Remembering Nixon's wage and price controls

The Washington Examiner ^ | 2011-08-16 | Gene Healy

[rabscuttle385]

Remember "TARP," "Too Big to Fail," "Government Motors," "pay czar," the buzzwords of the Bush-Obama era? They reflected a disturbing trend toward presidential interference in economic life.

Forty years ago this week, President Richard Nixon showed us just how dangerous unchecked executive power can be to the free-enterprise system.

On Aug. 15, 1971, in a nationally televised address, Nixon announced, "I am today ordering a freeze on all prices and wages throughout the United States."

After a 90-day freeze, increases would have to be approved by a "Pay Board" and a "Price Commission," with an eye toward eventually lifting controls -- conveniently, after the 1972 election.

Putting the U.S. economy "into a permanent straitjacket would ... stifle the expansion of our free enterprise system," Nixon said. As President George W. Bush put it in 2008, sometimes you have to "abandon free-market principles to save the free-market system."

[Lazlo in PA]

The plain truth is that, once you back out the growth of debt from GDP, the United States economy has been stagnant since 1983.

So your blaming Reagan.

[Lazlo in PA]

I also forgot about Nixon scraping Bretton Woods.

[BfloGuy]

I also forgot about Nixon scraping Bretton Woods.

I cast my first vote for Nixon. My family adored him. On hindsight, he was one of the most liberal presidents of the 20th century -- just behind FDR, Wilson and LBJ. But not far behind.

[icanhasbailout]

So your blaming Reagan.

No I am not. I am simply citing the actual factual data. There are many other potential explanations and it is a gross oversimplification to say everything is the fault of the person who was President at the time.

Observe the following chart:

What you are seeing is the red line, which is GDP change without debt included, and the blue line, which is GDP change attributable to debt. The facts are undeniable - we have gone nowhere economically in three decades.

Experience confirms this. Are you better off than you were three decades ago? If so, you are in the minority.

The blame, in my opinion, lies squarely on purveyors of debt.

[Lazlo in PA]

With your chart, I see a direct correlation between throwing away Bretton Woods in 1971 and making the dollar a fiat currency and things going haywire. I will blame Nixon. I am a proud over-simplifier after all.

[jacquej]

and, does anyone remember the run-up in interest rates in 1979-80? Iff’en I ‘ember ‘zact’y, t’was about 18 to 21%.

And we had four kids to feed, and were trying to buy our very first house, after years of renting!

[DB]

Factual data?

How is it the rate of debt change collapsed starting with 2007Q1 when in fact it has skyrocketed? Currently 10% of GDP is debt spending - a huge number.

[Hunton Peck]

It’s useful to learn from the past. It’s frequently noted among conservatives (including me) that it took a Carter to bring us a Reagan; less so that it took Nixon and Ford to bring us Carter.

Since the primary season hasn’t even started yet, this is a good time to try to avoid making the same mistake on some RINO running now. It makes a whole lot less sense to start now with the nagging that we must unite behind someone who hasn’t been nominated yet.

[count-your-change]

Nixon's wage and price controls produced distortions in the economy that were immediate, uselessly harmful and ever so instructive.

To illustrate I give you the example of the eight foot 2x4. It disappeared since it was under the price control regime.
But since ten foot 2x4’s were not they were abundantly available to be sawed off to make eight foot 2x4’s.

I rest my case.

[decimon]

Interesting to note how Libertines are always trash talking Bush Nixon et al but seem strangely incapable of ever saying anything at all about the Obama Democrat’s Progressive Fascist agenda.

You have a need for a read. Did you not see linked below the article, MORE BY GENE HEALY? Obamaphiles still longing for Camelot

[logician2u]

Interesting to note how Libertines are always trash talking Bush Nixon et al but seem strangely incapable of ever saying anything at all about the Obama Democrat’s Progressive Fascist agenda.

Yes, it is, isn't it?

Time for my little history lesson, kids.

Back in the hippy-dippy days of the Nixon administration, Republicans (of which I was one, along with everyone in my family except my union-loving maternal grandfather) were obligated to not raise a ruckus about what Tricky Dick was doing if they wanted to go anywhere in the party.

You didn't want to side with the peaceniks and the drugged-out rock-and-rollers and the commies in the universities, after all. They were scum and Republicans are by nature more civilized, more urbane, more intelligent than to get mixed up with free-speechers, hippies and the free-love set which was just about totally anti-Nixon. And on top of that, they never bathed.

Well, August 15, 1971 changed all that. For many free-market oriented conservatives, Nixon had committed a treasonous act by instituting wage and price controls and getting the U.S. officially off he gold standard. His trip to China was generally not well received, either, but it was nothing as compared with his now admitting to be a full-fledged Keynesian. "We're all Keynesians Now."

The turmoil Nixon caused in the Republican Party can only be described as HUGH. My dad, who had been serving as county precinct chairman for several terms, could no longer abide the back-stabbing that soon erupted and resigned. My mother-in-law was essentially ridden out of the party for telling it like it was, and never invited back. She continued to vote Republican until her dying day but did not lift one finger to help her fair-weather friends who believed Nixon could do no wrong.

I have been told that these purges were not a local phenomenon limited to one area, but went on nation-wide in Republican circles.

In hindsight, Nixon caused immense damage to the party not just because of Watergate and all that followed but also his abandoning the conservatives who were and are the party's main get-out-the-vote workers at the local level. Many never forgave Nixon; others were OK with his treasonous acts but never forgave those who criticized him.

It was not a good time to be a Republican is all I can say.

Now, to the point MNJohnnie made about "libertines."

The Libertarian Party was formed by mainly former Republicans as a direct result of Nixon's wage and price controls and abandoning Bretton Woods. You can look it up.

[decimon]

The Libertarian Party was formed by mainly former Republicans as a direct result of Nixon's wage and price controls and abandoning Bretton Woods.

I think that may have been more true of the rank-and-file people attracted to the LP and to libertarianism in general. I think that many hung around for a few years in waiting for something meaningful to happen just to walk away embarrassed at the antics of some prominent oddballs.

[Lazlo in PA]

You are right on your assessment of Nixon. He is garbage. Put to the original point of MNJohnnie, the Libertines always slam the Right and forget about the Leftists. Just look at this piece from the founder of the modern Libertarian movement, Ron Pauls mentor.

http://www.lewrockwell.com/rothbard/rothbard60.html

If solid Conservative values is all the Libertarians wanted, why did they hate Reagan so much? He is, after all, the gold standard of Republican values.

[logician2u]

. . why did they hate Reagan so much?

Because he failed at what he promised to do: shrink the fedgov monster. That's all.

Look, I worked my butt off getting Reagan elected Governor and had many friends and associates working for him both then and after. His first term, getting things back in order after Pat Brown's unfortunate governorship was a success in most people's book. Things started sliding midway through his second term, and I'm sure there was a reason.

As President, Reagan could have walked the talk and taken the bold steps of dismantling the welfare state.

Why didn't he? He had broad public support even if Congress was run by the Democrats.

My own guess is he lacked the nerve after being shot by Hinckley.

[logician2u]

Addendum:

Reagan at his very worst was ten times better than Nixon.

He was easily the best President in my lifetime in spite of his mistakes. We could use another one like him but I'm afraid it won't happen.

[Lazlo in PA]

Once again, here we are slamming a solid Conservative instead of focusing on the malcontents and Leftists. Point proven by the original post.

[logician2u]

To which oddballs do you refer, decimon?

Not being personally aware of anything meaningful happening in the early days of the Libertarian Party (no internet in the '70s, remember?), I'd like you to expand on your premise if you would.

I was not implying that "many" Republicans jumped ship and joined the LP after Nixon lit the fuse. Only that it was mainly disaffected Republicans who started the Libertarian Party. What happened later is another story, one which properly belongs on another thread.

[logician2u]

Once again, here we are slamming a solid Conservative instead of focusing on the malcontents and Leftists. Point proven by the original post.

The purpose of these discussions is not to slam but to elicit the facts.

If you are so concerned about hurting fellow Republicans, why do you frequent Ron Paul threads and drop your turds?

[Lazlo in PA]

Because Ron Paul is a POS and is not even remotely Conservative or a Republican. I am not the only FReeper who finds him unappealing. Try reading what the big cheese has to say on the Ron Paul matter. Post #4.

http://www.freerepublic.com/focus/f-news/2766652/posts

There is a wide valley between Conservatism and Libertarianism. I am a solid Conservative. Nothing will change my mind on that. Especially pro drug, free love sorts like yourself.

[logician2u]

Especially pro drug, free love sorts like yourself.

You like to make unwarranted accusations, do you?

Was there anything I have posted on FR in the last 13 years that led you to that conclusion about me?

If you can find it, please show me. I must have been off my meds or something.

What we had been discussing, however briefly, was the impact of Nixon's wage and price controls. As I said earlier, in my opinion it was HUGH. And since both Nixon and Reagan are no longer with us, it is altogether fitting to evaluate them, warts and all, just as we routinely do Presidents of the other party.

The reason should be obvious: to prevent catastrophic mistakes in the future.

If you find this not to your taste, please do cheer for your candidate and try to ignore the naysayers. Then we won't have to be concerned about repeating history in the WH, because the 0bamanation will have secured another 4-year term, perhaps the last one of what was once a Republic.

Good night.