Word: guidepost
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Dates: during 1960-1969
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Having abandoned last year's 3.2% guidepost in January, Ackley did not suggest what limit on wage or price increases would be fitting now. But he conceded that "most wage settlements" in 1967 will exceed gains in productivity. Without more voluntary restraint, he argued, the U.S. will stabilize prices only by the "disaster" of continuous peacetime price and wage controls or "higher unemployment-some say 5%-than the American people will or should tolerate...
...Administration may have quietly laid to rest its oft-proclaimed, oft-abused 3.2% wage-price "guideposts" last month, but it did not entirely give up the idea of restraint. As far as prices go, warned the President's Council of Economic Advisers, there are still plenty of areas "about which guidepost questions might be raised." The questions, and a flock of the old familiar Administration telegrams, flew last week in one of those areas: gasoline prices...
...from Ideal." The official obituary to the guidepost policy was written at week's end by Gardner Ackley, chairman of the President's Council of Economic Advisers. In a speech prepared for summer commencement exercises at the University of Michigan, Ackley said: "The policy we have relied on-our wage and price guideposts-is surely far from ideal, and has recently suffered some stunning defeats. But what is more disappointing than the specific defeats is the absence of much apparent recognition on the side of either-labor or management that this problem must be solved...
...When the government has mobilized pressure to enforce the guideposts, policy is administered "without due process." There is little logic in the choice of "situations selected for confrontation" since administrative difficulties often prevent action against the most flagrant violators of guidepost standards...
...Fixed guidepost standards, based on an average level of productivity increase are poorly coordinated with our economy's cyclical fluctuations. Productivity rises fastest in the early periods of an upswing when inflationary pressure is relatively slight. Labor costs and wage pressures start increasing more rapidly than productivity when the country approaches full employment...