Word: iv
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Mind-bendingly complicated and openly mocked, Phase IV, a product of necessity, was born last week. Even its authors have reservations about its chances for success. The latest wage-price control program in the Nixon Administration's 23-month alternately hot and cold war against high living costs is a temporary holding action. It is designed to stem the spread of food shortages while partially holding off the pent-up forces of inflation until they are weakened by waning demand (see box next page...
...latest controls are by no means as stiff as the Administration had hinted they would be. They allow farmers to sell for whatever the market will bear; they continue earlier wage guidelines; and despite some tightening on profit margins, they will pinch most corporate earnings only slightly. Phase IV should slow the rising price spiral, but there is little chance it will lower inflation to acceptable levels this year...
...incompetent. They are a disaster. All they have demonstrated is the ability to lurch from one short-term solution to another." The assessment is overly harsh, but it does reflect a wide frustration inside and outside the Administration with repeated failures to bring the economy into line. Phase IV could well be the Administration's last, best chance to restore public confidence in its ability to foster prosperity without inflation...
Food prices for the rest of this year are expected to go on inflating at an annual rate of close to 8%. Phase IV will most likely permit food processors, wholesalers and retailers to pass on to consumers the increases that are paid to farmers for raw materials, which are exempt from controls. But companies probably will not be allowed to pass on some of their labor, transportation, processing or other cost increases, at least not immediately...
...IV...