rightdto threaten other coun-
tries with economic collapse, to
push the world into a possible
global depression, or t) muse
starvation out of greed.
What is needed is dntenified
international cooperation ainlg
the oil consuming nations. The
news that oil representa:i v5s of
the U.S., Britain, France, West
Germany, and Japan met last
weekend is a positive sign that
the major Western powe.*s may
be forming an organization of
importing countries. O n I y
through coordinated nnd serieus
action can oil prices by brooght
back to reasonable levels that
will not choke the financial in-
stitutions of the world to death.
WHILE the most promising
ion against price controls. In
such a case, a national oil com-
pany should be established to
take over their operations in
the interest of the public.
In terms of agricultural pro-
ducts, shortages may occur.
The government should be pre-
pared to subsidize ag:icultural
producers who are ruinning their
operations efficiently, but whose
costs are too high to be met by
the controlled price. In regard
to the source of funds, it would
be more advantageous to sub-
sidize agricultural producers in
the interest'of stable prices than
to treat the Russians to a free
space ride or to 'support cor-
rupt dictators.
In addition to wage and price
controls, Ford must consider the
possibility of price roll-backs to
at least the level of last sum-
mer if not further back. When-
ever the possibility of controls
exists, corporations begin a mad
rush to raise their prices be-
fore controls are ordered.
THE SUMMIT addressed it-
self well tro the problem of the
inequities (f inflation. The poor
are less able to cope with in-
flation, basically because those
goods which are consumed the
most - food and fuel - have in-
creased in price the most.
While the unemploymeat rate
among blacks is 10 per cent, it
is estimated that in some urban
neighborhoods unemployment is
running as high as 20 to 30 per
cent.
Such inequities must not be
allowed to continue, arnii many
remedies suggested at the sam-
mit were commendable.Tax re-
lief for the poor and those on
fixed incomes is being consid-
ered by the Ford Administra-
tion, along with an increase in
public employment. In addi-
tion to lowering taxes fo' md-
die and lower income groups, in-
creased taxes on the wealthy
should be seriously cc-sidered
to equalize the economic turd-
en.
THE ISSUE of high versus
low interest rates also occaion-
ed heated debate. While high
interest rates do contribute to
high prices, any return to easy
money without controls would
send prices tip through t h e
clouds.
An alternative policy would
be to stimulate those industries
that are in most serious trouble
or that are productive. On the
other hand, non-productive in
dustries would be cracked down
on. Such a policy would help
the sick housing iniuisc=^y, and
would act as an incentive to
non-productive industries to in-
crease their efficiency or be in-
eligible for funds.
Ford has promised *i "coher-
ent and comprehensive p r o-
gram" to combat infision with-
in 10 days. In addition, he an-
nounced the creation of an Eco-
nomic Policy Board. If he
chooses to follow the e.:onomic
policies of the Nixon Admin-
istration, not only will inflation
worsen, but his political future
after 1976 will be quite dub-
ious. Only by taking bold steps
can the president win the war
against "public enemy number
one."
Letters to The T)'ilv hovild
ha -mnidtha n .i.An
" w
"
1
t r
0
7It
f r~*-
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tc
10
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"Majy ecoi;oin isis oppose inamdatory Con-
troll on the gromuds that they interfere with
the free mrkt sys eme. It is not controls
that interfere wit/ the system, but ratter big
Coirportin. Monopolies and oligopolies op-
erate in colhu;ioni with one another and are
the cause fo r the distortion of our ''free
S < r; i i ? i i re .' ..<
No one in America is pre-
pared to absorb a loss in the
name of patriotism. The grain
producer passes high higher
pries along to the meat pro-
duce' ,who then passes the
hiher cost along to the market-
place, which then passes ie
higher price along to the con-
sumer. The consumer is also
line is frozen at 58 cents a gal-
lon and OPEC increases the
price of its oil by 10 per cert,
it is hard to conceive that Mobil
will not deliver its proJa t o
market. It seems to ma±e more
economic sense to fell - ismA ne
while making 10 per cent Itess
per gallon than not 'i .sell it at
all