Ice for a Chill?

With economic droop still much on the nation's mind, Big Labor's Walter Reuther and Big Business' Harlow Curtice appeared in a green-carpeted Senate caucus room last week with prescriptions for the ailment. As witnesses before Democrat Estes Kefauver's subcommittee investigating noncompetitive "administered prices," United Auto Workers President Reuther and General Motors President Curtice took predictably opposite stands.

Curtice insisted that carmaking costs had risen faster over the past decade than wholesale prices of G.M. cars. Old Social ist Reuther damned the automakers' pricing policies as "greedy" and "irresponsible," called their profits "fantastic," urged creation of a federal fact-finding agency to decide in advance whether price increases, in or out of the auto industry, are "justified." Equally far apart were the Curtice and Reuther economic prescriptions. Curtice urged federal tax cuts "across the board" to jack up spending by business firms and consumers. Reuther called for big wage raises to boost consumer purchasing power.

As an example of what the economy needs, Reuther pointed to a fat package of contract demands that he intends to put before the auto companies in April (TIME, Feb. 3). His plan to cut auto workers in on automakers' profits* (they would also be guaranteed an annual 3.9% raise), said Reuther, would channel "high-velocity dollars" to consumers--who would spend them fast--instead of to stockholders, who would salt them away. As Reuther sees it, in short, what's good for General Motors auto workers is good for the country.

A lot of economists would agree with him that the economy's health in 1958 depends on consumer spending. But a recent University of Michigan poll of consumer attitudes across the U.S. indicated that Reuther's proposal for pepping up consumer spending is about as sound as prescribing ice packs for a man with a chill. The poll snowed that 1) well-heeled U.S. consumers are more reluctant to make big purchases than they were a year ago, and 2) the reluctance stems largely from discontent with high prices. Reuther's wage boosts would tend to push prices upward, making consumers even more reluctant to buy. And for workers who did not share in the new round of raises, the higher prices would mean a decrease in real purchasing power.

If the recession should deepen, a fairer remedy might be the tax cut urged by Automan Curtice, many U.S. economists and some members of Congress, and conditionally approved by Treasury Secretary Robert Anderson. Unlike wage raises, tax cuts would increase purchasing power without upping business costs, and would benefit all earnings instead of just members of muscular unions such as Walter Reuther's U.A.W.

*Boomed the U.A.W. magazine Ammunition in April 1949: As a substitute for straight wage boosts, profit sharing is a "step backward" for workers, adding to the "uncertainty" of their income and forcing them to "pay the cost of a bad decision" by management. Against the menace of profit sharing, the U.A.W. "will continue to fight with everything at hand."

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