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OF PRICES

AVE YOU noticed how

prices have been rising

lately? How could you have missed it?

In Toronto, for example, it now costs more to get a haircut, to drink a glass of milk, to eat a Slice of bread or smoke a cigar- ette than it did a month ago. Meat prices, which rose some time ago, are. still hanging up among the clouds.

Canned soft drinks, which used to sell for 7 cents a can, Now sell for 9 cents per can.

Prices on all types of consum- €r goods are going up.

The cost of living will be 8iven another spurt on April 1 when the Ontario government implements its increase of the Sales tax from its present 3 Percent to 5 percent.

A sideline to this is the sug- Bestion that many restaurant Owners may time a hike in the Prices of meals and drinks to co- ' Incide with the sales tax in- Crease on taxes. A night on the town, which now Costs about $20 for two couples, may cost $25 after April 1.

Rising municipal taxes are hurting homeowners. The tax in- Creases have provoked Mrs. Phyllis Clarke, who has been a Candidate for board of control in *Oronto, to issue a leaflet call- Mg for relief from the senior 80vernmenis.

Tn February the Canadian As- Sociation of Purchasing Agents

took note of a general and con- tinuing trend of upward price movements. :

Some examples in DBS statis- tics included: the general whole- sale index up from 246.8 in Janu- ary to 252 in October; the con- sumer price index from 136.9 to 139.3; prices of residential build- ing materials up from 149.5 to 151.4.

“It is worthwhile noting that corporation profits were also up in the third quarter of 1965, after record gains before that. One of the factors behind high- er profits was selected price in- creases in a wide variety of in- dustries.

Overall corporation profits in the third quarter were at a sea- sonally-adjusted annual rate of $1,263 million, up 2.9 percent from the $1,227 million in the preceding quarter.

As a result of price increases wage earners have been forced to put forward more militant wage demands and in many cases they have been able to win them.

But it is well-known truth that when inflation hits the eco- nomy it is the w2ge earner who suffers. Rising wages, which can only be won when old contracts expire, can never keep up to ris- ing prices and profits.

Does the present inflationary trend signalize a new pattern of development in the capitalist economy?

Since the end of the Second

“Fhe Keynesian philosophy

the economy as a whole would

World War the capitalist eco- embraced so enthusiastically in be up by 12 percent. This has nomy has generally resisted the Washington — government in- now been revised up to 19 per- traditional boom-bust line of de- tervention to stimulate demands cent.

velopment of earlier times. The most graphic example of the boom-bust pattern is the furious economic surge of the late 1920’s, followed by the stock- market crash.in 1929 and the

depression and terrible unem- -

ployment of the 1930's.

Since the war, however, while there have been ups and downs in economic development, the major capitalist countries have always succeeded in re-estab- lishing an approximate equili- brium fairly quickly.

“Depressions” became “reces- sions”. The last recession was in the late 1950’s. A new upward line of development began in

1961 and has continued until

now—the .longest line of con- sistent upward development in the post-war périod.

Now, for the first time since the immediate post-war period, business analysts, newspaper writers, government economists and university professors are be- ginning to talk about a real danger of inflation and the real

— worked weil in promoting ex- pansion when there was slack in the economy,” he wrote, “but analysts wonder how pertinent it will be to the problems of. ex- cessive demand.”

A recent Canadian survey looks at the problem from an- other angle. It suggests that the Canadian economy now may be entering what it describes as a “classical wage-price spiral’,

It should be noted that the real demand forcing prices up- ward is created by unprecedent- ed capital expansion. Anyone who is able to keep tab on the financial journals will be aware of this. :

Recent issues of the Financial Post, for example, describe the boom in British Columbia in glowing terms. The expansion includes extension of pulp and paper facilities, new mines and a furious search for new oil- fields. Similar development is underway in Saskatchewan and in Quebec.

In the United States, a recent

“A rise in spending of this magnitude does not only insure boom levels of business activ- ity,” says New York Times writer M. J. Rosant, reporting the survey. “It also means a big increase in inflationary pres- sure.”

Another factor forcing prices upward is the spending tied te. the escalation of the U.S. admin- istration’s dirty war in Vietnam.

What is happening to the eco- nomies of Canada and the U.S. at the present time raises at least two questions, one prac- tical, the other theoretical.

What measures must be taken’ by the Canadian government to combat inflation, to ensure at the same time continued expan- sion of the economy? The dan- ger here is that the big business oriented government will tend to put the burden of measures to bring inflation under control on the backs of the working class — i.e. wage restraints, higher taxes, etc. (The increase in Ontario’s sales tax is an ex-

danger that the boom may be survey of the Lionel D. Edie and ample). —-

getting out of hand.

Co. Inc. estimates that manu-

The second question is theore-

Last January, an article by facturers alone will spend 32 tical and needs. to be answered Thomas E. Mullaney (New York Percent more this year than they by economists: is the traditional Times) described the perplex- “id last year in business expan- hoom-bust pattern _reasserting

ities of a U.S. administration 810°

which has based its policies on Keynesian economic phies to encourage demand.

.

A similar survey six months

~*~

itself in the development of the capitalist economy, with all the

philoso- earlier had shown the spending dangers of a Crash and depres- on new plant and equipment in sion which this. would entail?

WILL the BOOM go

April 1, 1966—PACIFIC TRIBUNE—Page 5