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The net effect of the changing nature of the economy is that a much larger drop in employment must occur —and remain for longer periods—than anyone before thought necessary to force down prices to any appreciable extent. Johns Hopkins' Joseph Aschheim estimates that unemployment must continue at between 5% and 10% for an extended period to attain price stability, thinks that it is closer to 5% than to 10%. Other economists set unemployment levels at 8% or more before prices will stabilize, or drop.
To keep prices from spiraling too fast, a handful of the economists argued for an agency, such as a permanent Wage and Price Commission, which would gather accurate statistics, compute the effects of wage-price increases, and formulate standards for government policy. Economists such as the University of Chicago's Albert E. Rees would also like to see the Government itself put an end to price-boosting devices, e.g., farm price supports, tariffs and import quotas that shelter inefficient domestic producers. Said he: "If the Government is to condemn private enterprise for using rigid prices, it should itself cease being the greatest single source for price rigidity in the economy."
Whatever the solution, the theories about full employment will have to be changed in the light of today's rigid wages and prices. The U.S. can no longer operate on the premise that maximum employment, i.e., 4% jobless or 2,700,000 workers, is compatible with stable prices. Unless it is willing to accept the idea of close to 5,000,000 unemployed as "reasonably full employment," then it must expect a continuing rise in prices.