All the talk of renewed inflation brought back some terrible memories for me, and I wrote about them at New York:
When I was a freshman college debater at Emory University in the fall of 1970, the national debate topic was not Vietnam, but the desirability of wage and price controls. Little did we know that just months ahead a Republican president would impose a wage-price freeze, long the anti-inflationary prescription of the left wing of the Democratic Party. But the surprise known in financial circles as the “Nixon shock,” nearly a half-century ago (on August 15, 1971) showed how pervasive the fear of inflation — running at just over 5 percent in 1970 — had become.
That’s ancient history now, even to those of us who remember the double-digit inflation of the late 1970s, and the particularly horrid scourge of “stagflation” (high inflation and unemployment simultaneously). Inflation seems to have been tamed by wise monetary policies. The periodic warnings from 21st-century conservatives that low interest rates and federal budget deficits would create inflation didn’t much bother me. It was like hearing an old priest chant a forgotten litany in a lost language — just one among many ritualistic arguments for the tight credit and reactionary social policies these people favored instinctively as a sort of class self-defense posture.
The
current surge in consumer prices doesn’t necessarily change that picture; the current post-pandemic (we hope) economic environment was sure to produce a spike in wages and prices that cannot be projected into a future where something approaching normalcy will surely return (though the real-estate bubble is indeed troubling). But now I am beginning to hear echoes of the inflation panics of the not-so-distant past, which make me tremble.
Like Tim Noah, I suspect there may be a generational lapse in understanding the politics of inflation:
“I don’t care to be condescended to by a bunch of Gen Xers and Millennials about my ’70s-bred fear of inflation. It feels too much like the condescension we Boomers directed toward Depression babies whenever they warned us that we were playing with fire in deregulating the financial markets. Poor dears, we thought, traumatized for life by the 1929 crash and one-third of a nation ill-housed, ill-clad, ill-nourished.
“The Depression babies turned out to be right, of course.”
Noah makes it clear he’s not arguing inflation per se is bad for the economy. It is, however, bad for progressive politics, and not just because “stagflation” probably killed the Carter presidency and ushered in the Reagan era far more than the Iranian hostage crisis or other better-remembered Democratic foibles. The deflationary economic strategies of the 1980s weren’t called “austerity,” but rather a corrective for undisciplined policies that fed wage and price spirals which in turned hammered the value of savings, the living standards of those on fixed incomes, and the political case for federal domestic spending.
Most lethally for progressivism, the conservative supply-side tax-cutting when combined with inflationary fears can create enormous pressure for public disinvestment and the shredding of safety nets (which is why reactionaries happily labeled the intended result “starving the beast”). We are still living with some of the long-term consequences of anti-inflationary backlash. As Noah points out, California’s Proposition 13 ballot initiative in 1978 and similar “tax revolts” were a by-product of price spirals that boosted tax assessments on property and income alike.
But sometimes lost in an examination of the right’s exploitation of inflation fears is the abiding fact that the left has no clear prescription for dealing with it, either, other than by denying its existence or significance (sometimes rightly, sometimes wrongly). Ironically, that was made most evident by the supposedly illiberal Richard Nixon’s surprising use of the great liberal instrument for taming inflation.
The veteran ex-conservative economic and political analyst Bruce Bartlett has penned an exceptional explainer on the background and consequences of the “Nixon shock,” particularly its international dimensions, and the role played by Treasury Secretary John Connally, who like his boss and ally Nixon was more focused on short-term politics than on long-term economic realities. What’s clear is that Nixon was convinced a recession induced by the Eisenhower administration and its Federal Reserve Board appointees designed to kill inflationary pressures also killed his 1960 presidential candidacy. As prices spiked in 1970, he was terrified the same thing could happen in 1972.
Nixon had inherited (and temporarily extended) an income-tax surcharge from LBJ that was designed to pay for the skyrocketing costs of the Vietnam War, but its effects were limited. So with his signature televised bombshell reveal (the one he deployed a month earlier to announce his trip to China), amid great secrecy, Nixon rolled out a combo platter of initiatives to fight inflation and international economic instability. They included a suspension of fixed currency exchange rates and the convertibility of the dollar to gold (to head off a raid on gold supplies triggered by a British demand for a major conversion); an import surcharge (to prevent a worsening of the trade balance); and most significantly for most Americans, a 90-day freeze on wages and prices to be followed by an indefinite period of controls by federal panels.
As political theater, Nixon’s speech announcing a “new economic policy” was, well, Nixonian. He began with dessert: an assortment of tax breaks and job-creation incentives balanced by mostly unspecified spending cuts; only then did he mention the wage-price freeze. After promising to “break the vicious circle of spiraling prices and costs,” Nixon moved on to his international proposals, which he downplayed as “very technical,” while assuring viewers that “if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today.”
Nixon’s wage and price controls were initially very popular (as polls had told the White House they would be) and did indeed hold down inflation through the reelection year of 1972, when Nixon won his famous landslide reelection over poor George McGovern, in part by goosing federal appropriations to create a mini-boom. By then the administration had moved on to a more discretionary system for regulating wage and price increases, which generated rumors of employers currying favor with generous donations to CREEP (the Committee to Reelect the President), the notoriously corrupt operation heavily complicit in the Watergate scandals that brought down the Nixon presidency. Between the suppressed and eventually unleashed inflationary pressures and the oil-price shock Nixon’s international economic policies helped create, the country paid a very high economic price for the brief respite from inflation the wage-price freeze earned him. He sowed the wind with even greater inflation, and his successors Gerald Ford (whose feckless “Whip Inflation Now” campaign was widely mocked) and Jimmy Carter reaped the whirlwind.
Before you dismiss these events from 50 years ago as irrelevant, consider how much Nixon’s short-sighted approach sounds like something President Donald Trump might have done if inflation had became a political problem during his tenure (or in, God help us, a future term). Indeed, any president mulling Nixon’s choice of recession-inducing fiscal or monetary policies might be tempted to resort to the easy-to-understand, if dangerous, strategy of wage and price controls in which the pain is mostly back-loaded, particularly in or near an election year. Old folks remember how it preceded Nixon’s landslide 1972 win, followed by a decade of economic pain and multiple decades of political misery for progressives.
Its obvious that the press is not willing to go ahead and declare Kerry an outright winner of the debates and the person carrying the momentum at this time. I am not sure whats up with that, maybe they think there will be some bad reprisals if Bush got his first elected term in the HOUSE.
No matter what the press thinks or does however, its common knowledge that the electorate has assured Kerry that he won the three debates by wide margins.
In like manner, the electorate, by way of the polls, are also showing that they are learning to accept Kerry’s demeanor, his mannerisms, his style, his obvious honesty, his thorough knowledge of the English Language and how to use it, he wide knowledge base on relevant issues etc.. etc.. etc.
I guess Bush and his troop didnt quite expect to find another person on earth who would know more English than Bush himself, well they now know its not so.
Its early days and one should never fall into the pitts of over confidence and must stay on tract and keep the momentum going all the way to this time four years from now.. but, while you are at it, take some time to savour this moment.. it creates a most excellent feeling.. so why let it slip away!!!!!
Let’s not be to overconfident. We have Mo but I think we are in for all slime, all the time for the next 19 days. The only thing they’ve shown they have in their bag is to paint Kerry as a traitorous turncoat. The Swift Boat deal over again with much more money behind it. They have to make it uncomfortable for people who have begun feeling good about voting for Kerry. I hope Carville and his crew are ready to fight back and put these yahoos on the defensive.
I fear that election day may be so dirty, we’ll be looking at Afghanistan’s vote as a shining example of democracy.
Demtom:
They still have doubts about his replacement. They always do — even such lionized presidents as FDR, JFK, Reagan and Clinton were widely disaparaged/wondered about prior to their first elections. But the voters went to them ultimately because they thought change was necessary.
As usual, Demtom hits the nail on the head. The main thing Kerry had to do in this race was prove himself as a viable alternative to Bush, and he did so with flying colors in the debates.
The media will likely make it seem, when he wins, that the debates did it. Not totally true, but I do agree that it was the debates where the Bush talking-points were shown for the nonsense and fluff they were all along.
I thought Kerry did another solid job in the third debate, and deflected Bush’s criticisms when they verged upon saliency. Barring wild surprises, all Bush can do now is cry wolf (“he’s an anti-security liberal who can’t pay for his promises!”), pray something sticks (the “Tony Soprano” line tells me it won’t), and carry out his ground war. So long as Kerry and those of us supporting him keep up his good fight, this election is ours to win.
I agree with Demtom’s observations about the media. The narrative seems to be taking hold that Kerry’s campaign was drowning until two weeks ago when the debates started, giving him a life raft. In fact, throughout September Kerry was behind but still very competitive in most polls. The ones that pointed to a Bush blowout (which were often treated as gospel by much of the mainstream media) often used dubious samples and methodology, a point that we argued on these boards in great detail.
In a sense I do wish we could have even more debates, but in another sense I don’t. It’s really nerve-wracking to worry about your candidate making a fatal gaffe with all the eyes of the media and the nation focused on you, and in the debates all it takes is one ill-considered sentence or answer to do that.
John Kerry to me is an acquired taste. Unlike Bill Clinton, for example, he does not go to great lengths to try to get you to swoon over him the first time you see him. His entire approach to campaigning bespeaks a kind of faith in the old verities our mothers told us about how, in the end, character is what counts, and that if you’re a good egg the people who know you will come to know that. In our age this bespeaks a bold, one might almost say daring, faith in the ultimate good judgment of the voters. A concern his approach creates among his supporters is whether voters will acquire enough of a taste for him in time to vote for him. My perception is that over these debates Kerry is winning a lot of folks over, slowly but surely. For when it comes to John Kerry, the surprises are pretty much all good ones. He turns out to be the sturdy, reliable, steadfast friend, the one whose advice you might seek out on an important matter or who you’d want to be your best man–not the hell-raising party animal you met in college who, a couple of years after graduation, remains most notable to you for being–the hell-raising party animal from your college years.
To those inclined to vote for Bush because they think he is more the kind of guy they’d like to have a beer with, I’d say vote for Kerry. Although I hope Bush does not go back to drinking after he leaves office–this being unbecoming behavior from a former President–it will free up more of his time for informal, unscripted social occasions.
If Kerry wins 19 days from now (which I think is an ever-increasing possibility), the media consensus, I’m certain, will be that he won because he won the debates. Some will probably go further — taking the goosed post-GOP convention polls as gospel, they’ll proclaim that Kerry was “on the ropes” until extricating himself with a knockout first debate and solid victories in the later two.
I’m not about to argue with the fact that Kerry has done better in all three debates — he’s smarter, more presidential, all those things. But I’d argue that an opposite dynamic is actually at play: Kerry’s going to win the election, and that’s why he’s won the debates.
The voting public is not as shallow as the media conglomorate like to believe; they don’t switch votes based on a stray catch-phrase, a bad camera angle. They make their Election Day decision not on assorted trivia, but on the basics of presidential performance: how’s the economy? What’s our status in the world? Are things going well? On all those scores, Bush has been losing ever since Iraq started to go south. The continuing sub-par recovery in the economy keeps Bush on the defensive in another vital area. But for a few, artificially (and typically) inflated polls right after his convention, Bush has polled below 50% (including a shocking 43% from CBS the other day). The public WANTS a new president.
They still have doubts about his replacement. They always do — even such lionized presidents as FDR, JFK, Reagan and Clinton were widely disaparaged/wondered about prior to their first elections. But the voters went to them ultimately because they thought change was necessary.
Kerry did well in all the debates, but all he really needed to do was meet a minimum standard. Once he did that, the voters were going to judge him the winner of the encounters, because they have already deemed Bush’s POLICIES a loser.
Another beatdown. I think we’ll see Kerry moving up in the polls as this final debate settles in people’s minds.
“Wonder how that [ABC] poll would have turned out without an 8 point Republican party ID advantage.”
We can do a rough calculation of how the ABC poll came out for independents.
Respondents: 38 R, 30 D, 28 I
Results: 42 Kerry, 41 Bush, 14 tied
Assume that R’s backed their man and D’s the same. (Probably some deviation on both sides, but it likely cancels out.)
Then: 12 (42-30) Kerry, 3 (41-38) Bush, 14 tied
Changing to %ages: 41% Kerry, 10% Bush, 48% tied
(Numbers do not add to 100% due to rounding.)
Well, I actually watched the debate. I thought Kerry absolutely owned the first thirty minutes of the debate and dominated Bush. I thought Kerry’s victory in this debate was more pronounced than the first debate (which I thought was closer than the blowout it is now regarded as). I am not at all surprised at the instant poll results. My non-political sister called during last night’s debate to express how stunned she was at Bush’s lousy performance (she didn’t watch either of the first two).
I think the talking heads are so used to Bush’s eccentric mannerisms and lack of speaking ability that they don’t realize how off-putting he is to watch unfiltered. It is for that reason (along with their being afraid of accusations of liberal bias) that the “analysts” right after each debate have acted as if the debates have been a draw, when they weren’t. The nightly news edits out Bush’s awkward moments, which makes him look a lot smoother than he actually is. The debates shattered that media-created image.
It really was a trip to the woodshed for poor W. Tim Grieve sees big trouble ahead for Bush’s ratings in his just-posted article on Salon. (Get the day pass if you don’t have subscription).
I didn’t watch the debate, but — judging from a number of [mostly-] widely divergent blogosphere comments — it seems it was basically another draw. I would have preferred a sub-par “Shrub” performance, but unless the post-debate spins against JFK, I think he can live with this result. After all, the polls indicate a a majority of viewers felt Kerry’s performance was more convincing. Again.
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Predictably, wingerville is hyping the “War President’s best-ever debate performance” but I suspect there is more than a little bit of wishful thinking/desperate spin going on.
MARCU$
I thought the comments for this topic were especially on target.
Kerry has sealed the deal with voters.
Bush has shown the voters that his best is mediocre, and it goes downhill from there. Kerry has done the opposite. Suddenly, $100 million of negative attacks rendered meaningless.
Bush’s attack lines have been reduced to cotton candy, with equal weight.
HA-ppy – days -are -HERE a-again!
The skys above are CLEAR again,
So, let’s sing a song of CHEER again.
HA-ppy DAYS are here a-GAIN!!!
[Release balloons, cue the band]
How can you support Bush when he lied to you again within the first five minutes of the debate. I remember clear as day that man said he was not concerned about Osama Bin Laden. Cheney lied about never meeting Edwards before until their debate. If they lie about these petty things what else are they lying about and to what extent will they take thier conserative views to. No child ;eft behind? My little brother was in second grade and could not read, why? Because he did not have a spelling book- if you can’t spell you can’t read. Bush said himself he can’t speak english as good as his wife. I think Bush needs to be left behind.
I agree.
This third debate is where Kerry sealed the deal.
He proved that he is presidential, can laugh at himself and Teresa, and will lead the country in a better direction.
Bush proved that at the top of his game, he’s weak.
I think we will see the polls solidify for Kerry.
CNN/Gallup poll even more impressive: a 14% Kerry win.
Kerry scored a clean win tonight, and ends the “series” 3-0. In all three debates, he looked more presidential than the president, and he calmly, methodically and forcefully dismantled every single element critical to Bush’s reelection chances. The polls have been starting to move in Kerry’s direction and it seems likely that this performance tonight will only accelerate that trend. As a Democrat, I am a happy camper tonight. Let’s roll up our sleeves, do the the work that still needs to be done, and bring this baby home.