April 1979 RAIN Page 21 cine. When the consumer pays the bills for these four necessines, the money goes not to big government but to big business. The necessities of life are provided to us by monopolistic forces-banks, food processors, speculators, OIl and utlltty companies, pharmaceutical firms, hospital suppliers. This fa t of monopolies providing necessities is plainly at the root of modern inflation. There can be nO serious anti-inflation program that ignores profiteering off of basic human needs. OIN has been en.dorsed by the National Urban League, Consumer Federation of America, Public Citizen, National Council of Senior Citizens and the International Association of Machinists. This progressive coalition is urgently needed. Otherwise, progrcs ives themselves will be blamed for inflation. Under the guise of "cuning government spending," politicians will impose more costs and more suffering on the victims-consumers, workers, seniors, minorities and the disabled-instead of holding the profiteers accountable. Democratic Party leaders may think they are co-opting the inflation issue from the Republicans, but in reality the Republicans even in defeat are co-opting the Democrats into the program of Herbert Hoover. President Carter himself is setting the pace by adopting the classic reactionary formula to cure inflation-start a recession. The president'S plan would limit wages, ask for voluntary restraint by business, reduce the amount of money available, increase the cost of money, reduce help to those in need, and increase military spending. Obviously this is a way to make the poor poorer and still not stop inflation. What will work if not the Carter plan? Nothing less than an approach which treats the causes as well as the symptoms. The only solu;ion is to take the profit out of inflation. PEOPLE 'NHO PROFIT FRON\ IT____ 3. Housing High interest rates and real estate speculation have driven hou ing co ts through the roof. The cost of a new home has jumped from $23,400 in 1970 to $48,800 in 1977. These high prices are made worse by the high interest policies dictated by the Federal Reserve Board, a quasi-government agency closely allied with big banks. The bankers who dominate thinking at the "Fed" see high interest rates as good economics. And, for bankers who profit from high interest rates, that kind of economics makes sense. But, for home buyers, the effect has been disastrous. Between 1970 and 1977, home ownership and rent rose more than 25 percent faster than the costs of non-necessities. And, during the first half of 1978, mortgage interest costs jumped nearly 9 percent! If present trends continue, the price of the average new home in America will be $90,000 by 1980. Between 1970 and 1976, the monthly cost for a first time home buyer went up 73 percent. And, to understand the importance of this inflation in home costs, you have to realize that 20 percent of the average family's budget goes into the monthly costs of home ownership or ~ent. More and more families who dream of owning their own homes are being priced out of the market. And a growing number of homeowners- especially the elderly on fixed incomes- feel the threat of being squeezed out of their own homes by kyrocketing property taxes, insurance rates and fuel costs. What has caused the home price inflation? Well, since 1970, the finance and land components of the price of a new house have increased by a third. In 1970, they were 27 percent of the cost. By 1977, they had risen to 36 percent. And mortgage interest rates ro e from 8.4 percent to 9 percent. At the same time, the share of the cost of building a new home that goes to labor dropped 8 percent! nd, while land costs soar, tax laws-particularly the loophole for capital gains from real estate-actually subsidized land speculation. Housing: End monopolistic practices among realtors, lawyers, title companies, developers and building supply firms and other segments of the housing industry. Enact tax reform to stop encouraging land speculation that drives up home prices. Provide lower interest rates and credit allocation to reduce home mortgage costs, in rease construction and reduce costly cycle in home building. Increase hou ing rehabilitation programs. Support rent stabilization legislation in areas with low vacancy rates. Build tenant organization.s. 4. Energy It's no secret that energy prices-utility rates, gasoline prices, fuel bills-have gone up faster than just about anything else. From 1970 to 1977, energy prices rose 99 percent- more than twice as fast as the price of non-necessities. Last winter 1 of every 5 older Americans had to choose between buying groceries and paying the utility bill. And so far this year, gas and electric rates are going up at an annual nte of 17 percent. And energy price inflation fuels inflation throughout the economy. Increased energy prices mean increased shipping cOSts, increased fertilizer prices, increased manufacturing costs. And, because so many products are made of petroleumbased plastics, increased oil prices directly push up the cost of items from clothing to phonograph records to automobile dashboards. The energy industry is highly concentrated. Electric and gas utilities have local monopolies. The eight largest oil companies control 50 percent of domestic oil production, 40 percent of natural gas, and increasing amounts of coal, uranium and alternative fuels. The energy conglomerates sometimes claim that environ· mental protection costs have driven up fuel bills. Yet, according to Chase Econometrics, all federal anti-pollution requirements will increase the cost-of-living by only half of one percent this year-including regulation that doesn't even affect the energy industry. And it doesn't count the lower medical costs that come from cleaner air and water. The small price we pay for a cleaner and safer environment doesn't explain why big oil company profits doubled between 1970 and 1977. Or why Congress, which talks abou t controlling inflation, spent most of 1978 debating how much to raise natural gas prices. The fact is that energy price inflation is enormously profitable for a handful of big oil companies. And as long as national energy policies are set by them-and by their friends in government- we're never going to be able to beat inflation in America. Energy: Prioritize development of low-cost renewable energy sources, such as solar power. Regulatory agencies must get tough on oil companies and utilities that are inflating prices. Promote energy conservation and transportation policies that eliminate waste. Promote insulation. • Strictly regulate natural gas and oil prices, to keep them from rising to OPEC monopoly price level . End oil company ownership of coal, uranium and other competing energy sources.
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