Evening star., 1946-11-13
Three Moves Slated
To Discourage Strikes
American Economy Now Faces
Period of Adjustment

OHiSSOusuSSSA SAssNGS
American Economy Now Faces
Period of Adjustment
By Dauid Laurence
Three major influences may be
brought to bear in ls47 TO discourage
another wave OF strikes. =
First, the Republican Congress VIII
vote a decrease in individual income
taxes OF about 20 per cent. This Il
announced by speaker-to-be Joseph w,
Martin. 80
Second, prices of food viii show D
considerable drop next year and the
cost Of living will be diminished below
Its present high level.
Third, the necessity for overtime Id
those skilled trades and industries which
are to be given chance to operate In
full production will materially increase
the amount of take-home earnings for
millions Of workers
The biggest single impetus to produce
.tion has resulted from the removal Of
virtually all price controls. The aver
age man, unfamiliar with the intrica-
cies Of the economic system, can scarce
ly realize the extent to which price
controls were retarding production In
America. SO long as there was chance
OF eventual decontrol, prices could not
be stabilized. Now, with controls lifted,
prices can be fixed for indefinite Pc
riods-or at least until the full impact
OF demand Is ascertained.
Matter Of Markets.
Prices are always matter of testing
markets. But when the ceilings imposed
by Government do not cover costs. q
virtual strike takes place and produc-
ton lags. The damage in the recent
situation was that price controls were
on the way toward removal, and most
producers knew it, so there was no op-.
portunity to plan ahead.
The Presidents statement says very
rightly that 1t is impractical to retain
controls on articles when certain In
gradients are without controls. Also
ne might have said 1t Is impossible to
control prices If wages are not con-
trolled. too. Since the wage stabiliza-j
tion policy broke down, it was inevi-.
table that price controls would be elm
mated as well. -
SO the American economy now faces
period Of reconversion and readiust-
ment which should have begun last
spring. Whatever may be the merits
OF the labor situation, the fact re-
mains that the administration policy
OF asking management to absorb high
costs and refusing permission to in
crease prices except after a lot of red
tape did not result in stability. Manage
ment had to accept the challenge of
strikes which it might have otherwise
adjudicated on an equitable basis had
1t been able TO plan ahead with refer
ence to prices and production schedules.
Union leaders, for the most part,
know that Republican Congress win
not be extreme in its handling OF
labor problems but that it will insist
on fairness of both sides in collective
bargaining. Union leaders, therefore.
VIII not try series of strikes next
year merely to add to management,s
costs irrespective Of the profit situation
that may. prevail.
Living Cost Argument.
First of all, the cost-of-living arru-
ment win not be persuasive when the
prices Of food begin to decline. Secondly.
reduction of 20 per cent in Federal
income taxes win mean an increase
in purchasing power for the millions
OF citizens who have been paying high
taxes.
Thus, for instance, every citizen
knows that his withholding tag Is
around 20 per cent. If some of that
20 per cent can be retained by the in
divldual, 1t means an automatic in
crease in wages amounting to MANY
billions of dollars to the Nations work
ers. For the thrifty, this viii mean
added savings. For those who have
not been able to make ends meet, 1t
viii mean household budget that can
be balanced.
The problem of reducing taxes by
20 per cent turns on what kind OF
governmental economies can be an
piled. 1t would not be surprising IL
the whole problem of social security
taxes were re-examined. Originally the
law contemplated the investment Of
current payments in Government bonds.
There are some who believe that the
Government could carry out of cur
rent revenues the burden of payments
to the beneficiaries of social security
each year. This is but one ASPECT of
the tax situation out of many which
Will bear re-examination.
The truth is that the Republican
Congress viii not be fettered by left
wing handicaps or social planning and
Will endeavor to put the Nations fiscal
affairs on balanced basis so that
lower tax rates may mean Increasing
revenues for the Government. This
philosophy of taxation was followed In
the 1920s and the budget yielded !!
surplus out Of which the Federal debt
was materially reduced.
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