This'll cheer Jim up

[Lord Jim]

But in politics, what goes around more often than not comes around...Live by "The Misery Index", die by "The Misery Index"...

In the 1980 campaign, in another shrewd political move, The Gipper took Carter's "Misery Index" and shoved it right up his ass:

[rubato]

You can find the explanation here:

http://delong.typepad.com/peacetime_inflation.pdf


He makes one error and says that Reagan deregulated oil. He didn't. Carter did starting in 1979. Otherwise it is a good description of the two periods of spiking high inflation and subsequent high interest rates.


If you care about the truth you can read it this time.


The questions you should ask are: "Why did germany NOT have spiking high inflation from either oil shock?" and "Why did Japan have spiking inflation from the first shock but not the second?" Both countries were dependent on imported oil to a greater degree than the US was.


yrs,
rubato

[rubato]

Agreed, there is too much awful. My list goes like this:

Truman
Kennedy
Clinton
Johnson
Nixon
Obama
Eisenhower
GHWB
Ford
Reagan
Carter
GW Bush

If they were rated by the scope of the challenges they faced (and did not create) the top 3 would be:

Truman
Obama
Johnson

Obama is tough to rate at the moment.

If the were rated by political courage they would be:

Truman (firing Mac Arthur and desegregating the military)
Johnson (voting rights act, war on poverty)
Carter (Camp David, the Volcker disinflation and deregulating oil)

Carter and Johnson paid the highest political price for their courage.

yrs,
rubato

[Sue U]

Johnson's unforgivable sin was Vietnam and that's what really cost him politically.

Obama squandered his tremendous political capital early in his first term by failing to present a coherent healthcare reform program and abdicating leadership to Congress, where prolonged wrangling and GOP obstruction sapped the life (and the most effective policy choices) from the concept.

Truman was not a big thinker in terms of policy but was pragmatic, which made desegregating the military imperative -- especially in the wake of WWII and the rising civil rights movement. As for MacArthur, Truman had always had testy relations with the military chiefs, but the assertion of civilian control had to be paramount. From what I have read, the Korean War was a clusterfuck all around, and it was largely an accident that it didn't spark an all-out war with China as a result of MacArthur's over-reaching of his authority.

I think Ford has always gotten an undeserved knock, partly due to the effect Chevy Chase and SNL had on the popular culture at the time. I have mixed feelings about his pardon of Nixon; in terms of justice and the rule of law it was clearly wrong, but socially and politically it was probably a benefit to the country.

[Lord Jim]

If you care about the truth

It is precisely because I care greatly about the truth that I would never use the likes of a Brad DeLong as my pipeline to reality...

The questions you should ask are blah, blah, blah....

The question you should ask yourself is, "Why do I insist on repeatedly lying about the inflation situation that Carter inherited, and his role in making it worse? Especially when the actual numbers keep getting re-posted every time I do it, revealing me to be a dishonest dissembler."

As I read somewhere recently:

I can only present the truth. If you choose not to see it that is your affair.

[rubato]

Why did Japan suffer spiking high inflation from the first oil shock but not the second? Understanding that will help you to understand what forces caused both of the US inflationary spikes and why it was Paul Volcker who prevented them from happening in the future. Carter could not have stopped the 2nd oil shock nor its inflationary effects because the mechanisms were still in place from the Nixon era and it takes many years to undo them, look how many years it took for the Volcker disinflation to work and for it to restore confidence in the banks that the fed would not panic (as Nixon had it do) and print money when unemployment got too high.





yrs,
rubato

[Lord Jim]

the mechanisms were still in place from the Nixon era and it takes many years to undo them,

Yeah, see the problem is, for that bullshit theory to work, the inflation rate would have to have stayed high under Ford, instead of steadily declining for 27 months...

The numbers clearly show that the inflationary conditions caused by Nixon's ill advised wage price controls were wrung out of the economy under Ford, before Carter became President...

Try again...

[Big RR]

Jim--the biggest increases in inflation under Carter were late in his term, due to the oil shortage occasioned by Iranian production grinding to zero and the Saudis refusing to step up production. In 77-78 it was fairly steady at his pre election rates.

[Lord Jim]

In 77-78 it was fairly steady at his pre election rates.

Actually Big RR, that's not correct; if you look at the table that I linked to earlier you'll see that the inflation rate rose steadily almost from the very beginning of his Presidency; by January of 1979 it had risen to over 9% (much higher than the 5.22% rate he inherited from Ford) and by March of that year it reached double digits. (months before the fall of the Shah, and long before the Iran-Iraq War)

Of course it later got much worse, but let's not pretend that Carter is blameless for the second oil shock...

First, he leaned hard on the Shah to ease up on political repression too quickly and before a stable political process could be put in place,(this was probably the greatest single blunder of a Presidency that was awash in blunders; we're still paying for it today.) which played a central role in his being overthrown. (If you want to see a good template for how to effectively pursue political liberalization in that part of the world, Jordan provides an excellent example)

Second, by the time all of this was happening, Carter had gotten such a reputation internationally for being a weak and ineffective President that the OPEC countries knew they could reap the profits from the huge increase in oil prices with impunity, and felt no need to step up production. (And of course his reputation got nothing but worse; Carter became a complete international laughingstock, regarded with scorn and contempt by friends and enemies alike.)

This is similar to what happened during the first oil shock in late 73, when the Arab countries felt they could get away with first embargoing oil to the US and then quadrupling the price because Nixon had been so weakened by Watergate at that time, (and the passage of the War Powers Act) they knew they had nothing to fear from him either.

[Sue U]

This is similar to what happened during the first oil shock in late 73, when the Arab countries felt they could get away with first embargoing oil to the US and then quadrupling the price because Nixon had been so weakened by Watergate at that time, (and the passage of the War Powers Act) they knew they had nothing to fear from him either.

That is patently untrue. The 1973 oil embargo was a direct retaliation for US support of Israel in the October (Yom Kippur) War. At that time, although the Watergate investigation was going on, there was no evidence directly linking Nixon or the White House to the burglary; Nixon hadn't yet turned over the infamous tapes and was still pressing the issue of executive privilege. It wasn't until the following spring that shit really broke open, and it wasn't until the summer of 1974 that the impeachment hearings got real traction. (I spent that summer in DC at American U and it was surreal.) In any event, in October 1973 the Arab world gave not one fuck about some low-level American domestic political dust-up over a third-rate burglary; Nixon and Kissinger were very much forces to be reckoned with on the international stage.

[Lord Jim]

Wow, your recollection of what was going on with Watergate in '73 is really faulty; way off base...

I'd suggest you read up on it before posting about it again...

In the summer of 73' they had the Ervin Committee hearings that captivated the nation's attention, and during which John Dean directly fingered Nixon in the cover-up...

And then of course in October:

The Saturday Night Massacre was the term given by political commentators[1] to U.S. President Richard Nixon's executive dismissal of independent special prosecutor Archibald Cox, and the resignations of Attorney General Elliot Richardson and Deputy Attorney General William Ruckelshaus on October 20, 1973 during the Watergate scandal.[2][3][4

Congress was infuriated by the act, which was seen as a gross abuse of presidential power. The public sent in an unusually large number of telegrams to both the White House and Congress.[10][11] And following the Saturday Night Massacre, as opposed to August of the same year, an Oliver Quayle poll for NBC News showed that a plurality of American citizens now supported impeachment, with 44% in favor, 43% opposed, and 13% undecided, although with a sampling error of 2 to 3 percent.[12] In the days that followed, numerous resolutions of impeachment against the president were introduced in Congress.

http://en.wikipedia.org/wiki/Saturday_Night_Massacre

I stand by what I said 100%; had Nixon not been so badly politically wounded, the OPEC countries would have thought long and hard about imposing an embargo on the US. They would have had to calculate the possibility that Nixon might declare it an act of war and either bomb them or send in troops to seize the oil fields .(The Saudi's with basically no military to speak of would have had to have been the most concerned.)

I don't know whether Nixon would have taken action like that or not, but the possibility that he might would definitely have been a part of the calculus the Arab countries would have to take into consideration before imposing an oil embargo on the US.

[Big RR]

They would have had to calculate the possibility that Nixon might declare it an act of war and either bomb them or send in troops to seize the oil fields

after just achieving "peace with honor" in Vietnam, I imagine they would have correctly estimated that possibility as slim to none even without Watergate. Nixon was far too pragmatic to start another war so quickly.

[Lord Jim]

Nixon consciously cultivated an image with foreign governments for unpredictability; he did so precisely to deter countries from taking actions that were hostile to US interests...(he and Kissinger had discussions about it)

The Arab countries would not only have had to consider the possibility that he was capable of taking such action, but that Nixon might also view it as politically popular.

[Big RR]

he did so precisely to deter countries from taking actions that were hostile to US interests

Didn't work all that well, did it?

but that Nixon might also view it as politically popular.

I can't believe they would have thought he was that crazy.

[Lord Jim]

Why would it have been "crazy" to think that seizing the Saudi oil fields might have been politically popular in the wake of a war where the Arabs had just tried destroy Israel, and while Americans were watching the price of gas go through the roof and spending hours in gas lines?

[Big RR]

Sure, after enough time some of the American people might get pissed enough to start a war, but support of Israel was not at a high point (even though the press didn't talk about that), and people were sick war after Vietnam. And the Arabs stopped the embargo before the people got anywhere near that pissed off. If Nixon tried to start something in the middle east right after Vietnam, it would have been pretty unpopular, embargo or no embargo.