Obey the law of S&D

William Safire

March 23, 1993|By William Safire

IN THE long-ago days when I was a hotshot flack, I hired a young woman to place our clients on radio and television shows. She was terrific in ways it is no longer correct to use as criteria -- quick mind, great legs, go-get-'em attitude -- and after six months at $65 a week, she asked for a $10 raise.

Look, kid, I said with insufferable avuncularity, you deserve the 10 bucks. But there's this economic thing that restrains me called the Law of Supply and Demand.

She asked me to explain it in human terms. I pointed out how very few jobs existed with the glamour and excitement of radio-TV press agent -- ergo, low supply. And every ambitious, bright knockout in New York City wanted her job -- which meant high demand.

Put that high demand together with the low supply and you had a downward pressure on her salary; the result was a coolie wage, a term not then an ethnic slur. Sorry, kid, I told her, no raise yet; someday you'll thank me for the economics lesson.

That cruel-world episode was brought to mind when I was trying to discern the economic philosophy of the Clinton administration.

On the redistribution of income, the Robin Hood approach is apparent in the administration's budget resolution: Steal from the rich and give to the poor and portray anybody who objects as the Sheriff of Nottingham.

On the control of health-care costs, however, the shore is but dimly seen. We know that 37 million uncovered people (they're not naked; they just don't have insurance) are to be given coverage, thereby increasing demand.

What is to be done to increase the supply of medical services to offset the upward pressure of that new demand? We don't know; but before any long-range "managed competition" or "global budgets" are to be put in place, insiders murmur, Hillary Clinton's secret committee plans to limit increases in health insurance premiums and place a ceiling (now rakishly worn as a "cap") on charges by hospitals, doctors and pill rollers.

Price control. The very phrase sends a chill up my spine, as it is the ultimate government interference with the free market's fundament, the Law of Supply and Demand.

If health-service cost is to be controlled by fiat, it follows that supply must be rationed. For price control to work, money can no longer determine what is bought, except on black markets.

Price control also ultimately means wage control: not just reducing the swelling of the incomes of doctors, but freezing the wages of the hospital attendant who crashes your gurney into the elevator door.

Could it be that the task of Hillary's task force is force? A few weeks ago, trying to deep-background my way into the mind of a Clinton intimate, I was stunned by a counter-question: Wasn't it true that I had written President Nixon's speech of Aug. 15, 1972, imposing wage and price controls?

Look, kid, I said, reverting to type, that's not something for anybody, least of all a right-winger, to be proud of. Controls, a border tax, suspending the convertibility of gold, the whole statist works -- I wrapped it in words, even labeled it the New Economic Policy until somebody discovered in the nick of time that that was the name of Lenin's program. Some of the guys broke into the Watergate; I wrote the price-control speech -- where was the greater sin?

Peacetime price control was a colossal flop. Even Richard Nixon, never big on contrition, rolls his eyes when he remembers that ignoble experiment. We put on a lid that distorted the free economy, and inflation was worse when the law of Supply and Demand demanded enforcement.

Hillaryites! Whatever you do to redistribute health care -- and we can all agree on the need to curb patient greed -- forget price control. It is always justified as an emergency measure, starts off popular and winds up an unpopular mess. Instead, base your changes on the inexorable workings of the Law of S&D; make its freedom work for you.

Years after I denied that young woman a raise, I was impelled to call her with congratulations when she became the first journalist to break the million-dollar-a-year salary barrier.

"You remember that cockamamie law you told me about when we were a couple of kids?" said Barbara Walters (for it was she, as the sportscaster Bill Stern used to say). "It works both ways!"

William Safire is a columnist for the New York Times.

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