Wednesday, December 27, 2006

Ford couldn't WIN 

(Substantial update below.)

So how does academia remember President Ford? The Chronicle of Higher Ed leads off its coverage with this paragraph:
Liberal academics may best remember Gerald R. Ford, the 38th president of the United States, unfondly because of the pardon he granted to his former boss, Richard M. Nixon, over Mr. Nixon's role in the Watergate scandal.
So much for conventional wisdom. Wait until they remember that Ford's chief of staff was Don Rumsfeld first, and then Dick Cheney!

Not that I am a big fan of Ford -- I often use an old WIN button for a prop in discussing stagflation -- Alan Greenspan ended up being a fan of his. Greenspan, it should be remembered, headed Ford's Council of Economic Advisors. From a recent article on Ford's economic policies:
While I felt fairly close to his general point of view on economic policy problems, my initial impression was that he was not really capable of abstractly articulating a philosophy. Because of that, I sensed that he wasn't fully in control of the general framework of the policy decisions he was making on a day-by-day basis. But if you began to look at the concrete decision making process, what came through was a very sophisticated and consistent framework. Within perhaps a year, maybe even less, I was able to forecast how he would come out on individual issues with virtually zero error. I then began to conclude that this was not an accident. So, while he was not consciously or verbally in control of a general philosophy toward economic policy, he nonetheless had a fairly sophisticated view.
(Worth noting -- at the time Bob Woodward's bio of Greenspan, Maestro, came out, there was a second book by Justin Martin that covers the Greenspan-Ford relationship.) It's hard to go back and find the policies that would have whipped inflation in 1975-76 given how buggered the economy was under Nixon's wage and price control policies and the ending of Bretton Woods. There's little question that Jimmy Carter's misery index lines in his stump speech helped push Ford out of the White House (I have never thought it was just the pardon.) But the misery index rose under Carter, a point Ronald Reagan used to devastating effect in 1980.

UPDATE: I think Doc is right. The guy who did the least as president might be the best. At least pre-9/11.

UPDATE 2: Bill Polley's appreciation and later agreement. I am rather amazed and not very amused with the less-than-gentle treatment he takes from some. PGL's post discussed in the first comment is here. It's worth remembering that at that time the targeting strategy of the Federal Reserve was different than it is now. That is, the whole concept of reputation and credibility was absent in the discussion of monetary policy. In this recent summary of a St. Louis Fed volume, a clipping from the Wall Street Journal came out six days after Paul Volcker changed that strategy to one closer to what we now know:
Among those who are skeptical that the Fed will really stick to an aggregate target is Alan Greenspan, president of Townsend-Greenspan & Co., a New York economics consultant. Mr. Greenspan, who served as chief economic adviser to Presidents Nixon and Ford, questions whether, if unemployment begins to climb significantly, monetary authorities will have the fortitude to �stick to the new policy.�
I think what Ford was asserting in the point PGL pulls from the Ford inflation plan was the existing consensus in monetary policymaking: it had both real and nominal targets. Thus Ford was not asserting anything new in monetary policy in saying unemployment wouldn't get out of hand, or that interest rates would be managed. He was expressing the status quo. Allan Meltzer makes the point in that St. Louis volume:
[Fed chair Arthur] Burns resented White House interference and pressure, but he did not often resist it. He took over a Board most of whose members had been appointed by Presidents Kennedy and Johnson. To varying degrees, a majority preferred to continue inflation rather than increase unemployment. If inflation could be reduced at an unemployment rate of 4.25 or 4.50 percent, they would accept it. But they did not want any higher unemployment rate. There was a minority that wanted more restrictive policy and more action against inflation. The few consistent anti-inflationists, such as Hayes, Brimmer, and Francis, were exceptions. They gained support when inflation rose, but only until unemployment rose above the level the majority would accept. [Andrew] Brimmer explained at the time that if fiscal policy was the way it was, you would have to tighten monetary policy to the point of inducing a recession. He added that the Federal Reserve �didn�t promise a tradeoff [of easier monetary policy]�if you get a tax bill but we came pretty close to it.�
Given that constraint from an independent Federal Reserve, what were Ford's choices?