Donald Trump is often compared to Richard Nixon in his disdain for law and ethics. The parallel applies to economics too. Nixon in 1971 quit the Bretton Woods agreement and imposed a surtax on all imports. The “shock” disrupted the world economy and profoundly angered formerly trusting friends already uneasy over the war in Vietnam. But Nixon, who knew little and cared less about economics, had his eye fixed on one concern only: the 1972 election. His emergency economic measures—joined to a loosening of monetary policy and a big increase in Social Security payouts the next year—were selected with an eye to one concern only. In the words of Allen Matusow, the shrewdest student of Nixon’s economic policy, “Somehow he had to make the economy hum by 1972 or face likely defeat in his quest for reelection.” What that meant in practice, Matsuow wrote, was that Nixon governed not according to what would work in the long term, but according to “the prevailing mood of the two-thirds of the country he called the ‘constituency of uneducated people.’”
Nixon did indeed win in 1972. He also bequeathed his country not only the worst political scandal in its history to date, but a decade of stagflation that bore most heavily upon the very people Nixon claimed to champion. We’ve been there before; it looks like we’re returning there again.