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Last week Housing and Urban Development Secretary George Romney made a similar proposal; earlier James J. O'Leary, an executive vice president of Manhattan's U.S. Trust Co., urged the idea on the President. Both men would have a Presidential commission look into specific wage and price increases by companies and unions, and inform the public whether they seemed justified. Their proposal, in turn, was a watered-down version of the formal wage-price guidelines that the Kennedy and Johnson Administrations promulgated, and that many Democrats and even a few Republicans have asked Nixon to reinstate.
Advocating the Immoral
The fact that conservative Arthur Burns, of all people, should speak up for anything resembling guidelines is perhaps the best indication that Washington is profoundly worried. As the President's chief economist during the election campaign, and as chief domestic policy adviser during the first year of the Nixon Administration, Burns provided much of the free-market philosophy behind the game plan, which he now feels is not working quickly enough for a nation impatient for results. Beyond that, his advocacy of an incomes policy−even as a temporary expedient−violates some of his old beliefs. Other economic policymakers are satisfied to argue that guidelines simply do not work; Burns has viewed them as immoral. Some years ago, he wrote that he could see little difference between an economy in which guidelines were observed voluntarily and one shackled by outright controls. In either case, he said, the market would not be truly free. In one of his pipe-puffing appearances before a congressional committee, Burns recently added: "I see free markets as the greatest institution this country has."
Even so, in his long career as a professor, chairman of the Council of Economic Advisers under President Eisenhower, and head of the National Bureau of Economic Research, Burns has never been what he calls "an ideological economist." He tends, in fact, to distrust all highly systematic economic theory. He has little patience with the loud quarrel between Keynesian economists, who place great importance on Government tax and spending policies, and the followers of his friend Milton Friedman,* who contends that control of the money supply is of supreme importance. Significantly, Burns wrote most of his damning comments on guidelines when he was still a professor. Now, at 66, he is in a position that requires him to accept the responsibility of making and carrying out policy. To make matters doubly difficult, says Burns, "when a nation permits its economy to become engulfed by inflation, policymakers no longer have any good choices."
Despite its legal independence from the Administration, the Federal Reserve has been given the toughest assignment in Nixon's game plan. The board was expected to hold down the growth of the nation's money supply. It did its job with what may have been an excess of zeal. Through the last half of 1969, it permitted no growth at all in money supply. By the time Burns took over last February, almost everyone was starved for cash. Corporations were forced to borrow in the bond market at alltime-high interest rates of