The Hot-Air War

The Washington air was hot last week with talk of a new war on inflation. But it was plain that there would be little more than sham battles. Reason: the planners had planned their political inflation so well that there was no place for the price of most things to go but up.

The new Wage Stabilization Board, meeting for the first time under Chairman Archibald Cox, a 4O-year-old Harvard law professor, was already in trouble. It faced 12,000 applications for wage boosts for millions of workers, and new ones were pouring in at the rate of 1,800 a week. The board had inherited all the problems from the old board's steel wage fiasco.

Instead of making recommendations for wage settlements, as in steel, WSB can now only approve or disapprove of bargaining agreements already reached. And most unions, having used up most of their allowable wage increases, are after more than is permissible. The rubber workers, for example, are entitled to only about 5-c- an hour in cost-of-living increases. This week they settled with Goodyear for 10-c-, and the case will soon come before the board. John L. Lewis, for another, will hardly settle for the 10-c- his coal miners are entitled to.

What can WSB do? The board is hoping that the coal, rubber and other industries will stand firm against demands for big boosts. If the companies don't--and many won't be able to in the light of the steel boost--WSB will probably find an put with "productivity" increases, i.e., raises to compensate for greater man-hour out put. It will probably turn out that the bigger and stronger the union, the bigger the "productivity" raise.

But the troubles of WSB are nothing compared to those of OPS. Last week there was a rash of new price boosts--aluminum up 1-c- a lb., Kaiser-Frazer cars $54 apiece, cotton $5 a bale, manganese $40 a ton (which will boost the cost of making steel an average of 46-c- a ton).

And the effects of the steel boost are still to come. Economic Stabilizer Roger Putnam, pooh-poohing talk that all prices will shoot up, said he had a plan whereby users would absorb the increases, thus "eliminating any need for increasing prices to consumers." Putnam soon discovered his plan was economic nonsense. Many small fabricators have such small profit margins any further absorption of costs would force them out of business. As a result, the stabilizers, who already have been flooded with requests for price increases to compensate for the steel rise, started looking for a face-saving formula which would let prices go up.

One such formula is already in effect in the auto industry. Forced by Congress to drop dollars & cents auto ceilings, OPS last week substituted ceilings based on dealers' percentages of profit. That will not necessarily mean higher auto prices immediately, but it will be so hard to check the various percentages of dealers that for all practical purposes there will be little control.

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