DISCUSSION.

Strenuous efforts are now being made to convince the public that voluntary price reductions toward the height of a boom would largely avoid recession. Admittedly such reductions-perfectly timed-would help. But as a means even of keeping depression within bounds, consider them almost entirely ineffectual. Suppose a system is about to reach a point of backlog saturation. Price reduction to avoid depression would have to be made in precisely the industries whose demand curves have sufficient elasticity to mike it worth while. Also there must be enough such industries. Yet in such a situation many of the necessary industries would be entirely new. They would have to be created by strenuous entrepreneurial effort. The system would have to be sufficiently flexible to make a drastic and virtually instantaneous shift in the direction of its productive flow. The inevitable discontinuity of durable goods production in a free society cannot be avoided by mere ex ante price reduction. Other means of stabilization-as public works-must be kept in reserve. It is said that people usually become neurotic when they want irreconcilable things. Our society is neurotic in demanding a degree of stability impossible to combine perfectly with the promptness in satisfying demand for which people clamor. One cannot escape this dilemma by seeking out a whipping boy called monopoly or rigid prices, and it is to be regretted that the Council of Economic Advisers is not putting more of its effort into facing the real issue. It is in the hope of focusing attention on these issues that the author offers his rather elementary terminological critique.