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We Saw How Price Controls Worked in the 1970s. Did We Learn Anything?
Since Kamala Harris assumed the role of Democrat presidential nominee, she has presented few specific policy proposals for voters to use in making their ballot decisions. As I was writing some posts over the weekend, detailing my work experiences with the changes that took place in that timeframe, including automation eliminating most paper check transactions, I remembered some other events of that period.
The Vietnam conflict had been a major issue for Americans as the decade of the sixties concluded, but it was in the seventies when we got some real learning experiences in macroeconomics and government monetary policy interventions. The American economy went into what was termed an economic recession in 1970. That was a new experience for many Americans, and it was a big part of what prompted me to leave the small data processing service bureau where I had been employed for three years after leaving a position in commercial bank operations systems development.
I remember the first half of the decade as being dominated by political issues: President Nixon’s dealings with China, the election campaign against Democrat George McGovern, Vice-President Agnew’s expulsion from office for uncovered misbehavior, and Gerald Ford replacing him; Watergate and Nixon’s resignation, Ford becoming president, and wrapping up with the end of the American involvement in the Vietnam conflict. Wow! That seems like a really busy half-decade — and I left out several significant events. But we were just getting started.
After Nixon left office, the 1976 presidential campaign started. I recall that Ronald Reagan, former Hollywood actor and governor of California challenged President Ford but the incumbent got the nomination and was pitted against a former Democrat governor of Georgia, Jimmy Carter. Guess what the Republican election campaign slogan was: “WIN,” or “Whip Inflation Now.” It didn’t work. Carter won the election, but “WIN” said a lot about America’s economic dilemma during the first half of the decade.
This was about the time that I started working at the Treasury Department, managing the systems development project to convert federal check payments to electronically delivered Direct Deposit. Both inflation and interest rates rose over time to double digits. The OPEC energy cartel limited market production of crude oil, and this had an immediate effect on the world market price. Retail gasoline prices rose rapidly in America. The Carter Administration placed price controls on retail gasoline at the pump, and this created shortages in supply immediately. This created a new problem for the people in our society.
The gap created distanced demand from the supply of retail gasoline, causing enormous lines at gasoline stations, which were aggravated by the shortage that left many stations without gasoline to sell. A rule was put in place to limit customers at stations to alternate days depending on whether tags ended in even or odd numbers. This reduced the size of lines, but they were still long and this just added to the frustrations of a people already burdened with inflation and high interest rates. My family and I experienced it all very directly.
And it eventually arrived as an issue in my job responsibility. The professional economists in the Carter Administration and the Treasury Department were of two minds. Those who supported the price controls on retail gasoline, which were already in effect at something like $.75/gallon, considered implementing rationing similar to what had been done during WWII. This would involve my staff in analysis, for planning how to produce and distribute rationing coupons for gasoline. The more free-market economists said the short supply problem would not exist and would go away if the price controls were removed, allowing the price to rise to the world market price — somewhere in the neighborhood of $1.50/gallon. The latter approach was taken and the problem went away. (A miracle.)
So my Operations Planning and Research Staff went back to work on getting rid of checks.
Published in Economy
I forgot to note that the United States went off the gold standard backing the dollar in 1970.
Only those who study history learn from it. Does Kamala seem like a student of history?
We learned to wait until people forget before trying it again. Usually it takes only a few weeks, but sometimes people are in a hurry.
The intent doesn’t change, tho does it?
Distraction plays a big part in keeping the enslaved workers from overthrowing rule by those who think of themselves as the elite.
Had to take a few courses on that in the mid-’80s. Mad respect to you and others who do (or did) it professionally.
And to answer the question in the post title: No.
Some areas are still under price controls, especially things like rent.
For sure we didn’t learn “Well, THAT was a mistake!”
I think those of us who were there and experienced it, and were aware of the decisions I described, did learn. When we fail after that to include such knowledge in the education process for young people, a need to learn from experience recurs. It is not a very efficient approach to governing.
But of course, people who don’t experience these things – even if they read about them in books etc, or at (or on…) their parents’ knee – may still believe that THEY could do it CORRECTLY.
Radio talk host Hugh Hewitt, who has worked extensively for the Richard Nixon presidential library, has noted that the Nixon library has never had a display on the price control program that began during Nixon’s presidential term. Hugh says that lack of mention should be noted as an indicator of how much of a failure that program was.
True, but new generations don’t learn anything from LACK of a display.
Politically the criteria for “what works” is whether it gets you more votes than it costs you. Any other effect is secondary.
You don’t need a new generation. Just wait a few minutes and the old one will have forgotten and will have moved onto the latest outrage.
During this year’s election campaigns, how many people have talked about the need to do something to curtail abuses of emergency powers like we saw during covid? They’ve forgotten all about it, and are now chasing after conspiracy theories about the origin of the virus and other such issues that are irrelevant to the issue of emergency powers.
Perhaps, but another way of looking at it is, if they don’t get to call another “pandemic emergency” does it really matter how many powers they might have if they did?
And indeed, maybe there could be a situation in which more emergency powers would be needed. We just haven’t actually had one yet.
Yes, it matters. There will be more pandemics, as well as other emergencies, and Democrats will never let a crisis go to waste. Chasing after the latest conspiracy theory about covid origins, whether it’s a true conspiracy theory or false, does nothing to change that.
There was nothing particularly wrong about some of the initial emergency actions taken during covid. But there was no letup on exercise of emergency powers long after it was apparent that they were no longer justified.
The government exercised a lot of emergency powers during World War II. Try to tell people that what happened at Pearl Harbor wasn’t an emergency. (@arizonapatriot might take a stab at it, to give you an idea of how that goes.) But that doesn’t mean the New Dealers wanted to let up on the emergency controls after the war was over. Nowadays, with the short attention spans conservatives have, they might get by with it. Back then there were enough people who were more attuned to the dangers of government power.
Try telling people the Great Depression wasn’t an emergency. A good case can be made that the New Deal’s exercise of emergency powers made it worse and longer-lasting, but that doesn’t mean it wasn’t an emergency at first.
Some way needs to be found to put some controls on these exercises of emergency powers so they don’t get out of hand and don’t become permanent. But that is going to require longer attention spans.
Ultimately no matter how you set up the rules, they can be abused – or just ignored – if the wrong people are in charge of them. I favor putting some more emphasis on having better people, rather than trying to cook up rules that even bad people can’t abuse, which is probably impossible.
Even the Founders reminded us of this fact.
I’m glad the founders didn’t take that approach. Our republic wouldn’t have lasted as long as it did that way.
You forgot the part about “a religious and moral people?”
Face it, if the people are bad, rules don’t matter. Bad people don’t follow rules, and they don’t enforce rules against other bad people.
Congress holds a Biden official in contempt, and refers it to… the Biden DOJ.
And so on.
Of course people are bad. The founders assumed that. If you think throwing out the bad people and replacing them with good ones is the answer, we’re in for a very nasty government. But our Founders were smart enough to give us a government of laws and not of men. You could look it up.
Who enforces laws?
Men.
One of the perverse fascinations of the last month has been watching even recent history being literally rewritten before our eyes. What everyone saw two months ago now didn’t happen. It’s impressive.
There’s a lot more to the use of laws than enforcement. The Founders understood that.
So, what does that mean, you think there should be a lot of laws but aren’t that concerned if they aren’t followed/enforced?
Part of learning the pitfalls of central planning is admitting that it fails.
The FJB admin cannot admit it caused inflation – they have blamed it on Russia, Grocers, and everyone else.
Same goes for entitlement spending, the huge rise in the cost of education, the failure of Wind Farms in the East coast, the pushing of electric cars ….
Our Constitution and legal heritage gave us an adversarial system. The laws are there for you and other adversaries to use against each other. We have checks and balances by which government authorities who are jealous of their own turf keep a wary eye on each other. You don’t sit on your thumb and wait for some good sovereign to punish wrongdoers because he is good. Mostly.
The problem with our modern administrative state is that it removed a lot of the mechanisms by which different agencies of government keep an eye on each other, try to compete for the love and affection (and funding) of the voters. They act as a monolith in which the first priority is for all parts to look out to protect the interests of the administrative state against the people.
The Founders gave us a system that didn’t depend on a ruler being good. As we know, those systems have never worked and never will work. Those systems don’t work because people are corruptible, especially when they have the power to be corrupted.
That’s part of what is meant by the phrase, “a government of laws and not of men.” I’ll bet you didn’t look it up. I started learning this stuff in the middle elementary grades. It is extremely discouraging that conservatives now include people who don’t have a clue about it, and think of government in terms that might come more naturally to someone in Russia or China.
I do understand it, I think the problem comes from thinking it matters more than – or even close to as much as – good people. It’s also a fact that the people can “sue” the government but the government is in charge of that too. In addition to police and prosecutors, the judges are all government employees. And even if the government allows some lawsuits to “win,” you may get some money paid for by other citizen’s taxes; but the government can IMPOVERISH, IMPRISON, and even KILL YOU. As well as lawyers they don’t like, jurors who vote against them…
Again, “laws not men” is a fine aspiration, but it depends on good PEOPLE – not so much good LAWS – to function. And there are quite a few not-so-good people running things now.
no, it doesn’t depend on good people. There is no such thing as good people. However, there are some who behave better than others in office. Take the best you can get, but don’t depend on them.