A Modest Member of Parliament [Bert Kelly], “Inflation breeds moral decay,” The Australian Financial Review, March 12, 1971, p. 3. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 133-34, as “Inflation.”
Some weeks ago Mavis forbade me to write about inflation because she knows that it is a difficult and unpopular subject.
So for the last six weeks I have been dealing with the ways we can keep wage increases limited to productivity increases and so prevent price rises.
Then how we could use, through restrictive trade practices legislation, a consumer council and tariff reductions to keep prices down. The goal all the way through has been to keep prices down.
But I haven’t said why we want to keep prices down. I can’t, without mentioning inflation.
But Mavis has gone to visit her mother and I don’t think she will see a copy of this paper, so I will take a chance.
If this column doesn’t appear next week you will know she has caught up with me.
I used to think that inflation was something you did to car tyres.
Then I thought it was something that only economists had to worry about. So I wasn’t surprised to find that Eccles’ naturally long face grew even longer when inflation was mentioned.
But it has been hammered home to me that inflation is not just a problem for economists to worry about, nor is it just a problem for non-Labor Governments, either.
Mr Ben Chifley, when he presented his last Budget in 1949 said:
I am deeply grateful for the support that my colleagues have given me in my fight again the great danger of inflation.
I know that some of them have not readily seen the force of many of the economic theories on which I have had to act, and that they were apt to regard my ideas as fossilised. But they have stood by me.
Why do responsible people get concerned about inflation?
It is easy to see why old Fred is up in arms because he mostly sells on the export market so he is well aware of the devastating effects of cost increases in Australia, while his prices do not go up overseas.
And the chap who has saved for his old age, he knows because he sees his savings diminish in real value by inflation.
But the problem goes far deeper than that. Inflation causes a decay in the moral standards of the country.
You see it in the stock market. In ordinary times decent business standards are observed.
But as the get-rich-quick fever takes over the standard is forgotten and the crashes follow quickly afterwards.
You see it again with schoolteachers. A few years ago it would have been unthinkable for schoolteachers to go on strike and leave their pupils untaught.
You see it with the doctors too — indeed you see it everywhere. The inflation fever is beginning to devastate our community standards.
And any student of history will recognise the symptoms as similar to those occurring when other countries and other civilisations started to decay.
So for everyone’s sake we have to do something about inflation. The great trouble is that almost all anti-inflationary activity is unpopular.
It is true that the general idea of cutting Government expenditure is received with rapture, but it will not be long before the inevitable refusal of the Government to do things that are both unpopular and desirable will be resented.
And unpopularity will then follow.
But cutting Government expenditure will not be enough. More unpopular things will have to come afterwards.
Action on wages, action on prices, action on tariffs, possible taxation rises, credit restrictions — all of those would certainly be unpopular with some people.
The truth is that the economy will have to be restrained by the Government.
Now sitting on the horse’s head is not a process that endears you to the horse, however necessary it may be for the safety of the people in the trap, and indeed, sometimes of the horse.
But that’s just what the Government has to do if it is to be a good Government.
And the trouble is that I will have to support it in its unpopular action and I don’t like it, not one little bit.
I just love being popular and giving away money on everything you ask for — on pensions, on schools, on dams, on salary increases and almost everything.
Now it appears that all this is going to stop, all because of a queer economic disease called inflation.
But my immediate concern is that Mavis will read this article. I will be in enough trouble without that!
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