John Taylor

‘Steady As You Go’ Still Good Policy for Uncertain Times

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.

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