In Pursuit of Price Stability: The Wage-Price Freeze of 1971

In Pursuit of Price Stability: The Wage-Price Freeze of 1971

In Pursuit of Price Stability: The Wage-Price Freeze of 1971

In Pursuit of Price Stability: The Wage-Price Freeze of 1971

Excerpt

The announcement of a wage-price freeze by President Nixon on August 15, 1971, was something new in American history. It set in motion a broad experiment in peacetime controls in the United States and removed the debate over "incomes policies" from the seminar room to the public domain. Direct controls over wages and prices now have joined monetary and fiscal policies as officially acknowledged remedies for dealing with the problems of inflation, employment, and growth. In the future, economic policy makers in the United States will be able to consider controls as one of the precedents in responding to political and economic pressures to maintain growth with price stability.

This volume provides a record of the wage-price freeze of 1971 and the steps that were taken to make it work. The study can be viewed at two levels. First, it incorporates an analysis of the specific policies that were formulated to give effect to the broad decision to put a lid on wages, prices, and rents. Second, it affords a detailed account of the administrative strategy and measures that were taken to translate the policies into an operative program. Though the greatest drama was associated with the imposition of the freeze itself, the credibility of the program was determined, in a large measure, by the performance of the leading players and the skill of the stagehands. This study does not attempt to deal in fine detail with the relationships between the freeze and complex economic variables and behavior. Those issues are best considered in an analytical framework encompassing the stabilization program in its entirety. Rather, emphasis is given to the process of policy formulation and implementation as it unfolded under conditions of extreme urgency.

Because I was Executive Director of the Cost of Living Council, the government unit that played the major role in the administration of the freeze, this study inevitably reflects ego as much as economics. However, I have strenuously attempted to avoid making this account either a memoir or a mea culpa. Indeed, the reader will probably conclude that when I was confronted with a choice between an insider's anecdote and dry analysis I opted for the academic virtues.

Author Advanced search

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.