Abstract:
When inflation reached 18 percent in 1980, a groundswell of public opinion clamored for mandatory wage and price controls. President Carter steadfastly refused, citing consensus among government leaders and economists that America's previous experience with peacetime controls, under President Nixon, had proved an abysmal failure. This case explores this analogy and the lessons drawn from it. Part A presents Carter's problems and contemporary arguments on price controls. Part B describes the implementation, structure, and effects of the controls of 1971-73, providing a basis for evaluating the "lessons of price control" cited in the 1980 debate. Part C covers the period from FDR to Eisenhower, examines the experiences that framed the "lessons" Nixon himself used in making his decision.
Learning Objective:
This case may be used to illustrate three different themes. First, it demonstrates the use of historical analogies in decision-making. Second, this case can serve as a vehicle to discuss the uses of issue-history in decision-making. Third, the case demonstrates how ideology may condition memory.
