Don't Sacrifice Growth For Special Interests

The U.S. Federal Reserve has had an explicit policy of tightening to prevent "wage-based" inflation, which tends to occur in the later stages of recovery phases of the business cycle ("Raising America's living standards," Editorials, July 17).

What this policy directly means is that over time, the price of most other goods will rise faster than wages. Perhaps U.S. economic policymakers (including the Fed) should focus more on maximizing real (inflation-adjusted) growth and less on redistributional issues--the excessive obsession with minimizing inflation at all costs.

Minimizing inflation at the cost of real growth does redistribute wealth to bond holders, but it negatively impacts the overall economy. Economic policymakers should be wary about sacrificing efficiency for the sake of redistribution to favored constituencies.

Gerhard Holt


Fontainebleau, France

A worker making $10 an hour probably isn't going to produce world-class quality goods when the wage isn't worth getting out of bed for. We, in this country, are managing by the old formula: Cut heads and the rest will work harder. Unfortunately, the effects of this myopia are yet to be felt. Many college-educated Americans over 40 have lost their homes, their IRAs, even their will to work. They will probably never get it back. I'm afraid American products are going to get worse, not better.

William J. Rose


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