tary and fiscal agencies still have a responsibility to do the best
they can. And any economic imperfections do not relieve these
agencies from their statutory responsibility. The Federal Reserve
System has a job to do, and it is not a pleasant job. The federal
government has a job to do, and it is not a pleasant job either, for
its restraints lead to slack and increased unemployment.
As we talk about unemployment as a cost of price stability, we
are talking about human beings, we are talking about the loss of
dignity that goes with the loss of employment. It is not something
that we should accept too lightly. If public policies are going to
induce unemployment deliberately, then public officials have a re-
sponsibility to mitigate the effects of unemployment and to spread
the burden of that unemployment. Whether it means increased
public employment programs, increased expenditures for man-
power training, liberalization of unemployment benefits and the
like, this must go together with any stabilization efforts. We have
to keep in mind that those people who cry hardest for price stability
are typically not in the front ranks of the inflation fighters on that
unemployment line.
The Federal Reserve System, as 1 see it, is clearly constrained.
It cannot do a lot. If it turns around from its present policy stance
and expands the money stock substantially to bring interest rates
down in the short run, it is going to contribute further to the exist-
ing inflationary pressures because it is going to intensify demand
pressures in some areas that are already running at a pretty good
clip.
Similarly, this is not the time for dramatic fiscal policy actions
designed to cut down inflation. Fiscal policy can do only a nominal
amount, given the dimensions of the cut being discussed. I person-
ally would not object to a modest deficit at the federal government
level. I think that the economic situation probably requires it. It is
over the longer run that we have to be concerned with this procliv-
ity for the federal government to continue to spend more income
than it takes in through taxes.
The government’s tendency to deficit spend only reflects the
public’s same tendency. The American people have always been
told they can have instant gratification without having to worry
about paying. And it is much easier to recommend a tax cut than a
tax increase. Name the politician who will run for office on the
grounds that we have to increase taxes and pay for our public
wants and our public demands! I am not against public wants. I am
not against public demands. But I am for somehow matching those
wants and demands with an ability to pay. The American people