The Economy in the Early 1970s
Political administrations do not begin with a fresh slate, free of what went before. That should be obvious enough, but it is still necessary to remind ourselves that the world does not start over with the advent of a new presidential administration, despite all the political rhetoric to the contrary. Whatever may be said of other areas of public affairs, in the economic sphere it is particularly evident that economic conditions do not conform to political cycles. It follows that any new administration must confront the economic realities it inherits whether it wants to or not, and if it is lucky, it may be able to embark on programs to change that reality; if it is unlucky, economic events may simply prevent the introduction of new approaches and the implementation of whatever innovative ideas the new administration brings with it.
Clearly then, it is necessary, even essential, to understand the economic world that the Carter administration inherited. We would then have some idea of what problems the new administration faced, and what, if anything, had been done about them by previous administrations. Only in this way can we begin to appreciate the economic program that the administration planned, and only in this way can we measure how successful it was in accomplishing what it set out to do. With full awareness of the barriers it faced at the outset, a better assessment of its successes and failures is at least possible, if not easy.
The purpose of this chapter is to provide, in summary form, the state of the economy when Carter took office. 1 After this background is in place, we can examine the economic measures proposed by both sides in the campaign of 1976 in chapter 2, and the economic plans of the Carter administration as they were amended in chapter 3.