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May 18, 1979 - Image 14

Resource type:
Michigan Daily, 1979-05-18

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Page 14-Friday, May 18, 1979-The Michigan Daily
Kahn predicts decline in standard of living

WASHINGTON (AP) - Americans
are going to have to learn to do with
less, Alfred Kahn, the nation's chief in-
flation fighter, said yesterday. .
"The sum total of the demands we
are placing on this economy of
ours ... somehow adds up to more
than the economy is capable of sup-
plying," Kahn told a meeting of in-
vestment counselors.
The solution is restraint, not only on
wages and prices but also on the
American expectation that things
always must get bigger and better, said
Kahn, chairman of the Council on Wage
and Price Stability.
"THERE'S NO way of avoiding a
decline in our average standard of
living," he asserted.
Kahn told the Investment Company
Institute that Americans have been
demanding larger and better-equipped
homes, beef in the face of a cattle shor-
tage and more gasoline despite the
Mideast cutbacks and price increases.
While efforts to increase wages may,
in the short run, allow Americans to
keep up with their buying, it will in the
long run cost the nation in more in-
flation, he said.
"WE WILL pay it in one way or
another," he added.
The peptalk on the psychology of in-
flation came as the government
released new statistics on personal in-
come and factory operations - both
showing some cooling in the nation's
The Commerce Department reported
that personal income rose only $6

billion in April, compared with $22.5
billion in March and $14.3 billion in
The small April increase of 0.3 per
cent was blamed in part on work
disruptions caused by floods and tor-
nadoes and strikes involving United
Airlines, the Teamsters and steel
THE INCREASE was not nearly
enough to keep pace with inflation,
which has risen to an annual rate of
well over 10per cent.
And the Federal Reserve Board
reported that factories operated at 84.9
per cent of capacity last month, down
from 86.1 per cent the month before. It
was the lowest level since July,
statistics showed.

Weather and strikes again were a
factor, government analysts said.
THE GOVERNMENT had reported
on Wednesday that industrial produc-
tion dropped one per cent in April, the
largest decline since 1975, and that
housing starts were off 2.1 per cent.
All the statistics contribute to the
belief among some economists that the
economy is due for a slowdown or mild
recession in the second half of the year.
"These are more cautionary signs,"
said Chris Probyn, an economist with a
private research group, Data Resour-
ces Inc.

AN ECONOMIC slowdown would not
be unwelcomed by Kahn, who repeated
earlier statements that the economy
remains overheated.
The wage and price guidelines, which
Kahn oversees, are "the least impor-
tant part" of President Carter's anti-in-
flation program and need a slower
economy in which to work, he says.
The more important part, he said, is
the administration's policy of tighter
monetary and fiscal restraint. If
"patiently applied, not with a crash,"
these measures should help slow the
economy and allow the guidelines to
work at checking inflation.

Hair dryers-to be replaced

WASHINGTON (AP)-Under govern-
ment pressue, the hair dryer industry
said yesterday it will offer to modify or
replace millions of hair dryers con-
taining asbestos.
The plans presented to the Consumer
Product Safety Commission came from
the 11 manufacturers and retailers of
hair dryers that the agency staff had
said presented an unreasonable cancer
risk to consumers.
The commission later voted
unanimously to accept the plans, a step
that eliminates the possibility of com-
mission legal action against the com-

"THERE'S BEEN such worry on the
part of consumers. Our main worry is
to alleviate that," commission head
Susan King said. She said "a vast num-
ber of consumers" have called or writ-
ten the agency to ask if their hair
dryers contain asbestos, which has
been found to cause cancer if breathed
by humans.
The agency staff has estimated the
number of asbestos-containing hand-
held hair dryers at 12.5 million.
Commission staffer Catherine Cook
said the companies offered the plans in

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negotiations with federal officials in the
hope of ending the controversy over the
safety of hair dryers. "It will give them
a sense of finality, a sense of certain-
ty," she said.
THE COMMISSION turned its atten-
tion to finding out about asbestos con-
tained in other products used by con-
"There may be other household
products presenting similar
problems," the commission staff said,
recommending efforts to find out about
A little-noticed consultant's report
delivered to the commission last year
identified more than 100 types of
products that may contain asbestos.
"Some of those products are in almost
every home in America," Com-
missioner Sam Zagoria said.
"A HOUSEWIFE wants to know
when she uses a pot holder if over the
years there will be any asbestos
released. Now that the red flag of hair
dryersdhas been so thoroughly waved
around, we need to give people a sense
of security," Zagoria said.
The commissioners authorized staf-
fers to begin work to elicit information
on products other than hand-held hair
dryers that contain asbestos. The staff
also was authorized to write draft or-
ders to manufacturers of asbestos
paper asking about known consumer
product uses and manufacturers that
use the paper.
"Asbestos is a ubiquitous product in
the environment and in consumer
products," King said.
THE 11 COMPANIES that offered
plans to repair or replace and
sometimes to offer refunds for con-
sumers who return asbestos-containing
hair dryers are Conair Corp.; General
Electric Corp.; The Gillette Co.;
Hamilton Beach Division of Scovill
Manufacturing Co.; J.C. Penney Co.,
Inc.; Korvettes Inc.; Montgomery
Ward & Co.; North American Philips
Corp.; Norelco; Schick, Inc.; Sears,
Roebuck & Co. and Sunbeam Corp.
All the companies except Korvettes
have marketed hair dryers nationally.
That chain is limited to some cities,
mainly in the East and North Central
Industry representatives have said
they are not convinced their hair dryers
present any health hazard. But, facing
threatened legal action by the com-
mission and many concerned
customers, they agreed to negotiate
with the commission staff over ways of
getting the dryers back.

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