After the freeze is over

Press, Volume CXI, Issue 32700, 1 September 1971, Page 17

After the freeze is over

(N.Z. Press Association—Copyright) WASHINGTON, August 31. The chairman of President Nixon’S council of Economic Advisers said yesterday that there would be a follow-up programme to stabilise wages and prices to avoid an inflationary explosion after the 90-day controls expired, United Press International reported.

Dr Paul McCracken told the House-Senate Joint Ecohomie Committee that it was too early to spell out what the programme would be. “A freeze by itself cannot be expected to do a long-run job,” Dr McCracken said. “Indeed, by itself a freeze is apt to pile up ammunition

for an explosion of wages and prices at the end. “That, in fact, has tended to be international experience with freezes as such.” The freeze of wages, prices! and rent will expire on November 13. In the meantime, Dr MeCracken reported, Mr Nixon had directed the new Cost of Living Council to work with business and labour leaders “to set up a proper mechanism for achieving continued price and wage stability after the 90-day freeze is over."

Although he said that the details had not been worked out for the second phase, the objective had been. “It is to achieve a long enough period of a reasonably stable level of prices and costs per unit output to create a new confidence in the purchasing power of our dollar,” Dr McCracken told the committee. Three of Mr Nixon’s Cabinet members already have suggested the prospect of something more than voluntary controls on profits, dividends and interest rates —as well as wages and prices—when the freeze ends.