Our Resilient Economy: Remembering Nixon's Wage and Price Controls

Last year's ineffective tax rebate checks for how many hundreds of billions of dollars? I can't even recall.

The badly-managed, ill-conceived and ineffective TARP for $350B, with another like sum to follow this year.

Now, a $1T+ 'stimulus' plan to allegedly fix an economic recession. Except the larger part of the economic shrinkage is due to deleveraging, more than recession. And spending doesn't fix recessions, it only adds to government debt.

Still, we've endured worse. Perhaps the very worst, the nadir of America's free-market economy, was the 1971 imposition of wage and price controls by Republican President Richard M. Nixon.

Having defeated the hapless socialist Senator from Minnesota, and sitting VP, Hubert Humphrey, Nixon was viewed as a cold-hearted, paranoid conservative. If any Republican in then-recent memory embodied corporate politics, it was Nixon.

Yet, in what was to become a new paradigm for US Presidents, the ardent cold warrior opened China. And, as conservative, business-supporting President, he crossed over to commandeer the economy though cumbersome wage and price controls. All because inflation rose to the then-scary range of 2-3%. Union demands drove wage increases beyond prior experience.

Just about two years later, on January 11, 1973, Nixon called the whole thing off, ending the two-year travesty.

Later, in the late 1970s, Jimmy Carter almost instituted gasoline rationing. My girlfriend in the early 1980s had worked on the program for Energy Secretary James Schlessinger as a consultant at one of the beltway firms.

Yet, some thirty-five years later, in the mid-2000s, our economy had risen to unbelievable size and prosperity.

Ronald Reagan's tax cuts, Paul Volcker's steady hand at the Fed, and American enterprise combined to usher in the most productive, wealth-producing era in modern American history.

If our economy could withstand the body blows of Nixon's wage and price controls, Carter's energy policy, and even, before both of them, LBJ's inflationary financing of the Vietnam War as he raised taxes, it can also probably survive the current tough times, and those to come.

There's still hope for the US economy not because of, but despite, the planned programs of Congress and the administration.