In 1963, the now-defunct magazine The Statist reported an (unnamed) American senator as saying: "I am against inflation. I am against deflation. I am for 'flation." At the time, the UK economy was experiencing just that. Unemployment was low (2%). Wages were picking up, but not yet by much. Productivity was rising. State spending was just about under control. There was some spare capacity (about 50% of firms said they could produce more). Exports were rising (with the greatest rise, by the way, being in sales to the European common market, from which the UK was still excluded). Inflation was low and steady. In all, there was no real feeling among the experts that there was any risk out there. Too many people, said The Statist, were "too jumpy and too frightened of good news". They needed to get a grip.
If that doesn't sound familiar, it should: in our cover story, John Stepek explains the close parallels between then and now. The happy 'flation of the early 1960s soon gave way to one of the things our US senator was so against inflation. By 1967, The Statist was worrying about rising wages and angry workers; inflation was on the up, and the economic miseries of the 1970s were just around the corner. Could the same be set to happen again?
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