In 1971, Nixon created an economic policy known as the “Nixon Shock” which led to a floating exchange rate. The results on economic instability have been extreme. Aside from creating the stagflation of the 1970s, it also created this ever-widening gap between income and prices. The Libertarian Party was formed that same year (‘71) as a reaction to the Nixon shock and the abandonment of the Bretton Woods System and the gold standard, and everything those early party founders predicted has come to pass.
My 8-Point Plan
Income as a ratio to Prices is a better barometer for gauging impact than simply looking at wage growth alone. That gap has been growing consistently wider. When you consider prices as either a percentage or multiple of income, everything from housing to rent, food, automobiles, gas prices, and education have increased exponentially since 1971. While it’s highly unlikely we’ll revert to a fixed exchange rate or a re-adoption of the gold standard, that doesn’t mean there aren’t ways to reverse the trend.
1) Balanced Budget Amendment- Government expenditures should be dictated by projected receipts. It’s time to turn the money printer off. The increase in money supply is the root cause of inflation, and it devalues our currency over time.
2) Fundamentally decrease the cost of healthcare by rolling back Patent Protection Laws geared at allowing Big Pharma to operate without competition. Allowing competition into the marketplace will lead to a reduction in pharmaceutical costs. Less expensive drugs mean less expensive healthcare which means less expensive insurance.
4) Drive down energy costs through diversification and less foreign dependency. This will require a combination of further development in Solar, pipelines, and nuclear energy.
5) Expand trade diversification by nearshoring where it’s feasible. This will create less dependence on China while also easing some of our supply issues.
6) Drive down the costs of goods by reducing the tax burden on manufacturers. Replacing the corporate tax with the FAIR Tax will have a deflationary effect and bring more manufacturing jobs to the US.
7) Roll back Trump-era tariffs on steel, lumber, and other items. Your friendly reminder: A tariff is a tax, and we’re the ones that pay that in the form of higher prices.
8) Encourage natural and sustainable wage growth. The FairTax will replace the Payroll Tax, allowing funds already set aside for payroll (and previously dedicated to the payroll tax) to go directly to the employee in the form of higher wages.
On an important side note, 1971 was also the year that Nixon announced the War on Drugs. John Ehrlichman, Nixon’s domestic advisor, would later admit the War on Drugs was created as a means to vilify black people, “disrupt their communities, arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news.”
Today, we live in a society of mass incarceration and mass drug addiction. Black markets have prospered and created revenue streams that result in more people on the streets pushing this stuff. Addiction and overdose rates have gone parabolic since we began the War on Drugs. This should come as no surprise. Government interference almost always exacerbates the problem it seeks to fix.
We spend a lot of time focusing on rolling back the previous administration’s policies. (eg Trump rolled back Obama’s policies, Biden rolled back Trump’s policies, etc) Perhaps it’s time we re-address the policies of Richard M. Nixon.
Why focus on the past? Because these policies are still in effect and are having a devastating impact on Americans TODAY.