When the new rent control policies were being stirred up under the name of rent stabilization, I thought the policy types were trying out some new branding. But Arthur Okun’s essay The Agenda for Stabilization show the term well in use before 1970. The idea that government would influence pricing in the name of a stable economy isn’t a new idea.
At least Okun, who was the Chairman of the Council of Economic Advisers, proposes that private industry take heed of guidance to voluntarily adjust their pricing expectations.
Second, the appeal for restraint must be based on some set of ground rules that spell out what private decision makers are being asked to do. “Drive carefully” is not an effective substitute for a posted speed limit. Speed limits on wages and prices will inevitably share some of the imperfections of those on the highways. They will contain an element of arbitrariness, just as a fifty-mile speed limit is arbitrary in the sense that it is not demonstrably superior to forty-nine or fifty-one. Just as a passing lane is needed on the highways, so a “passing lane” must be provided for wages and prices, allowing relative shifts over time in response to the signals of the market. Just as some speeders will escape the eyes of the traffic patrol, so some violators of the price and wage standards will not be identified.
Despite their imperfections, speed limits on the highways serve the nation well and so can those on prices and wages.
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