Newswise — Since their release, historians and other scholars have been poring over Richard Nixon’s infamous White House tapes, which capture rare glimpses into the inner workings of the embattled president’s administration.
University of Delaware economics professors Burton Abrams and James Butkiewicz recently took another dive into the recordings. They say they emerged with evidence of a politician who put personal ambition ahead of the nation’s best interest, specifically when it came to his 1971 New Economic Policy.
Reviewing the tapes, Abrams and Butkiewicz found that Nixon was aware his policy would likely harm the economy. However, he felt the policy’s favorability in the public eye would help him to win re-election in 1972.
The professors said Nixon made it clear that he did not support the policy’s wage-price controls, which would prevent businesses from changing wages or prices for 90 days in order to counter inflation.
The team’s article in the academic journal Public Choice reported that in February 1971, Nixon said, “In my view… wage-price controls in peacetime on a broad basis will not work.” He added that they would “lead to a terrible smothering” of the economy.
A few days later, however, Nixon said, “Here’s my concern about the freeze ... There is strong support for... wage-price controls,” even though they “will not work.”
The article by Abrams and Butkiewicz explained that Nixon didn’t believe that controls would work, but then became willing to do something “cosmetic” that would help his re-election.
“A freeze or controls likely would be effective for only a short period of time and thus, if imposed, Nixon thinks they should be imposed close to the 1972 election,” they said.
The article further described these “cosmetic” political reasons: “At the time of the wage and price freeze, Richard Nixon’s presidential re-election bid was less than 15 months away. Any political gains that might be made in the run up to the election from reducing unemployment might be negated if the inﬂation rate accelerated. Temporary wage and price controls would conveniently disguise inﬂation until after the election.”
By June 1971, the team found, Nixon said on price controls: “I’m not going to say never.”
In July, Nixon said, "I’ve never seen anybody beaten on inﬂation in the United States. I’ve seen many people beaten on unemployment."
In August, Treasury Secretary John Connolly urged Nixon to consider the political ramifications of his decisions.
“To the average person in this country this wage and price freeze — to him means you mean business,” Connolly said. “If you take all of these actions…you’re not going to have anybody…left out to be critical of you.”
During this same conversation, Nixon enquired about “Just do[ing] some stuff for symbolism.”
Nixon then announced his New Economic Policy to the nation on the evening of Aug. 15, 1971, with wage and price controls included.
The result? “The wage and price controls failed miserably — as Nixon predicted,” Abrams said. “Following the end of controls, inflation roared on and worsened in the 1970s.”
This was an unprecedented move, the first and only peacetime wage and price controls in U.S. history, and Butkiewicz said the controls’ negative consequences demonstrate the impact of wage and price freezes like it.
It also demonstrates, Butkiewicz said, that, “Politically expedient policies often cause more harm than good.”