The Nixon Shock and the Libertarians

David BoazOn August 15, 1971, President Richard Nixon went on television and announced a three ‐​part New Economic Policy supposedly intended to stop inflation and increase economic growth. By executive order he would “close the gold window,” thus preventing foreign nations from exchanging U.S. dollars for U.S. gold; impose a 10 percent surcharge on imports; and order a freeze on wages and prices. Public reaction was good, and the Dow Jones Average rose the next day. The New York Timeseditorialized that “we unhesitatingly applaud the boldness with which the President has moved on all economic fronts.”The few libertarians at the time had a different reaction. Milton Friedmanwrote in his Newsweek column that the price controls “will end as all previous attempts to freeze prices and wages have ended, from the time of the Roman emperor Diocletian to the present, in utter failure.” Ayn Rand gave a lecture about the program titled “The Moratorium on Brains” and denounced it in hernewsletter. Alan Reynolds, now a Cato senior fellow,wrote in National Review that wage and price controls were “tyranny … necessarily selective and discriminatory” and unworkable. Murray Rothbarddeclared in the New York Times that on August 15 “fascism came to America” and that the promise to control prices was “a fraud and a hoax ” given that it was accompanied by a tariff increase.Some libertarians who were gathered that night at t...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs