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As the American public is learning to its dismay, there are many ways in which government actions can cause or worsen inflation. Large budget deficits and excessively easy monetary policy are usually cited as the two major culprits, and quite properly. Yet there is a third, less obvious--and hence more insidious--way in which government can worsen the already severe inflationary pressures affecting the American econmy.

That third way is for government to require actions in the private sector which increase the costs of production and hence raise the prices of the products and services which are sold to the public.

Murray L. Weidenbaum has had a long association with AEI as an adjunct scholar, a resident scholar, and member of AEI's Council of Academic Advisers. He is currently Edward Mallinckrodt Distinguished University Professor and Honorary Chairman of the Murray Weidenbaum Center on the Economy, Government, and Public Policy at Washington University in St. Louis.