A Day That Should Live in Infamy
August 15, 2019 is the 48th anniversary of President Nixon’s announcement of a 90-day freeze on all wages and prices. What followed after 90 days were various phases that caused the controls to last into 1974. The worst effects of the price controls were in the oil and gasoline markets, where OPEC’s price increase in the fall of 1973, combined with binding price controls, led to shortages, lineups, rationing, occasional violence in lines, and, arguably, President Carter’s Rapid Deployment Force, which was later changed into U.S. Central Command (CENTCOM.) So August 15, 1971 is a day that should live in infamy.
I worked as an intern with Herb Stein’s Council of Economic Advisers in the summer of 1973. I lived with a bunch of other interns in a seedy house on East Capitol Street and every morning rode my bicycle from there to the driveway between the White House and the Old Executive Office Building. The ride took me past the Senate building where Senator Sam Ervin was conducting the Watergate hearings and I would see people lined up to get in.
The Watergate break in was horrible. But what I thought Nixon should have been impeached for in 1971 was the wage and price controls. Unfortunately, the people who would have been most willing to impeach him–the Democrats who were the majority in the House of Representatives–were also the people most in favor of wage and price controls.
I was one of the anonymous referees on a paper (ungated paper here) on Nixon’s motives that Emily Skarbek highlighted a few years ago. The authors, Burton A. Abrams and James L. Butkiewicz, do an excellent job of going through the White House tapes to show Nixon’s thinking.
My main criticism, which the authors didn’t handle, was that they left out where George Shultz, at the time Director of the Office of Management and Budget, stood on the issue of wage and price controls.