major concern people have. And that is the purpose of the Council on Wage and Price Stability, to try to do everything it can to get the inflation rate down so peoples' concerns will not be raised by inflation when we try to raise the employment. This is no conflict, one is as important as the other, and both contribute to each other. Senator SARBANES. How do you address the concerns of the people who come at you from the other side, in other words, who are concerned that the unemployment? I think they are so intertwined that this desire to put one ahead of the other just won't work. Mr. BOSWORTH. I don't see any move to put one ahead of the other. You have got to make progress on both fronts. Senator SARBANES. You are all economists involved in policymaking in Government. At what level in the making of economic decisions, in your view, does the consideration, for instance, that racial tensions on a factory floor are greatly eased and diminished if there is a stable or growing employment situation, and greatly exacerbated if there is a declining employment situation? At what point in the decisionmaking process is that consideration put forth and by whom? Only by the President himself? I mean, is what comes froom your Council and the CEA that reaches in both economic advice and in the process of decisionmaking, who brings that factor in and who puts that forward, and at what point is that kind of consideration, which I think is quite an important one in terms of a healthy society, entered into the process? Mr. BOSWORTH. I can say that for one, the Department of Labor is very active in this area, especially in the specific area you point to, racial tensions. There have been a lot of studies indicating that in recent years that is very closely related to unemployment problems, and the task to make sure that it is taken into account of is one for the President and his advisers. Senator SARBANES. But you have an institutional mission, as you have been quick to point out in your statements, when you deal with regulation. I think it is a very good point. An institution in effect has a mission, they perceive they have a mission to be carried forward and they view the advice they give and the role they play as meeting that mission. So I go back to my question, Who, is the process of making the decisions, who reflects the sensitivity of this concern, as you see it, as economic policy is made? Mr. BOSWORTH. If your point is that in the past there has been too little account taken of these things, I agree with you. I don't myself have any objection to a council on employment; but it does seem to me in some respects it is comparable to the problem of inflation. There are macroeconomic issues that ought to be raised about how to get the unemployment rate down. But I do not see a lack of administration efforts in that regard. The Department of Labor has a clear mission to make that a primary aspect of its operation. But on the inflation side, there is no agency that you can point to and say that is their primary mission, to do something at the microeconomic level to alleviate inflationary pressure. Senator SARBANES. My time is up. The CHAIRMAN. Go right ahead. Senator SARBANES. Unless the other two members of the panel want to respond in terms of how you make policy, at what point do those kinds of considerations come in. Mr. HOUTHAKKER. I can testify from my own experience that the point you made about the participation of minorities in employment was certainly one that I have heard quite a number of times, when I served on the Council. And in fact it is reflected in the Council of Economic Advisers annual report, which has had discussions of problems like this. I remember, for instance, a chapter which was written when I was a member dealing with the role of women in the labor force. This is not quite the same, but it is a somewhat similar one. So I believe these questions about who are participants is employment have always been very much in the minds of people who were concerned with full employment in the years when I had some knowledge of it. The CHAIRMAN. Thank you gentlemen very, very much. I think you have made an excellent record, it has been most helpful. [The following information was received for the record:] EXECUTIVE OFFICE OF THE PRESIDENT COUNCIL ON WAGE AND PRICE STABILITY 726 JACKSON PLACE, N.W. WASHINGTON, D.C. 20506 August 1, 1977 Honorable William Proxmire, Chairman and Urban Affairs United States Senate Washington, D. C. 20510 Dear Senator Proxmire: During the recent hearings on S. 1542, you asked that we submit answers to you to some questions which you asked. One question which you asked regarded the number of subpoenas and periodic report orders which the Council has issued. We have never issued a subpoena but have issued one periodic report order. That order was issued to the Aluminum Company of America on July 15, 1977. Alcoa was perfectly willing to provide us with the data which we wanted but insisted, on advice of their counsel, on receiving a formal order. Although this is the first time where we have actually issued an order, we have generally found companies to be quite cooperative about providing data to us but concerned about its confidentiality. Many companies have asked in the past that a subpoena or periodic report order be issued to them; however, after negotiations we were able to persuade them to comply voluntarily. You had asked for a list of instances in which we were able to have a positive effect on inflation. We have enclosed such a list. You further asked for a breakdown of Council filings before government agencies by agency. That list. is also enclosed. If there is any further material which we can supply, we would be pleased to do so. Sincerely, Barry Bosan Barry P. Bosworth Enclosures EXECUTIVE OFFICE OF THE PRESIDENT COUNCIL ON WAGE AND PRICE STABILITY 726 JACKSON PLACE, N.W. WASHINGTON, D.C. 20506 July 20, 1977 The following is a breakdown by agency of the filings produced by the Council on Wage and Price Stability from the years 1974 through 1977 (July). National Highway Traffic Safety Administration Department of Health, Education & Welfare (HEW) 10 10 6 9 4 3 2 1 The Federal Reserve, Federal Deposit Insurance Department of Housing & Urban Development (HUD) Securities & Exchange Commission (SEC) Federal Communications Commission (FCC) Federal Energy Administration (FEA) Federal Power Commission Department of the Interior National Oceanic & Atmospheric Administration 21512242TT Barbara & Imagent: Barbara J. Saragovitz Public Information Assistant Office of Public Affairs General: The prime objective of the Office of Wage and Price Monitoring has been identifying and analyzing This Office has published studies analyzing: 1) specific price increases, 2) industry pricing policies, sources. Specific Price Increases: Where this Office has found a specific wage or price increase to be inflationary, In December 1974, this Office investigated the price increases for steel which were announced by several companies and persuaded three companies to roll back their increases by approximately 20 percent. In December 1975, Ford announced a new price increase for its 1976 model cars. In order to evaluate Ford's This Office released a report, detailing this cost and price information. On January 15, 1976, Ford Industry Pricing Policies: Examined the capacity, profit, price, demand, and supply conditions of the following industries: steel, antifreeze, automobile manufacturers, metal can, paper, automobile parts manufacturers, chlorine and caustic soda, wholesale and retail food, aluminum, sugar, health care, tires, cereals and bakery products, etc. |