stenta me fer Diry made a speech at a meet

The frame Coleente Bargaining and Group Relations in San Kundan, kamarating sa tieme Denice ad: “A single n'imber is not a wage * 32 53 or 42 ira an orage even to think so." Next By mang the gig umpiasty the San Francisco Ezeminer said Dunlop had Svet matte Gone of Living Cornell might soon adopt a higher standard for

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fre the paths per the Drop rubber standard has been applied with gay pay increases in construction. In March, 2. Protect 5 ron named Dunlop chairman of the Construction Industry What Cowton, Committee la you that he finally relinquished in June of this year). Peture *r** the nineteen building-trades unions had been winning raises averaging 12 percent a year. Dunlop refused to use any quick clamps, even after the President froze wages and prices in August, 1971. Later, when the Pay Board tried to order Dunlop to conform to its rigid rules, he refused.

Dunlop's pragmatism was so flexible that few outsiders could see principle or Jogie in it, but to him it all made sense. Though he sometimes allowed the bestbald craft in the area no increase at all, he let others catch up in order to restore the traditional local balance between trades, sometimes with increases amounting to as much as 17 percent a year. Gradually, both the size of pay gains and the frequency of strikes declined. Last year building-trades wages rose only 5.9 percent, slightly less than the average for all contracts under the Pay Board's purview. So far this year, wage settlements in the construction industry have continued to move downward in percentage terms.

For this achievement, the International Association of Wall and Ceiling Contractors recently awarded Dunlop a metal plaque as "Man of the Year in Construction." Dunlop received it with a chuckle. "I'll be glad to put it on my wall," he said, "right next to the letter they wrote to the President two years ngo demanding that I be fired."

Perhaps the most ambitious of Dunlop's aims is to use his wage-control powers to spur enduring improvements in labor-management relations. He is Currently trying to do this in the supermarket industry, the only segment of food retailing where unions have a substantial foodhold. Its labor-management relations, Dunlop says, are "in more than a mess."

Stores deal separately with butchers, clerks, and teamster locals, and wage rater tend to leapfrog from one chain to another. Moreover, supermarket chains In a particular area do not always bargain with the same locals, so pay and fringe benefits often differ in the same town for employees of different chains. Weatherbedding rules abound: no conveyor belts in trucks, price marking done only in stores, no stocking of shelves by vendors.

A WAY TO SETTLE A STRIKE

One result of all this is that over the past decade store wages have increased much faster than supermarket sales per man-hour Naturally that disparity has helped me force prices up. But most grocery chains run on such paper-thin marins chat they are afraid to risk a strike.

Dunlop put the change of dealing with such problems up to the food indusFAN UNOBJEDE wage and salary committer, organized by the COLC. Robert 0. Adors, bosna cheirman of Kroger Ca, and a member of the committee, took the IN LAST VỀ ÁN VR ・ ng on boil, management and unions to set it permanent nativusi meplanera të mond their poistions, though not he stressed, it do any bargaining Durdan i donhdoni chɛi che outcome w..... he "new long-term arrangements in KTAN PX4 Pliki despers tely, noods (hem.

THE TEACHER AND THE MEDIATOR

Many years of training and experience, both on and off university campuses, have helped to prepare Dunlop for the complex job he now holds. The eldest son of a Presbyterian clergyman, he earned his way through the University of California at Berkeley partly by cooking for a professor and partly by managing the family pear orchard. He came to Harvard as a teaching fellow in 1938, and there he stayed, in time becoming chairman of the economics department and then dean of the Faculty of Arts and Sciences.

For decades, Dunlop pursued a double career as an academician and a labor mediator, spending at least one day a week in Washington. During World War II and again during the Korean war he served as a federal wage stabilizer. Over the years he has probably acquired more practice settling construction labor disputes than anybody else in the country.

These days, Dunlop commutes weekends to his ranch-style home in the Boston suburb of Belmont. His wife Dorothy and the youngest of their three children have remained there. Dunlop likes to read, walk in the Belmont woods, or, he says, "just sit in my study and get a perspective on things." There are also what he calls "leftover chores" from Harvard to keep him busy. As Dorothy Dunlop says, "he never stops working."

Over the course of his career, Dunlop has developed a strong aversion to federal economic controls. "Government," he says, "can never outsmart private parties, never recruit the people, never acquire enough oomph, knowledge, and capacity to run the U.S. economy."

He nonetheless accepted the wage-price-control job because it provided a challenging opportunity to put a life-time of learning into practice. For nearly thirty-five years his teaching, writing, and mediating had focused on such issues as incomes policy, wages and prices, productivity, and structural changes in labor and product markets. And he was well aware that governments had often stumbled in trying to apply economics to real-life economies. "No Western society knows how to arrange an optimal balance between economic stability, high I employment, and labor peace," he says. "We want all these goodies, but we don't kow how to have them."

Now, looking back on the disappointing results of Phase Three in slowing down price increases, Dunlop concedes that the balance remains elusive. It still fascinates him that the Administration, like most private economists, failed to anticipate this year's great leap in farm prices. While Phase Three was being planned last November, Agriculture Department technicians predicted a rise of less than 2 percent in retail food prices for the first half of 1973. Instead, they went up roughly 10 percent.

But Dunlop has a good case when he maintains that Phase Three was not responsible for most of the price increases that occurred while it was in force. The program was designed for a set of economic conditions that vanished almost as soon as it went into effect.

WHY THE STICK STAYED IN THE CLOSET

Dunlop does not argue with critics who contend that in announcing Phase Three the Administration fumbled by labeling it "voluntary." Labor leaders, journalists, and many businessmen leaped to the conclusion that price enforcement would be lax. Though Nixon, Shultz, and others made a point of talking about "the stick in the closet" that would be wielded against price offenders, it was not until June that the COLC challenged a price increase under the Phase Three rules.

One reason for the delay was that it took the council until May 7 to issue the form (CLC-2) on which big companies were required to report and justify price increases. The forms covering the first quarter of 1973 were not even due to be filed until June 21. Factional strife inside the COLC contributed to the delay. Carry-over staffers from the abolished Price Commission wanted to require companies to justify all price increases by profit margins on each product— a proposal that was overruled after businessmen protested that this might lead to leaks of vital competitive secrets.

Ironically, when the returns were examined last month, they showed that price violations had been scarce, just as Dunlop has insisted all along. Only three companies out of 674 appeared to have raised prices without cost justification; another thirteen appeared to have violated the regulations on profit margins. In looking back on Phase Three, Dunlop concedes that "maybe I should have

been out doing a big public-relations job." Though he adds, "That's not my particular dish," it is noteworthy that in recent weeks Dunlop and other top COLO officials have begun seeing reporters regularly, and press criticism of the price-wage program has softened.

A FREEZE TO FORESTALL A FREEZE

George Shultz, Dunlop's boss, also defends Phase Three. "In the areas where Phase Three could do something," he said not long ago, "it has been pretty effec tive. We've had industrial peace. Our labor-cost posture is beautiful. Prices? We worked on the auto companies and other big companies at the start of Phase Three. They've been extremely responsible. Maybe it would have been better if we'd encouraged them to make outlandish increases and then had a confrontation. What the country loves, and what Washington loves, is knocking heads off. My approach and John's is to go about our task in an orderly way. We've got to figure out how to be more flamboyant."

Both Shultz and Dunlop counseled President Nixon against reimposing price ceilings. So did Herb Stein and even presidential adviser John Connally. Shortly before the end of Phase Three, Dunlop said to a reporter that advocates of a freeze were "as crazy as bedbugs."

Only presidential counselor Melvin Laird favored price ceilings, on political grounds. When the President began studying new moves against inflation in early June, the other four suggested what Dunlop calls "a more moderate program," including more mandatory controls over some sectors of the economy. The presidential advisers discarded the idea of asking for a tax increase or other fiscal measures. They figured that Congress would wrangle over the legislation too long. They also feared that Congress might load a tax bill with unwelcome provisions.

Nixon rejected their first set of recommendations and asked for stronger proposals. When he got them, he made his own selection. He chose a price freeze partly to try to halt inflationary expectations and partly to forestall threatened action by Congress. The Senate seemed about to vote for a ninety-day freeze covering not only prices and wages but also rents, profits, and consumer interest rates. It would be better to shape the freeze himself, the President reasoned, than to be faced with a freeze he considered too severe.

Having placed wholesale and retail price ceilings on food, the Administration had to impose export controls to keep excessive quantities of U.S. farm products from moving abroad. Until the autumn harvest, says Dunlop, "we really don't have any other measure to deal with food prices." Now that the controls are on, it would not surprise Dunlop if they persist through the 1974 crop year.

"In the years ahead we have a difficult economic passage," says Dunlop, with academic understatement. “We very much need a period of continued restraint in industrial prices and wages while we work out our agricultural problems." Fortunately, evidence is accumulating that the economy's rate of expansion is slowing. But it will require extraordinarily delicate action on several fronts to keep Phase Four from "fouling up matters unduly," as Shultz puts it.

"PHASE FOUR IS PHASE OUT"

Though the President has demanded stability in gasoline prices, for example, his controllers nevertheless must allow these prices to be high enough to pay for large oil imports. Food prices will undoubtedly have to go up before they level off, in order to give farmers as incentive to expand their output. Some industries operating at capacity, including aluminum, steel, and electric power, must be allowed sufficient price incentives to expand their capacity.

In Dunlop's view, "Phase Four is phase out," because permanent wage-price controls would be "economic suicide." Still, he feels that "the forces for perpetuation of controls are real and significant." As he sees it, getting rid of controls "depends on the determination of the people." That determination has undoubtedly been strengthened by the problem-plagued freeze, and Dunlop is hopeful. "If the country learns a lesson from the freeze," he says, "it won't have been in vain."

1

[From the New York Times, Oct. 28, 1973]

ADDICTIVE NATURE OF CONTROLS

(By Edward Cowan)

Washington-The Nixon Administration finds itself staring full in the face the proposition that wage-price controls are addictive.

In Administration economic circles, everyone says controls should be ended. Not now, mind you, but as soon as possible.

Why not now? Well, right now the Cost of Living Council is using controls, especially its power to delay price increases, to "stretch out the bulge."

What bulge? Why, the bulge that follows the end of a price freeze-in this case the Presidential freeze that began June 13 and ended in stages between July 18 and Sept. 10.

And when does a bulge end? Officials concede that this is a good question. Indeed, the distinction between a post-freeze bulge and continuing inflation may be entirely semantic.

The Administration's general proposition last summer was that it would dismantle controls this winter or early next year as the pace of the economy slowed and underlying inflationary pressures subsided.

John T. Dunlop, director of the Cost of Living Council, suggested a phased decontrol, starting with those industries least beset by inflationary forces.

Mr. Dunlop took a step in that direction last week by exempting fertilizer from controls as part of a package of moves to increase domestic fertilizer supplies and, ultimately, food supplies.

Development of a phased-decontrol strategy has proceeded slowly, partly because of preoccupation with writing Phase 4 regulations and partly because underlying conditions don't look propitious. Two weeks ago the Secretary of the Treasury, George P. Shultz asked the hundred corporate barons who comprise the Business Council how many of them would raise prices within three weeks if controls were ended.

"A substantial number of hands" were raised, Mr. Shultz reported.

Since the start of Phase 4 for manufacturing on Aug. 12, more than 1,200 large companies have filed price-increase notices covering 3,300 product lines. The cutback in Middle East oil production and price increases can only add to the considerable upward pressure on oil and gasoline prices. Moreover, Congress seems determined to include in the Alaska pipeline bill an exemption from price controls for "small" oil wells. What the size criterion will be is unresolved. Food prices, up 21.5 per cent in the 12 months ended Sept. 30, are expected to go on rising, if at a slower rate. This may be a key fact, because if anything is likely to ignite a new round of wage inflation, it is the rising price of food. Mr. Dunlop said the other day that he opposed wiping out all controls by the turn of the year. He said decontrol by New Year's Day would produce price increases great enough to revive public and Congressional sentiment for controls. These facts, portents and dangers appear to argue for keeping wage-price controls for at least six more months. It is easier to hang on than to let go. But six months from now, on April 30, 1974, the legislative authority for controls, the Economic Stabilization Act, is due to expire. It is unlikely that Congress would renew it in a form acceptable to the Administration. It is equally unlikely that the Administration wants the law extended. No Administration position has been hammered out, but Mr. Shultz, Mr. Dunlop and other officials I are understood to believe that the act should die.

That does not mean, however, that the Administration will get out of wageprice intervention altogether. Politically that's not wise. The Administration cannot return to complete passivity on the wage-price front without exposing itself to criticism that it is indifferent to the plight of the workingman and the consumer.

That is another of the addictive qualities of controls. Also tempting is the belief that intervention can be useful, if it's the right kind.

So the search for a new approach is on. Mr. Dunlop has spoken informally about a wage-price monitoring unit in the Government. It would search out what Mr. Dunlop regards as the key prices and wages-those that set off an inexorable chain reaction when they rise.

But what to do then? Mr. Dunlop is a great believer in and practioner of selec tive, backstage intervention. While he knows what he might do, that is an insufficient foundation for a policy that must be declared. Moreover, there is the nagging question of whether high-level cajolery and arm-twisting can be effective if Washington has no reserve authority to intervene.

Arthur F. Burns, the Federal Reserve Board chairman adviser on economic issues, has dusted off an old idea for wage-price intervention that has interested liberal members of Congress.

Mr. Burns would set up a review board. It would have the power to delay increases, inquire into the economic facts, publish findings and make recommendstions. This approach has at least one obvious merit: It contemplates an institutionalized approach to wage-price restrain that could be highly visible.

Mr. Burns has suggested that the proposed board be empowered by Congress to intervene only in industries deemed by the board, according to its own criteria. to be lacking effective competition.

Mr. Dunlop's objection is that this approach assigns too much responsibility for inflation to the more concentrated industries (autos, aluminum, oil, steel and computers) and overlooks the trouble that can start elsewhere, most notably in the highly diffused construction industry.

For instance, would a Burns-type board have authority to poke into wages paid to the highly skilled steamfitters, welders and metal workers who will be in great demand to build and expand oil refineries in the next few years?

If not confined to noncompetitive industries, a review board might be able to take up where Phase 4 leaves off.

Meanwhile, no start on industry-by-industry deregulation is likely before December, according to high officials. What begins to emerge, therefore, is the possibility of a sudden, immediate termination of controls time in the first months of 1974. A cold-turkey cure, it might be said.

AMERICAN NURSING HOME ASSOCIATION, PLAINTIFF

v.

COST OF LIVING COUNCIL, ET AL., DEFENDANTS

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

Civil Action No. 1773-73

ORDER

Upon consideration of the entire record in this action and for the reasons stated in the Court's Memorandum of December 5, 1973, it is by the Court this 5th day of December, 1973,

ORDERED that the Phase IV regulations on institutional providers of health services, as applied to nursing homes be, and the same hereby are, adjudged arbitrary and capricious and in conflict with the mandate of Congress as outlined in Titles XVIII and XIX of the Social Security Act; and it is further

ORDERED that defendants be, and the same hereby are, individually and as members of the Council, their agents, servants, employees, and attorneys, per manently enjoined from implementing or enforcing any of the Phase IV regula tions on institutional providers of health services as they affect nursing homes; and it is further

ORDERED that defendants be, and the same hereby are, individually and as members of the Council, their agents, servants, employees, and attorneys permanently enjoined from interfering with or limiting the amount of cost reimbursement which nursing homes are entitled to receive for services rendered under the Medicare and Medicaid programs.

Judge.