The Anatomy of a Policy Failure: Nixon's Attempt to Control Inflation
Burton Abrams and
James Butkiewicz
A chapter in Research in Economic History, volume 38, 2025, vol. 38, pp 157-180 from Emerald Group Publishing Limited
Abstract:
Richard Nixon and his advisors were aware of the inherent economic problems of wage–price controls: suppressed inflation, shortages, biases, avoidance, cheating, etc. Nixon's secret White House tapes reveal that Nixon disliked controls, never expecting them to extinguish inflation but only agreed to them to deflect attention from devaluation of the dollar. The political popularity of his controls changed his view of them, even producing a second freeze on retail prices in 1973. Importantly, the tapes reveal that Nixon pushed for inflationary monetary policies long after his 1972 reelection. Federal Reserve Chair, Arthur Burns, seemingly capitulated to Nixon's pressures by restraining interest rate increases in Federal Open Market Committee meetings. Politics won out over economics. Nixon and his advisors avoided addressing the reason for increasing inflation – the monetary expansion that Nixon pressured Arthur Burns to pursue in support of his 1972 re-election – an expansion that continued long after the election. This tragic policy failure was avoidable had the administration focused on controlling the true cause of the inflation.
Keywords: Inflation; wage–price controls; monetary policy; political business cycle; Nixon’s White House tapes; E52; E58; E64; G28; H11; N1 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rehizz:s0363-326820250000038006
DOI: 10.1108/S0363-326820250000038006
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