THE DEPRESSING thing about the rise of consumer prices last month is that there were no surprises. It was a very broad upward movement among all the categories of prices that have been moving upward for months and seem very likely to keep moving upward. There were no tremendous strikes or droughts or disruptions to account for any significant part of that rise. It was just the same old trend, accelerating.
Worse, most of the largest price increases were in areas that the administration's price guidelines do not cover. They were, as you would expect, mainly in food, medical care, home financing and fuel. Does it mean that the country ought to head toward mandatory price controls? Bofore you join that campaign, consider that it's impossible to put controls on some of those categories -- and that others are already controlled.
The experts have always warned that basic farm prices cannot be held down by price controls. Richard Nixon tried it once. Desperate, in 1973 he overrode his advisers.Remember that summer? The first effect was a series of sudden shortages in the grocery stores as outraged producers held their foodstuffs off the market. Next, the Nixon administration caved in and lifted the controls from food. Then the prices shot wildly upward, going much higher than they would have gone without the controls. It was an experiment no sensible person could want to repeat.
As for medical costs, the administration is having another run this year at persuading Congress to put controls on hospital bills. Last year, Congress refused. This year the outlook is a little better only because the inflation in health care is a good deal worse.
Mortgage interest rates are set indirectly by the federal government's monetary policy. Gasoline prices are even more instructive. They rose a fat 2 percent in one month alone, from December to January. It wasn't unusual. Since mid-1978, gasoline prices have been going up at a rate of 18 percent a year -- faster than any other major item in the family budget except meat. But, unlike meat, gasoline has been continuously under price controls since 1971. Prices rise in part because of the rising costs of imported oil, in part because of rising costs in refining and handling. Gasoline illustrates the truth that, in a tight market with rapidly expanding demand, no amount of price controlling can stabilize prices.
The only way to work the inflation rate down is the way that the Carter administration has reluctantly chosen. It is not simple, it is not exciting, and it is not without substantial costs. The strategy is to keep the economy in second gear for quite a long time, growing much less rapidly than in recent years. That means somewhat higher unemployment. It means a significantly less rapid improvement in standards of living than that to which Americans have become accustomed. The nation's economic output rose 4 percent last year. The administration has now accepted the responsibility to reduce that growth rate substantially. A mild recession seems likely to begin later this year. It is not a happy prospect, but it has to be accepted as less harmful than any of the devices that. might stave it off.
The political challenge is to spread the costs and burdens of the coming slowdown as widely and fairly as possible. The weight of a recession usually falls disproportionately on a small number of vulnerable people -- working people who are laid off, businessmen whose enterprises fail. The guidelines, to the extent they are observed, will at least mitigate these worst effects.
Reducing inflation is not an exercise in mere technical economics. The price statistics that the government publishes each month are turning into a judgment on the strength of a political system and the sense of common purpose that holds Americans together.