Over the last few years a regular feature at annual shareholders meetings (after the usual announcements of officers indicted during the preceding year) has been the attempt by certain groups to have the shareholders adopt liberal social or political resolutions. Perennial favorites have been for the company to get out of South Africa, stop doing defense work, hire more minorities, or give its land back to the Indians. Recent resolutions have called for withdrawal of investment in Chile and disclosing foreign payoffs.

These proposals are generally defeated by substantial majorities, but the groups get their proposals put before the other shareholders (mostly at corporate expense) and force the management to take a position. The proponents view these resolutions as an educational exercise to raise the awareness of their issues and believe that this exposure is increasing the acceptance of their ideas.

Since libertarians had so much fun with a national political campaign, perhaps their contacts and organization could be carried over to corporate democracy. Why not force management to take a position on proposals with loaded libertarian language in favor of free trade and resistance to hiring quotas and government strong-arming? The whole thrust of shareholder activism has been from the leftists who have, consequently, been able to define the issues and get management's attention (and an occasional concession). It doesn't cost much to become a shareholder and get the right to attend the annual meetings. The libertarians have enough of a national organization to locate people who can collect proxies and conveniently attend meetings. Shareholders to the barricades! Capitalists, arise!

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I get tired of denouncing inflation (just as ministers must get tired of railing against sin) so 1 will just mention very quickly an interesting study, "The Welfare Cost of Inflation," from the November 1976 Review, published by the St. Louis Federal Reserve Bank.

It may come as a surprise to many readers, given the libertarian movement's hard line on the money question, that many economists actually have good things to say for inflation—at least for fully-anticipated inflation. Their argument goes that if everyone knows about the inflation then the unfortunate wealth and income transfers in the private sector (e.g., from creditors to debtors) will be largely eliminated by normal market processes and you will be left with the wealth transfer from the private sector to the government. Viewed in this way, inflation is seen as simply another method of public finance and the only relevant inquiry is whether it is more or less efficient than alternative means, such as taxing or borrowing. Their analysis concludes that, in given circumstances, inflation may be in fact a more desirable form of public finance and, in these instances, inflation is preferable to non-inflation.

Lest you conclude from this merely that economists know the price of everything and the value of nothing I am pleased to relate that economist John A. Tatom, in the article above-cited, examines this so-called "tax efficiency" argument for inflation and concludes, after a rather technical economic analysis, that the cost to the public (the welfare cost) so far exceeds the gain to the government that inflation cannot be justified as a tool of public finance.

Also on the subject of public finance, you will have noticed that the Internal Revenue Service has restored the foreign bank question on the Form 1040. Commissioner Donald Alexander had dropped the question in 1975 in a move many of us hoped signaled a more constructive turn in post-Watergate morality. Alas; columnist Jack Anderson, the Department of Justice, Congress, and other foes of liberty intervened and the question is back, penalties of perjury and all.

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When this column sees print the country should be emerging from its blanket of winter ice. Among the interesting phenomena we may anticipate may be a depressed real estate market in the northeast and upper midwest as residents vow never again to suffer through such weather, and a resulting boom in the market for homes in the southwest and California (tempered in the latter case by drought problems). The action will probably not start until spring since easterners may be afraid of freezing pipes back home if they come west to scout too early.

While we're on the weather, this might be a good time for retreaters to look for ranch land in California depressed by the drought.

This column has usually pooh-poohed the economic disaster forecasters within the libertarian movement, but the recent natural gas crisis in the east, and the government's response to it, does remind us that the market system can tolerate only so much government control. Usually these controls have only put people out of work or raised prices; this time we got a glimpse of it breaking down the division of labor as poor families burned newspapers to keep warm while natural gas was kept in the ground by price controls.

The politicians, on the other hand, were in their glory, touring closed factories and ostentatiously lowering their thermostats while the T.V. cameras rolled. The stoves of Buffalo were lit by an act of Congress and in New Jersey loyal citizens obediently followed their governor's orders to shiver at 65°, lest they fear a knock at the door by the dread Heat Police (die Hitze-polizei).

The distress of the people is the health of the state.

© 1976 Davis E. Keeler