Beyond the heartfelt thoughts and prayers directed to family and friends, the death of an important public figure inevitably elicits reflections on those times when our lives were inextricably linked to theirs. So it is with Gerald R. Ford, the 38th president of the United States. In the realm of economics inhabited by this weblog, that legacy is probably most associated (unkindly) with the infamous WIN -- Whip Inflation Now -- campaign. Explains a modern-day grassroots effort:
Whip Inflation Now (WIN) was an attempt to spur a grassroots movement to combat inflation, by encouraging personal savings and disciplined spending habits in combination with public measures, urged by U.S. President Gerald Ford. People who supported the mandatory and voluntary measures were encouraged to wear "WIN" buttons...
The buttons were snazzy...
... but the idea itself is nowadays viewed as, well, kind of foolish:
"WIN" buttons immediately became objects of ridicule; skeptics wore the buttons upside down, explaining that "NIM" stood for "No Immediate Miracles," or "Nonstop Inflation Merry-go-round," or "Need Immediate Money."
Seen through contemporary eyes, it is clear that the President Ford's speech hopelessly entangled shocks to relative prices with ongoing inflation of monetary origins. From the Whip Inflation Now speech, delivered to Congress on October 4, 1974:
... Food prices and petroleum prices in the United States are primary inflationary factors. America today partially depends on foreign sources for petroleum, but we can grow more than enough food for ourselves....
To halt higher food prices, we must produce more food, and I call upon every farmer to produce to full capacity..
Number two: energy. America's future depends heavily on oil, gas, coal, electricity, and other resources called energy. Make no mistake, we do have a real energy problem...
Number three: restrictive practices. To increase productivity and contain prices, we must end restrictive and costly practices whether instituted by Government, industry, labor, or others. And I am determined to return to the vigorous enforcement of antitrust laws.
And on it goes. Monetary policy proper commands all of two sentences in the speech, and the message was decidedly mixed at that:
... Prudent monetary restraint is essential.
You and the American people should know, however, that I have personally been assured by the Chairman of the independent Federal Reserve Board that the supply of money and credit will expand sufficiently to meet the needs of our economy and that in no event will a credit crunch occur.
My colleague Mike Bryan explains why this whole discussion is essentially misguided:
A rise in the cost of living means that one’s ability to maintain a certain level of well-being has diminished. Prices may or may not have risen, but people’s income relative to prices has fallen. The other concept, inflation, refers to the deterioration in the purchasing power of money—a rise in prices that comes when the central bank has created too much money, leaving people’s income relative to prices unchanged. Inflation does not mean it is more difficult to maintain a particular lifestyle, only that its cost in terms of money is “inflated.”
... it is useful to appreciate the distinction between these two ideas. The causes of inflation and a rising cost of living are fundamentally different, as are their remedies.
Lest anyone thought he wasn't talking about diminishing well-being, Mr. Ford added this plea:
Here is what we must do, what each and every one of you can do: To help increase food and lower prices, grow more and waste less; to help save scarce fuel in the energy crisis, drive less, heat less. Every housewife knows almost exactly how much she spent for food last week. If you cannot spare a penny from your food budget--and I know there are many--surely you can cut the food that you waste by 5 percent.
The misfire on emphasizing inflation's true source turned into mealtime for satirists with the whipping out of the WIN buttons:
There will be no big Federal bureaucracy set up for this crash program. Through the courtesy of such volunteers from the communication and media fields, a very simple enlistment form will appear in many of tomorrow's newspapers along with the symbol of this new mobilization, which I am wearing on my lapel. It bears the single word WIN. I think that tells it all. I will call upon every American to join in this massive mobilization and stick with it until we do win as a nation and as a people...
Are there are any kind words to be found about all of this? More thoughts to follow.