WHY NOT RESORT now to mandatory wage and price controls - the 200-proof kind, enforceable by law, with criminal penalties for violation? The inflation rate has been rising ominously ever since the beginning of the year. The present voluntary guidelines have had only a limited effect. Last week a judicial decision denied President Carter the authority even to deny government contracts to the transgressors. Inflation is, as Mr. Carter keeps saying, dangerous. But he won't hear of controls.
He's right. First of all, before you even get to the principle of the thing, there is an insuperable inhibition of a purely procedural nature. The controls law of the Nixon era had expired; Congress would have to reenact it. The process would be neither quick nor easy. Most of labor and most of business are adamantly against controls. The Experience of 1971-73 produced an endless catalogue of inequities that an army of lobbyists would work desperately hard to prevent a second time around.
During the long hearing and debates, every price in the United States would get shoved wildly upward in anticipation of the coming controls. It would resemble the rush for the fire escape in the burning building. By the time the law finally went into effect, the American inflation rate would look like Argentina's.
But suppose that, by some magic unknown to the American political process, controls could be imposed overnight. Even then, would they be desirable? Remember that the items responsible for most of the inflation over the past four months have been oil, other raw materials, food and interest rates.
Oil stands as a powerful warning that price controls can offer very little enduring protection to consumers. Crude oil and gasoline have been under legal controls continously since 1971, but their prices are now going up faster that almost anything else. Controls cannot reach the world prices at which international commodities are bought and sold. The same thing is true of most other raw materials, including those that the United States exports. Theoretically, the government could hold down prices by an embargo of exports. But this country, like any other, has to export to pay for its imports.
As for agricultural products, President Nixon tried to put controls on beef prices in 1973. The cattlemen simply held their beef off the market, rapidly forcing the administration to capitulate. The only lasting effect was a great wave of inflation in food prices. Interest rates are hardly a more promising target for controls since, of course, they are set by the government itself.
That is why Mr. Carter concludes that mandatory wage and price controls are a bad idea whose time has come and gone. That is why anyone else would be wise to regard them with the deepest suspicion and doubt.