Wage-Price Controls Under Nixon
Michael Kinsley has an interesting piece in Slate today. http://slate.msn.com/id/2084315/ It's about the Patriot Act and other so-called security measures and whether they infringe on our liberties. He concludes that so-far the infringement has not been so bad but there is potential danger in large part because Americans don't really love freedom. Indeed, when motivated with good stories they are willing to give freedom away quite easily (shades of Bryan's notion of rationality irrationality here). He then gives this stunning example: This does not mean there's nothing to worry about. Incipience is legitimately scary. To return to the original question, Americans are not so innately freedom-loving that we would never let it dribble away without noticing. I can prove this because it actually happened, within the adult lifetimes of anyone over about 50. On August 15, 1971, more or less out of the blue, President Nixon declared a freeze on wages and prices. Legislation authorizing this had passed Congress the year before, with little controversy. The freeze evolved into a system of formulas about who could get paid what, requirements about filing forms with the government and keeping records and posting notices, all enforced by a growing bureaucracy of wage and price cops. The controls lasted a couple of years at full strength and then faded away over the next couple. The notion that the government could tell everyone from General Motors to a baby-sitting teenager what they could chargeand did soseems shocking in retrospect, at least to me. There was no real national emergency. It was part of a cynical re-election strategy to gun the economy while holding inflation temporarily in check. But at the time, controls were not just accepted but popular. When they disappeared, even those (like me) who had opposed them found it strange and, at first, unnatural. You mean, anyone can just charge whatever they want? How does that work? The analogy isn't perfect. The right to set your own price isn't as profound as the right to express your own political opinion. But it is, if anything, even more a part of every citizen's daily life. And yet when they took it away, we freedom-loving Americans didn't even miss it. -- Alexander Tabarrok Department of Economics, MSN 1D3 George Mason University Fairfax, VA, 22030 Tel. 703-993-2314 Web Page: http://mason.gmu.edu/~atabarro/ and Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621 Tel. 510-632-1366
Re: Wage-Price Controls Under Nixon
Well, the average American is not so pro-freedom as, say, Walter Williams, but considerably more so than the average Frenchman or German. So it's all relative. By the way, contrary to Kinsley's assertion, wage and price controls were not merely a cynical re-election ploy. There was a real problem associated with the fact that at the time the Bretton Woods exchange rate overvalued the dollar and the domestic U.S. inflation was making the problem worse. If I'm not mistaken, wage and price controls and the Bretton Woods system were both abandoned at about the same time, which is probably not a coincidence. Marc Poitras
Re: Wage-Price Controls Under Nixon
Well, the average American is not so pro-freedom as, say, Walter Williams, but considerably more so than the average Frenchman or German. Really? How do you measure this? The remarkable fact is that it is apparently perfectly legal for the government in the United States to control the price of just about everything - i.e. fascism - I mean this as literally and not in a loose derogatory sense - is constitutional in the U.S. This really illustrates that a) the constitution counts for pretty much nothing if the public wants something to happen and b) the public is not so freedom loving as to not want wage and price controls on everything. Hence Kinsley's conclusion that there is a danger of big losses in freedom should the public buy some story that reductions in freedom are necessary for security the way they apparently bought that government control of price and wages was necessary to control inflation. Alex -- Alexander Tabarrok Department of Economics, MSN 1D3 George Mason University Fairfax, VA, 22030 Tel. 703-993-2314 Web Page: http://mason.gmu.edu/~atabarro/ and Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621 Tel. 510-632-1366
Re: Wage-Price Controls Under Nixon
Alex Tabarrok [EMAIL PROTECTED]To: [EMAIL PROTECTED] cc: Sent by: Subject: Re: Wage-Price Controls Under Nixon [EMAIL PROTECTED] u.edu 06/13/2003 04:42 PM Please respond to ARMCHAIR Well, the average American is not so pro-freedom as, say, Walter Williams, but considerably more so than the average Frenchman or German. Really? How do you measure this? Well, we can start with the fact that in the first-round of a typical presidential election in France, 2/3 of the votes go to candidates so far to the Left they make Ralph Nader look moderate, and about 1/2 of these votes, or 1/3 of the total, go to out-and-out Marxists of one sort or another, candidates who are avowed Trotskyites, Stalinists, etc. In U.S. presidential elections, no avowed socialist has *ever* garnered more than one or two percent of the vote. Marc Poitras
