Evening star., 1947-08-28

WClC CAC1&lRVSA A4NA4 o44S VIVA ~S@SA>S
of the antitrust laws.
The automobile unions can get to-
getAr nationally and fix the price
of Eor affecting all major plants.
When the automobile producers en-
deavor to include those increased
costs, they are attacked as doing
something wrong.
The miners union in the coal in
dustry, which has a closed shop
monopoly. recently fixed the cost of
labor in the coal mines for another
year. The coal operators promptly
raised.the prices of coal, and so did
the steel producers.
Producers Have Rights.
II small group of citizens may
get together and fix the price of la
Dor, which Is a ma jor item in costs,
why Is it wrong for producers to in
crease their prices to absorb that
cost?
The fact k the coal operators or
the steel producers increase their
costs by the same proportion when
bIlS ItCNc VI OllC AI1C0CC ul O4lC ~ ANC
of labor is published The pro-
ducers do not mead to meet and
enter into a conspiracy to fix prices.
The price level is fixed for them by
the wage level.
1t Is most unfortunate that the
Republicans in Congress did not
order an investigation of the whole
question of prices in relation to
wage costs. The Senate Committee
on Economic Affairs Is supposed to
look into some phases of this next
month, but the subject should have
had attention before.
Problem Twofold.
The problem of prices is twofold
Industrial and agricultural. The
average person wants to know why
his cost of living has increased.
Congressional inquiries could ex-
plain it readily by mobilizing the
facts. Thus, the prices of agricul-
tural products are in large part fixed
today by the Government, itself
through the supports given the agri-
cultural program. Also such prices
are fixed by the size of the over
seas demands in which our own
Government plays a major role.
The law OF supply and demand
cannot be repealed by exhortation.
If the Government today attempted
to fix prices, 1t would stimulate a
black market and greater shortages
in food. The Presidents economic
report says:
although most farmers cannot
voluntarily reduce their prices be-
cause they do not make price de-
cisions, we are not entirely without
recourse In the farm situation. We
may still obtain a total agricultural
output as large as last year"
Foreign Demands Factor.
But the demand from abroad will
tend to keep prices up till the rest
of the world has its own harvest
again. In the industrial realm, the
Presidents economic advisers wrote
recently in their report:
I'm the free economy. prices are
made by the forces of the market
place and the action of business
management. The initial RESPONSE
pility for many prices is that of the
businessman who decides at what
figure he will sell. In the first eco
nomic report each businessman was
urged to take a broad view of the
long-run problem and. in the inter-
est of sustaining large markets, to
reduce his prices insofar as costs
permitted"
The Ford Motor Car Co. took
such advice and tried to keep from
increasing prices on its cars, but
costs caught up with the company's
best intentions and now Ford goes
along with the other auto makers
in increasing prices.
This correspondent urged just be-
fore VI day that both wage and
price controls be retained for the
transition period. President Tru-
man discarded wage controls and
kept price controls and thus forced
an irnbalance. To get out of this
dilemma, price controls eventually
had to be removed. Now supply is
slowly catching up with demand.
When the two are in balance and a
surplus of products appears, there
will be a gradual reduction in prices
and labor costs or else considerable
unemployment as producers try to
operate on the present high level of
wage costs,
Businessmen are being urged by
theorists to take chances, just as the
Ford Co. did. But such experiments
are speculative and most business
men would be glad to take chances
if some one underworld their losses.
For that problem. of course, the
politicians have no answer.