WHERE'S THE INFLATION coming from? The current surge of prices and anxieties tempts people to grasp at the one-sentence explanations and the short, snappy remedies. There's the theory that blames in all on federal deficits. Another view holds that inflation is all due to mismanagement of the money supply. A third attributes it to OPEC and oil prices.
All of those things have contributed to inflation from time to time over the years. None of them is the single crucial source of the trouble. The technical economic analyses never quite reach the heart of the matter. At this present stage, the inflation is rooted mainly in public attitudes. Not only the government but Americans throughout the country want better performance out of the economy than it is capable of giving. They want lower employment and better housing and bigger pensions and faster growth, simultaneouslysy, than the great machine can provide.
Living in a highly organized society, Americans have become skilled at protecting themselves from inflation. The cost of living has risen 10 percent in the past year, and people think it only fair that their incomes should go up 10 percent to compensate them. To the extent that people succeed in recapturing that 10 percent, it will turn up again in the months ahead in somebody else's costs and the inflation will continue.
To keep the inflation rate at zero, every rising price has to be balanced by a falling price somewhere else. When any worker manages to push his wages up faster than his productivity, some other worker's wage has to fall. But most American producers have a ratchet on their prices, and wage cuts are almost unknown. President Carter's wage and price guidelines are a brave attempt to hold everybody to increases that are a little below the inflation rate, to distribute the burden as widely as possible. While the guidelines are better than nothing, they are hardly proving a miracle.
Instead, a rather sinister change is overtaking American attitudes toward money and inflation. It is conventional to say that inflation is extremely unpopular. But as it goes on, more people are responding by borrowing heavily and depending on future inflation to pay their debts. The person who has just bought an expensive house on a 10 percent mortgage is a vote for continued inflation. In that fashion, inflation creates its own constituency.
It would be nice to think that there was some quick simple adjustment to the economy - some valve down in the engine room-that could suddenly turn off the inflation. But there isn't. An end to inflation will take deep changes in the way Americans think about their society, what it owes them and what they owe it. Those changes will probably come-but at what cost, and to whom? Merely learning to live with inflation does not seem a very promising prospect. As the rate goes up, growth is endangered and, ominously, the economy becomes progressively less stable.