August 15, 2011 marks the 40th anniversary of the Wage and Price Freeze announced by President Nixon on August 15, 1971 in a televised broadcast to the Nation.
Nixon’s speech launched the U.S. economy into a decade of unprecedented turbulence, punctuated by episodes of hyperinflation, shortages, high interest rates and stagnation. Most adult Americans today were either too young to experience these traumas or are now so old as to have forgotten them. But Nixon’s dramatic statement was a watershed event. No Presidential pronouncement since has so radically reordered the U.S. economic agenda both domestically and internationally.
This blog is intended to provide a history of the radical programs imposed by Presidential order beginning forty years ago. I attended the first meeting of the Cost of Living Council on August 16, 1971 and was deeply involved in the entire price control effort as General Counsel for the agency. I have written and included in this blog an account of the controls program together with a contemporary commentary.
As we debate the proper role of government in Congress and during the 2012 elections, it is useful to remember the consequences of Nixon’s program. Nixon wanted to use government policy to fix the economy. He failed and looking back over forty years, we can survey the wreckage. Obama and the Democratic Party are now advocating using government policies to fix things they don’t like: unemployment, healthcare, financial institutions, to name a few. The message from forty years ago is this: be very cautious. Government policy can cause serious harm with all the best of intentions. Just look at what happened to Nixon’s wage and price control program.