Washington’s Taking a Cue From Nixon

Andy Snyder|February 9, 2022

Oh boy… here come the price controls.

Politicians never let a good crisis go to waste. With the prices on everything surging (whodathunkit after printing $5 trillion?), our saviors in Washington are rubbing their hands together.

Oh boy, they say.

Let’s get busy.

That rowdy squad of liberals is talking up price gouging…

Arizona Sen. Mark Kelly said last week that food is getting expensive for folks… “and has to be dealt with.”

And the mainstream rags that keep these folks in power have started to beat the drum.

We’ve done it before, they say. Price controls are nothing new, they quietly remind us.

The good pieces share how disastrously it has gone.

Ready for Horse Meat?

Take the world of meat… where the notion of “dealing with the problem” seems to have found the most attention.

We threw the whole playbook at the issue during World War II.

Even with supplies tight and hungry boys overseas to feed, sellers couldn’t raise their prices. Not with those pesky price controls in place. So they did what so many industries are doing today. They cut quality.

Suddenly, the beef on Americans’ plates may not have been beef. Horses disappeared.

The sausage on the breakfast table may have been stuffed with soybeans, potatoes or even crushed-up crackers.

Or how about that burger between your buns? Back then, it was likely to be stuffed with a whole lot of fat.

Sure, prices didn’t rise… but folks sure weren’t getting their money’s worth.

We’ve written about the idea before. It’s called “shrinkflation.” Your cereal box has less cereal in it. Your hotel room doesn’t get cleaned during your stay. A robot stands in for a customer service agent.

It’s all miserable.

It slashes at our quality of life.

History Tells the Truth

Digging into this idea, which seems to be quietly bubbling under the hats of the political types, we blew the dust off an old essay written by Rueben Oppenheimer. It was published by the Columbia Law Review in the spring of 1943.

The piece starts by describing what was a common scene at the time… six men in shirtsleeves, gathered in earnest discussion. They were deliberating whether the fella in front of them needed a new car.

He says the car would help him take his fruits from the farm to the market.

But the men don’t buy it. Use your dad’s truck, they say. Let your brother do it, they demand. And besides, your car looks perfectly fine to us, they declare.

Application denied.

The piece goes on to describe the troubles that came with the launch of the Office of Price Administration, the bureaucracy that spewed from this new agency, the black markets that exploded in response to it and the long-lasting effects it had on the nation’s economy.

Most folks think the agency was shut down in 1947.

Legally, it was.

But its legacy lived on in the minds of Americans, in the 140,000-some workers that made it all happen… and in the mind of one very powerful man.

Nixon’s Other Crimes

Price controls are not the first thing that most folks think of when they hear the name Richard Nixon, but “I’m not a crook” can be quite a vague statement in the world of politics.

The 37th president served time with the Office of Price Administration in the 1940s. It’s where he learned what levers to pull… what triggers to avoid… and what math is best kept hidden.

Given his résumé, it’s no surprise Nixon used price controls as one of his first weapons against inflation.

For a bit, it was a popular decision. The politically savvy leader used it to get reelected in a landslide.

But eventually the smoke lifted and the mirrors cracked. The free market got its way.

His plan quickly turned into an enormous failure.

With the market stripped of its most powerful balancing tool, demand rapidly outstripped supply. Goods disappeared overnight. Job growth froze. And the economy slowed.

But inflation? Oh boy… it kept climbing.

Nixon got the votes, but the American economy got screwed.

But here’s the thing… It’s the critical idea in this pivotal midterm election year. Nixon held on for only as long as was politically expedient. He was aware of the trouble his long-disproven idea created.

Once reelected, he lifted the controls and let the market do what it needed to do.

It crashed.

Learn From It

A recent piece in The Wall Street Journal summed up the idea nicely…

Nixon’s price controls put the federal government in direct control of the American economy. Despite its good intentions, the freeze caused lasting damage. It’s a lesson worth pondering 50 years on, when the Biden administration is proposing new government interventions on an unprecedented scale.

And before you go writing us hate mail for even printing the “B-word," this isn’t a partisan problem.

All the political dopes end up voting for some sort of price control.

Look around. We’ve got caps on medicine… an informal cap on oil prices… caps on electricity… Find a market that’s surrounded by trouble and, surprise, you’ll find somebody from Washington with a fat finger and a proud smile on his face.

If price controls are allowed… the only things that will be capped are the growth of the economy and the value of the stock market.

Wanna fight inflation? Give Washington the year off and let the free markets reign.

What a rich blessing it’d be.