Forty years ago this month, President Richard Nixon sharply shifted hiseconomic policy in an interventionist direction with deleterious economic results that continued for a decade and provide lessons for today.
On August 15, 1971, Nixon announced a freeze on wages and prices. This action paved the way for a series of monetary and fiscal policy interventions that eventually led to double-digit unemployment, double-digit inflation and double- digit interest rates. Had he stayed the course, rather than shift policy, the 1970s would probably have been a decade of strong employment growth with low inflation and low unemployment, much as we eventually saw in the 1980s and 1990s.
You can learn a lot from this period by reading contemporary accounts, and one of the best is that of economist Milton Friedman, who was writing a regular column in Newsweek at the time.