Jimmy Carter

Art Buchwald once mused about what would happen if a television writer pitched an idea to a network for a new sit-com. The main character would be a naval officer who was also a nuclear engineer but after his discharge decided to become a peanut farmer. He then lives with his 75 old mother who was a member of the peace corps. He has a brother who drinks 10 six-packs of beer a day, one sister who drives a motorcycle, and another who is a faith healer. He and his wife also have a daughter who lives in a tree house.

Then he decides to run for President.

And gets elected.

Well, enough levity.

No one can say that the Presidency of James Earle Carter was free of its problems. Oh, it's not just that he had a younger brother that kept doing stupid things like becoming a registered agent for the Libyan government - then being led by monomaniacal nutcase and terrorist-funding Muammar Gaddafy, - or who would take a Welcome Break on the tarmac at a major airport or sponsor the short lived product Billy Beer. Actually what hurt Jimmy most - in an Honest But Humber CooperToons Opinions was a comment he made while running for president.

When Jimmy ran against Gerald Ford, inflation was 5 %. That, Jimmy said, was a national disgrace.

At one time when running against Jerry, Jimmy said that an inflation rate of 5 %, is a - and we quote - "a national disgrace".

Despite his famous and short lived badges proudly blaring "Whip Inflation" or WIN (better would have been "Stop Inflation Now" badges) when Jimmy did get elected inflation shot to 16% and interest rates where a whopping 22 %. Fixed rate mortgages had vanished.

We won't go into great explanations as to what caused the - quote "Great Inflation of the 1970's" - now something people this side of 50 don't remember - as there are almost as many explanations as there are economists. And the explanations are mostly after the fact or politically inspired. You may hear deficit spending causes inflation - until we have massive deficits with virtually no inflation. It was the Oil Embargo of the OPEC nations - except that the Embargo was over well before the late 70's two digit inflation. It was labor demands of higher wages producing a spiraling of positive-feedback in cost increases - except that in some times of high labor awards, there had been very little inflation.

But what we do know is that during re-election time that Jimmy said that wasn't his fault. That didn't sit well with a lot of voters particularly when Jerry - who was not seeking the election at the time - kept reminding them of there was the 5 % "national disgrace" vs. the 18 % "not-my-fault" inflation.

Actually it wasn't Jimmy's fault any more than 5 % inflation was Jerry's fault. The truth is that in things like inflation, interest rates, and prices, there's not really anything politicians can do. Diocletian tried fixing these back around 300 A. D. and what he tried hasn't worked yet.

Unfortunately, the tendency to blame others for things which are about as controllable as the tides builds an inherent dishonesty into our political system. For instance suppose one candidate appears in a debate and says:

Now if you vote for me, you'll pay less at the pump! You can count on it!

But another one says:

Well, if you vote for me and provided services stations in your area don't close, and if there are no changes in the number of intermediate distribution centers, or transportation disruptions and if foreign and domestic quantities of feed stocks aren't reduced either due to contract agreements or other circumstances and as long as federal, state, don't rise, or if the value of the dollar doesn't drop, and if refining doesn't reach full capacity, and if fuel demand drops, and if the executives decide they don't think they need any additional rise in their bonuses for the following quarter, then you will pay less at the pump. You can't count on it but that will probably be the case.

Now anyone who an pour rainwater out of a boot with the instruction written on the heel knows that the second politician is actually telling the truth. On the other hand, there ain't a snowball's chance that anyone would vote for him and he couldn't win an election for dog-catcher.

As to 5 % inflation, we used to be told that inflation was bad! bad! bad!. And you'll read that in a - quote - "perfectly functioning economy" - unquote, you want slight negative inflation.

On the other hand since nothing is perfect, economist are now telling us that we want at least some inflation. Often 2 % is cited as optimum, but there are also cases that as much as 4 % is OK, too.

So it turns out that what was once a national disgrace is pretty close to what we need!

How about that?

References

"The Optimal Rate of Inflation: An Academic Perspective", Peter J. N. Sinclair, Bank of England Quarterly Bulletin, pp. 343 - 351, 2003.