HOW IT STARTED: Rent control policies are gaining support nationwide. Here’s why economists still think it’s a bad idea.
—CNBC, March 15, 2023.
How it’s going: Biden to cap rent rises at 10% in new affordable housing ploy: White House to unveil plan that could stop landlords upcharging on millions of homes.
—The London Daily Mail, March 29th, 2024.
Will Sundown Joe’s handlers go the full Nixon, next?
On Sunday night television, Nixon presented his New Economic Policy, a cynical plan that helped his political prospects at substantial cost to the long-term economy. He immediately closed the gold window, ending the convertibility of dollars to gold. He imposed temporary wage and price controls. He asked Congress for a tax credit that was frontloaded for maximum impact pre-election, even as he slapped a surcharge on imports.
Many of the minds at Camp David, and at other advice sessions, opposed components of the plan. Shultz, then director of the Office of Management and Budget, fought the wage and price controls. But the economists eventually went along, telling themselves that concessions were the price of being policy makers.
“Ideologically, you should fall on your sword, but existentially it’s great,” Ben Stein, the son of Herb, told his father.
The short-term results of the New Economic Policy were as splendid as hoped. The Consumer Price Index, now manacled, dutifully declined to 1.7 percent from 4.1 percent the preceding year. Unemployment didn’t rise.
By July 1972, four months before voters would choose between Nixon and Democrat George McGovern, Stein, then chairman of the Council of Economic Advisers, held a press conference at which he claimed second-quarter data was “the best combination of economic numbers to be released on one day in all of history, or at least the Christian era.” (Reporters politely protected him by editing this down to “the best results in a decade.”) Gross domestic product for 1972 grew more than 5 percent. McGovern didn’t stand a chance.
But the long-term outcome, as Stein, an admirably honest thinker, later noted, was abominable. In the post-Nixon years, unemployment started rising again. International markets recognized that without the threat of gold withdrawals to keep officials’ spending in check, the Federal Reserve, Congress and the Treasury might inflate with impunity.
Inflation therefore also accelerated, as Stein noted regretfully in his memoir, “Presidential Economics.” The combination of inflation and unemployment was something so novel that Americans created a new word to describe it: stagflation. The homebuyer paid for the euphoria of Camp David with the worst mortgage interest rates in the history of Christianity, or at least the postwar period: more than 18 percent in 1981.
—Amity Shlaes: What not to do in an economic crisis, the Orange County Register, August 8th, 2011.