Back in the ‘70s, when Richard Nixon was in the throes of the Watergate scandal, the U.S. economy was overheating because of the Vietnam War, among other causes. Nixon had attempted during his first term to deal with the problem by imposing a wage and prize freeze. After several months, the freeze was lifted.
Distracted by Watergate, Nixon pretty much ignored the problem. After Nixon resigned and Gerald Ford became president, another half-hearted effort to stanch inflation was attempted, without much long-term success.
Then Jimmy Carter became president, and he had to cope with the problem. Eventually inflation was curbed when Fed Chairman Paul Volcker imposed punishing interest rates that caused a recession and brought inflation under control.
The cure was every bit as bad as the disease. In 1972, the unemployment rate was 5.2% and inflation rate was 3.4%, a rate that would see prices double every 21 years. By 1974, the unemployment rate was 7.2% and the inflation rate was 12.3 percent, a rate that would double prices every six years. By. 1980, the respective numbers were 7.2% and 12.5% for inflation. The following year, unemployment jumped to almost 11 percent and inflation dropped to 3.8%. In other words, inflation was finally licked by policies that put one out of every 10 Americans seeking work out of a job.
I apologize for all the numbers, but I thought they were necessary to make my point.
And the point of this little historical exercise is that distracted presidents often let potential problems become real crises. We have no way of knowing what’s boiling under the surface with Donald Trump in the White House. What we do know is that he is a weak, incompetent leader with little understanding of the economy despite going to the Wharton School of Business and, according to him (and no one else) doing very well there.
What we also know is that he has appointed a lackluster bunch of rich men and three women most of whom with little or no experience in public affairs. If there is a crisis brewing—and every administration has had to deal with at least one—we shouldn’t be comfortable or confident that Trump and his team will know what to do. That is true especially because Trump’s closest adviser is his gut, which so far hasn’t distinguished itself with brilliant policies. In fact, for the most part, Trump isn’t interested in policy, although he does like making spur of the moment decisions based on the advice his stomach gives him.
If the above gives you cause for concern, good. You should be worried.
What is to be done, as Lenin so famously asked? Stay tuned.