The moral imperative here was strong. On its face, the wage-price spiral may
seem purely mechanical. However, many believed it was caused by the greedy
(immoral) behavior of both management and labor. President Dwight
Eisenhower referred to the spiral in his 1957 State of the Union address:
The national interest must take precedence over temporary advantages which
may be secured by particular groups at the expense of all the people.…
Business in its pricing policies should avoid unnecessary price increases
especially at a time like the present when demand in so many areas presses
hard on short supplies. A reasonable profit is essential to the new investments
that provide more jobs in an expanding economy. But business leaders must,
in the national interest, studiously avoid those price rises that are possible
only because of vital or unusual needs of the whole nation.… Wage
negotiations should also take cognizance of the right of the public generally
to share in the benefits of improvements in technology.7
Even though 1957 saw only a moderate burst of inflation, from less than zero
in 1956 to a peak of 3.7% in 1957 and far smaller than the 23.6% in 1920, it
stirred emotions because of the moralizing narrative that attended it. A 1957
editorial in the Los Angeles Times exemplifies the reaction:
What is wrong with our country? A creeping inflation is like a small crack in
a dam or dike as it grows menacingly larger by the force of the seeping water.
The crack in our national economy is being widened by greed—greed of
some leaders of big business and labor as they continue to boost prices and
wages, each blaming the other, and neither pausing to realize that the
economy of our country is at the breaking point with a crash being inevitable
if we do not level off now and hold prices and wages. It may even be too
late.8
The moralizing in these narratives, spoken by presidents and prime ministers
and published and commented on by journalists, gave the US Federal Reserve
and other nations’ central banks the moral authority to step hard on the brakes,
risking a recession. They did just that, tightening money gradually until the
discount rate rose to a peak in October 1957. Allan Sproul, the recently retired
president of the Federal Reserve Bank of New York, in 1957 lamented the
difficult role of the Fed as the “economic policeman for the entire community.”

He noted the blame the Fed gets for the expansion before a crackdown:
As it is, there are times when your Federal Reserve System finds itself in the
position of having to validate, however reluctantly, public folly and private
greed by supporting increased costs and prices.9

Inflation in a Constellation of Injustice and Immorality
Narratives
When inflation has been high, many commentators have regarded it as the most
important problem facing the nation. Starting in 1935, the Gallup Poll has
repeatedly asked its US respondents, “What do you think is the most important
problem facing this country [or this section of the country] today?” During the
era of highest US inflation, from 1973 to 1981, generally more than 50% of
respondents responded by saying either “inflation” or “the high cost of living.”
This perception appears to have been common across much of the world.
Reflecting this view, economist Irving S. Friedman wrote in his 1973 book
Inflation: A World-Wide Disaster that the increasing inflation was sending “panic
signals throughout the world,” opining that the inflation crisis was as serious a
problem as the Great Depression of the 1930s.10 Inflation was “eroding the fabric
of modern societies” and “threatens all efforts to keep the international monetary
system from fragmenting into hostile forces.”11
The discourse seemed to want to fix blame on some segment of society, either
labor or business, for the inflation. Popular syndicated columnist Sydney J.
Harris wrote in 1975:
WHAT IS SO frustrating about this kind of thing is the difficulty in pinning down
the culprits, if any …
Either somebody is lying, or the whole economic process doesn’t make
sense.
If labor is getting “too much,” why are most working families struggling to
make ends meet?
If grocers are “profiteering,” why do they get glummer as prices go
higher?
Where does the buck stop? Nobody knows. And so each segment blames
another for the vicious spiral, and each justifies its own increases by pointing
to its own rising cost of doing business.
THE MARKET NO longer seems to control prices when they keep escalating
despite reduced consumption.
Some strange new twisted law appears to be operating in place of the
classical formula of the “free market.”