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.
READER COMMENTS
Benjamin Cole
Aug 15 2019 at 7:24pm
Great history.
It is also on the record that Nixon prosecuted the war in Vietnam knowing that it was a lost cause, but did not want to be the “first President to lose a war” before the 1972 elections. He also interfered in the 1968 Paris Peace talks by sending a message to the South Vietnamese government that he would back them up more than a Democrat.
In prosecuting the war in Southeast Asia, Nixon dropped 280 million cluster bomblets into Laos, a secret war.
http://legaciesofwar.org/resources/cluster-bomb-fact-sheet/#targetText=The%20Legacy%20of%20Cluster%20Bombs,a%20day%2C%20for%209%20years.&targetText=Laos%20has%20suffered%20more%20than,munitions%20casualties%20in%20the%20world.
Mark Brophy
Aug 16 2019 at 12:13pm
LBJ knew that the Vietnam War was lost in 1965 so he and Nixon were worse Presidents than Trump and Obama but in the long term, the Great Society and Nixon’s price controls and ending the gold standard were more damaging than the Vietnam War.
Thaomas
Aug 16 2019 at 7:19pm
Price controls are pretty clear. How did Great Society expenditures harm the economy?
David Seltzer
Aug 20 2019 at 6:40pm
Mark, The battle of Ia Drang, moreover, convinced Ho Chi Min he could win. A friend, with whom I served, was there under the Command of Lt Col. Hal Moore. They fought in that valley for 3 days and understood the resolve of the NVA. Nixon knew that as well.
Michael Giberson
Aug 16 2019 at 1:28am
But for price controls and supplemental measures to manage the fallout, no energy crisis in ’73, less likely an OAPEC Oil Embargo, no “Project Independence” and no endorsement of energy independence as a policy goal by nine consecutive US presidents, no Energy Conservation and Policy Act of 1975 so no CAFE requirements nor Strategic Petroleum Reserve nor energy efficiency requirements for wine coolers and a thousand other appliances. Nixon gave us the shortages that made the neomalthusians seem prescient, so he is also responsible for boosting Paul Ehrlich further into the public square.
I’d hazard a guess that Nixon has done more harm to the world than any post-WWII U.S. president other that George W. Bush and his war in Iraq, and we may well speculate without the demonization of OPEC in the 1970s we may not have seen Middle East history play out as it did.
But the goal was reelection and the politician was reelected, so politically that counts as success, right?
DeservingPorcupine
Aug 16 2019 at 1:40pm
I can’t believe I’ve never asked this question until now, but how does the president have the authority to enforce price controls?
Phil
Aug 16 2019 at 4:53pm
I am open to being corrected, but if I recall correctly it is done essentially the same way a president declares a national emergency to divert appropriated funds to build a wall.
Les Leinaweaver
Aug 17 2019 at 10:37am
Congress passed a law giving him authority. The Democrats had been pushing controls. Where Congress got the authority I don’t know.
David Seltzer
Aug 20 2019 at 6:47pm
Recently released Nixon tapes: Nixon demanded Arthur Burns follow an expansionary monetary policy in a runup to the 1972 election. Burns knew better but was bullied.
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