4
Tuesday, September 3, 1974
University Dally Kansan
THE UNIVERSITY DAILY KANSAN
OPINION
By Kansan Photographer DAVE PETERSON
Day-care centers are fine, but sometimes you want mother.
KU Senate must shun lobby
The Student Senate voted in November 1973 against joining the Associated Students of Kansas and developing indicators indicate that the Senate should continue to remain outside this organization.
ASK, a group that lobbies in the state legislature on behalf of the students of the five other state colleges and universities and Washburn University, was the subject of a survey by the university summer. The results of the survey revealed little support among legislators for the co-operative.
It isn't surprising that legislators feel that way. An ASK spokesman appeared this summer before the Kansas Senate's Interim Committee to announce a campaign finance reform. He alleged that the votes of legislators
were being purchased by special interests.
The committee chairman, State Sen. Arden Booth of Lawrence, challenged the spokesman to name one legislator who was being bribed. ASK had no evidence to substantiate its claim and received a severe public scolding from the committee members.
The paraphrase of the words of John F. Kennedy by one student senator last November are still a caveat for today:
The incident damaged the credibility of ASK, according to several legislators. The bad feelings that were created could color other issues, including state funding of higher education.
"ASK not what KU could do for it,
ASK what it could do to KU."
—Richard Paxson Contributing writer
Dykes signals rebuilding
When Chancellor Archie R. Dykes last week called for revision of the priorities used in funding higher education, he first step toward rebuilding the University of Kansas.
Snob Hill is back.
In recent years the University has had a tradition of being an elitist school—a place where graduate studies and research are stressed, people were professional people were trained.
But then came the baby boom. The University's size mushroomed and its quality improved. Each new student meant a need for more funds, so funding was tied to enrollment. And the system worked great until the quantity of students became more important than quality of education.
KU truly deserved its nickname, "the Harvard of the plains."
To sustain the University's growth and to sustain its constant improvement in quality, more students had to be brought to the University. Students need faculty, and money meant quality.
The switch from quality to quantity was neither sudden nor intentional, but it was necessary at the time.
What! University administrators never seemed to realize, however, was that some of the new students brought to the University would cause problems for their school to solve. After all, they had to be educated, advised and housed just like everyone else.
So the new dollars they brought with them to the University weren't spent entirely to improve KU's quality. Instead, they were spent keeping the students and attaching more.
It became a vicious circle, reminiscent of the old Defense Department justification for aircraft carriers.
Carriers, the department said, were needed to protect nuclear submarines. Why were they needed? To protect carriers.
This isn't to say, however, that the vicious circle at KU was all bad. In fact, it helped expose KU to many more ever worse cases and have come here without the quantity emphasis.
But when the riots came,
when inflation set it, when enrolments stopped growing,
when the legislature issued a no-increase budget—this was the downfall of the system. The new students actually became burdens. The new money they
brought in didn't even pay for keeping them in school.
Again, University administrators apparently didn't understand this. They reacted to the problem by trying to pull in even more
had to drive to Topeka or Kansas City to teach their classes—all because those were the places where potential students, and potential new sources of state funding, resided.
By Eric Meyer Editor
students. The action, of course, was counterproductive. And the University's financial state became increasingly worse.
One of the most recent attempts to reach out for more money was to reach out for "nontraditional students." Thus evolved the easy access and outreach programs. Professors
Rather than solve any financial problems, however, the Lawrence schools programs robbed the Lawrence campus to fund Topeka and Kanaa City branch schools. The school's quality of education declined.
After all, the University of Kansas wasn't intended to be an
extension service. That responsibility in Kansas to Kansas State University and Cooperative Extension Service.
KU's place in the state educational system always has been as an elitist school. The legislature long ago recognized, as Dykes said last week, the need to equip students that would perform research and emphasize graduate studies.
But the legislature apparently has forgotten this, because it now seems more interested in getting ahead of other states throughout the state system.
Part of this is that farmers, predominantly allegiant to K-State, are a stronger faction in the legislature than before.
And, with the addition of Wichita State University to the state system, increased equalization demands from the
state's largest city are heard.
Witness the demands for a WSU medical center and a WSU law school.
It is extremely unfortunate that the legislature cannot understand that Kansas does need a single, quality institution. Each state school should have its own goals and missions. And those missions shouldn't overlan.
Because the missions, if established, would be so radically different, a new formula's formula not based on requirements—would be needed when budget decisions were made.
And that's exactly what Chancellor Dykes proposed last week.
If he can follow through with this project to change the present budgeting pattern, he will be taking the decade's first giant step back to quality education.
'Evangelists' confuse issue
Our professional economists remind me of our most-publicized evangelists.
Each one vows that his dogma and doctrines offer a certain road to heaven while the other does not. They will open the rates of hell.
And although none of them offers proof of ever having seen heaven, and only your own cynicism leads you suspect that God is not with hell, you just have to pick your preacher on faith.
No debate by evangelists ever confused those merely seeking to be saved more than our current crop of economists will confuse Americans. C. Jackson Grayson, Jr., head of the price commission during the Nixon administration and most influential of the Southern Methodist University, is vocally opposed to new wage and price controls, or even guidelines. He said controls worked only for a
Walter Heller, chairman of the Council of Economic Advisors under President Kenyan government from inflation caused by a demand-pulp process, aggravated by explosions in food and fuel, and that we now know in a classic wage-spiral.
No Baptist ever argued more passionately with a Methodist over whether baptism means "a little sprinkling of water than our economists argue these days over the value of a balanced economy," or monetary policies or the efficacy of wage and price controls.
short time during cost-push inflation, but not during what he said we had now, which is a demand or supply inflation.
And so it is with regard to the economists who speak with such fervor about how the Ford administration can curb inflation without plunging the economy in magic recession or depression.
The rhetorical gobbledygook is enough to convince you that
Secretary William Simon's suggestion that the defense department use the welfare programs are cut, or will he go for Grayson's suggestion that defense and all other segments share the budget.
If the above strategy is adopted, how much unemployment is Ford prepared to accept as the sacrifice some Americans must make in the war on inflation? How much money will he invest in public service jobs and other
By Carl Rowan
So overlook, if you can, all the theoretical talk. As Ford movesumn these are the issues that really matter to you and me;
there is no such thing as an expert on the economy.
Will the "old-time religionist" prevail in their view that cutting federal spending and balancing the budget is a cure-alarm giant first caused by Mr. Bush's salvation? If Ford buys this solution, where will he cut the budget? Will he follow Treasury
programs to ensure that the poorest, weakest Americans do not become economic cannon fodder?
Could Ford possibly adopt Heller's argument that our budget-cutters and money managers are fighting the wrong inflation, and in doing so are squeezing out of the economy not water but its economic life-blood? If Woolf said President that he must risk a severe recession, Heller wants food stamp benefits raised, unemployment compensation
increased, income tax exemptions adjusted, tax laws reformed to close loopsholes and relief for lower income groups.
Or will Ford perhaps buy the sort of middle proposal that he adopt guidelines (as proposed in 1984) allowing prices to go up three per cent while wages increase 10 per cent—the difference to make up for the rise in food and utility costs; that fact rooftop margins are un?
More likely, perhaps, than a middle proposal, is the possibility that Ford will agree that the Federal Reserve Board has driven interest rates so high that some banks and businesses are in financial jeopardy. He would like to move from the current tight-money stance to a more moderate posture.
Those are areas and issues that are crucial to the economic well-being of all Americans. You won't need six years in the London School of Economics to understand what the Ford administration is doing if you ignore it and concentrate on the issues of who loses his job, whether prices rise faster than your pay, whether Americans can borrow money to buy a house.
You may go on taking your evangelist on faith. But as for the economists, judge them only by what happens to your pocketbook and bank account. Copyright 1978, Publishers-Hall Syndicate
Loose money supply feeds inflation
By LELAND J. PRITCHARD
Inflation, economists agree, is a more-or-less chronic across-the-board increase in prices. What economists don't cause or cures for inflation are the factors partially because all inflations aren't alike. If inflation is of the demand-pull type, the proper solution is to reduce the rate of growth of the money supply. This reduces the rate of money turnover. Cost-push inflation, on the other hand, can best be held in check through methods that increase the degree of price competition labor and product markets.
The present two-digit inflation that now plagues our economy is largely of the demand-pull type. But if you were to ask Arthur Burns, chairman of the Board of Governors of the Federal Reserve System, for his solution, it would be that the board is and has been following a restrictive monetary policy, and that it is now up to Congress and consumers to balance the federal budget by using restraint in the pricing of products and labor and by buying less and saving more. It has been able to sell this version of tuition to the public and, apparently, to Washington.
To date I haven't read one article or heard one statement
THE UNIVERSITY DAILY KANSAN
Accommodations, goods, services and employment of students enrolled in the Student Education program are not necessarily those of the Student Segment of the Student Education Program.
An All-American college newspaper
Published at the University of Kansas weekdays
Monday-Friday, 10:00 a.m. and Saturday-
animation periods. Serendipity-class portraits.
Lawrence, KA. 60045. Subscriptions to mail are $8.
Cookbooks, $9.50; Books, $13.50; $13.50 a.m.
a. $13.50 a.m., paid through the student activity
EDITOR
Austere Editor Eric Moore
Jefrey Stricken Jill Willis
Business Manager
Advertising Manager Assistant Business Manager
Alice Riotter Dave Reeves
disputing Burns' contention that the board is following a restrictive monetary policy. And if the participants in the planned summit conference are not willing to problem think the board is following a restrictive monetary policy, they will fail in their efforts. The fires of the present raging inflation will not be eradicated drastically reduces the rate of increase in the money supply and the velocity of money. Institutions change and can be changed. Much of the sharp increase in the transactions per capita has occurred in the last few years is due to an institutional innovation—allowing banks and savings institutions to calculate interest on a daily compounded interest rate. We customer the right to withdraw savings on demand without notice and without income penalty. We can, if we want, go to the bank when a savings account is just that and not an adjunct to our checking accounts.
The board and most of the public apparently accept the dictum that high interest rates may facet evidence of a restrictive tax policy; the time frame of your economic policy is 24 hours rather than 24 months, they are. For example, if the manager of a bank does not make in buy orders for Treasury bills for the accounts of the 12
Federal Reserve banks, the prices of these bills will tend to rise, and their yields (interests rate) fall. This particular procedure, taken alone, would restrictive monetary policy. And the opposite action would be evidence of a tighter monetary policy. But, as noted, this is a 24-hour phenomenon. At times, time, open market operations or any other type, because they provide legal reserves (an increase in iending capacity) to the banking system, result in an expansion of bank credit and thus an increase in the money supply (checking accounts and currency).
It is the excessive increase in the money supply combined with a sharp rise in the transactions velocity of our money system and the present high rates of inflation. This in turn is almost wholly the cause of our present high interest rates. During the annual compounded rate of 6.5 per cent, our means-ofpayment money supply was about 2 per cent. During the same period, the annual transactions velocity of our money system was about 31. In the nine-year period since 1964, our money has grown at an annual compounded rate of about 6.5 per transaction velocity of money which average a level of 70 in 1973. Velocity has continued to increase and is now in excess of 80. These velocity figures and all other monetary data on which computations have been made for the Federal reserve Bulletin. (Thus we see that high interest rates aren't evidence of a tight money policy but rather a result of the excessively easy money policy of the last nine years, which, in large responsibility for the present intermolecular levels of inflation.
The impact of both an accelerated increase in the volume and velocity of money on prices is made more evident if we examine rates of increase in aggregate monetary demand increased by 4 percent the decade ending in 1984, aggregate monetary demand increased at an annual compounded rate of about 6 per cent. In the nine years since, the increase has been more than 13 per cent and the year 2017 because of Gross National Product and, presumably, the volume of goods and services offered in the markets was increasing at a rate of less than 5 per cent, it should come as no surprise that intensification of our chronic rates of inflation to the present devastating level.
Leland Pritchard, professor of economics, is an occasional contributor to the Kansas opinion page. He teaches courses in personal finance and money and banking.
"IT'S THE GRAPH FROM WALL STREET."