Tax-Based Incomes Policies: A Commentary for the Future
During the 1 970s incomes policies were a lively issue. In the United States there was a wage-price freeze and in Britain, a wage-price policy, followed by a social contract. Proposals for tax-based incomes policies (TIP) received much attention in journals and even a brief appearance as a proposal "floated" by the White House in 1977.1 More recently we have experienced a decline in inflation, growing severity of recessions, and much smaller increases (even some decreases) in negotiated wage bargains. Thus interest in TIP has declined as the need for incomes policies has seemed less urgent. Nevertheless, the structural issues that TIP attempted to address have not changed, and if TIP had virtues in the 1970s, TIP is again going to seem a sensible proposal when a greater degree of prosperity returns to the economies of the developed nations. Modern states are most unlikely to have anything like full employment without inflation unless they adopt incomes policies.2