______ Page 20 RAIN April 1979 A new coalition of national and local cititen groups has recently been formed to encourage the public, government and business to concentrate on life's four necessities in anti-inflation policy. COIN (Consumers Opposed to Inflation in the Necessities, 2000 P St. N.W., Suite 413, Washington, DC 20036) is launching an educational campaign that will focus on food, housing, energy and health care under the premise "Inflation isn't a natural disaster; it's caused by people who profit from it." The initiating group of COIN includes the Consumer Federation of America, Exploratory Project for Economic 'Alternatives, Community Nutrition Institute, Environmental Action, International Association of Machinists and the National Urban League. We hear everything but profit being blamed for inflationseniors who supported national health insurance, factory workers trying to maintain their purchasing power, consumers "living beyond their means" to pay for Christmas presents, police and firemen trying to maintain services, garbage collectors and hospital orderlies and case workers- the list never ends, except when we arrive at the doors of the big corporations. J We agree that wasteful government spending is one reason we have inflation. The government is bloated by bureaucracy. Civil service has to be reformed. Tough choices have to be made. We find it hard to understand why, for example, the Pentagon's budget is rising in peacetime while the president bluntly tells the cities to give up any hope for fcderal relief. Even more important, simply cutting taxes or reducing government does not confront the primary sources of inflation. Even if Americans receive more dollars from lowered taxes, the dollar will continue to buy less and less while being devoured by inflation. The fact is that inflation assaults Americans when they try to afford the basics of life- food, shelter, energy and mediINFLATION IS CAUSED BY Prices Go Up Because Someone Raises Them 1. Food Between 1970 and 1977, food prices rose over 50 percent faster than the prices of non-necessities. The avcragc food price hike was about 8 percent a year. Spinach went up 9 percent a year, margarine 10 percent, fish 11 percent, and beans 12 percent. . 1978 was even worse. The annual food inflation rate for the first half of the year was 18 percent. Who's to blame? Not most farmers. They get only 3 cents of every dollar you spend on bread. Not workers in the food industry. Between 1970 and 1977, their hourly wages didn't even keep up with the increase in the food marketing bill. . One of the big reasons for rising food prices is the monopoly power of food processors, grain dealers and other corporate middlemen. While food prices went up 67 percent be· tween 1970 and 1977, after-tax profits in food marketing rose over twice as fast: 150 percent! Profits like that are not surprising when you realize how few corporations dominate the food industry. Four firms make 75 percent of the bread and flour. Three firms control 82 percent of the breakfast cereals. Onc firm 'produces 90 percent of all soup. While much of farm production is still done by independent, family farmers, big business is moving in. Already 97 percent of chicken farming, 85 percent of citrus production, and over 90 percent of sugar production is controlled by vertically integrated corporations. Unlike most countries, the United Statcs has no program to prevent sudden pricc riscs (due to shortages or weather) from jolting the consumcr and staying up. For instance, in the period 1973-74, basic food prices went up 32 percent. Even though the shortages are now over, consumer priccs remain high. Our overall farm programs don't adequately protect either the farmer or the consumer. 2. Medical Last year, hospital charges jumped 10.4 percent. Doctors' fees went up 9.2 percent. And drug company profits were over 25 percent higher than average corporate profits. Between 1970 and 1977, medical costs rose more than 50 percent faster than the prices of non-necessities. Ten years ago, a day in the hospital cost $48; today it costs $183. Where does the health care dollar go? Well, the average doctor made $63,000 iPl 1976. While doctors' fees have risen much faster than the cost of living, pay for nurses and other hospital workers has barely kept pace. In fact, from 1955 to 1975, the share of the consumers' daily hospital charge that goes to labor dropped 14 percent. Much of the blame for rising medical costs goes to insurance companies which have been merely collection agencies for the doctors and the hospitals. Regulated loosely by the states- if at all- these insurance giants have allowed doctors to pass on to patients the cost of every overpriced new medical gadget that attracts their professional fancy. They have looked the other way as unnecessary surgery (costing almost $4 billion in 1975) and excess hospital beds (150,000 too many in 1974) have driven up insurance rates. Spending $5,000 a year on advertising to t'ach doctor (while restricting advertising of prices to consumers), the big drug companies have kept profits high: an 18.2 percent rate of return last year. This reprint from Campaign for Economic Democracy News outlines a coalition fo rming to take tbe profit out af inflation.. Provides some fo od for thought and a starting point of strategies to follow to bring tbis about. CED News is published mOllthly, 304 S. Broadway, No. 501, Los ilngeles, eA 90013. - LS It's Time for a Progressive Agenda: Food: Develop Consumer Cooperatives and direct farmer-to-con sumer marketing. Protect the family farm to keep the farm economy competitive. Create grain reserves, export controls, and other programs to keep shortages from driving up food prices and to stabilize farm income. Increase efficiency by reforming Interstate Commerce Commission surface transportation regulation. Medical: Break the control of doctors, hospitals, insurance companies and drug companies over American health policy. Increase prepaid health plans that take away the economi incentive for unnecessary operations and over-medication. Begin tough controls on hospital charges. Enact comprehensive national health insurance for all Americans, with strict budget controls. The federal government should actively promote prevenrive care (which saves lives as well as money) and increase efficiency in the medical industry.
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