The Price of Prosperity

Parliament last week conducted a lively debate on Britain's high cost of living, while British workers grumbled loudly about its damage to their pay packets. In Italy, where the government has launched an unpopular austerity drive to halt rising prices, the man in the street has found a new scapegoat in la cara vita. And the French, who love to complain, moan relentlessly about la vie chere. In any language, inflation is Europe's foremost economic preoccupation--and the problem that most threatens its extended boom.

Papal Plea. With European consumers clamoring for goods faster than farms or factories can produce them, prices have been soaring in almost every country. Last year they rose 4% in the Benelux nations, 6% in France, 7% in Italy. They are still climbing. Such worried leaders as German Chancellor Ludwig Erhard and Italian Prime Minister Aldo Moro warn that continued inflation may ruin Europe's economy by weakening its currencies and shutting off its world markets. Even Pope Paul, in an unusual message last month, took note of Italy's inflationary spiral by recommending austerity both because of "the Lenten season and the state of things in this country."

Europe's governments are beginning to give up some growth-inducing policies for the sake of stability. They are reshaping their economic policies in hopes of persuading free-spending consumers to buy less, borrow less, save more. Since October, Belgium, France, Sweden, The Netherlands and Britain have increased their bank interest rates. France has also clamped some price controls on food and manufactured goods, and Denmark has placed a 9%-sales tax on most nonfood products. In Italy the government's austerity program aims at raising taxes on cars and gasoline, restricting installment purchases. Some manufacturers protest that such measures may brake Europe's boom too hard, but political leaders insist that drastic action is needed to stop the rise in export prices and narrow the trade deficits that have been growing dangerously in Italy and Britain.

Servant Shortage. Even the sweeping statistics do not show how substantially inflation has changed everyday life in Europe, and the extent to which it has hurt pensioners, .civil servants and others on fixed incomes. Beer now costs almost as much in Munich as in Milwaukee--170 a pint. Italian housewives have to pay 290 apiece for oranges that cost them 210 last year, and the common varieties of pasta have risen from 90 a Ib. to 130. In Paris, where the price of steak is $1.22 a Ib. (for biftek, the lean cuts from the round, rump or tip), a cheap restaurant lunch runs to $1.50, and $4 lunches are common. The well-pressed Frenchman has to pay $70 to $100 for a suit (or $200 if it is custom made) and $2 to have it dry cleaned, about $8 for a shirt to go with it. Movies on the Champs-Elysees cost $2, and a three-room apartment in a new Parisian building $120 to $150 a month. In the past six years, prices of homes have risen as much as 33% in Britain, 100% in Denmark. While some items are still relatively cheap in Europe, such diverse merchandise as toothpaste and paperback books now cost almost as much as in the U.S.

Inflation has also helped bring to Eu rope that old American problem: the servant shortage. Most maids have been lured into the higher-paying factories, and those who remain play off one employer against the other. Result: their wages have shot up 50-100% in the past five years. A sleep-in servant now pockets up to $100 a month in Italy and Germany. When they are discontented with their wages, some European maids have a sly way of hinting for a raise: they simply start breaking the dishes.

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