Nixon, McCracken & Connally on Economic policy and Unemployment

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Well, first of all, first of all, I'm amazed at the admiration for science that you do.

I thought it was fantastic.

It's a one-man operation in history.

I say one man.

We, of course, farm Bill Rogers.

He has the farm government, but... His history and I just about told my soul that if you got to work it out, work up all the papers,

...papers on things that are not there in line, and they're in line with what would be the position of the administration.

And all of this is a change in a variety of very, very super-different channels.

Third governments that could not be, could not disclose.

to work it out together with the Russians and the Chinese.

But the impact was perhaps, I know it would be considerable, but it's not as great or important because of the, first, the massive surprise, and second, the fact that it is most significant diplomatic revolution.

We probably have more face-to-face conversations with Joe and I than any other government.

Oh, and a question about healthy at 21 hours.

Oh.

You can sense that young people, I like kids, even people around here who've got kids, you know, and they're the ones that are excited.

Yeah, that's the two reasons for it.

One, they like surprise.

They like boldness.

I mean, they play, they think, why the hell do we have to be so careful about anything at all?

The other thing is, they know deep down the sense that it's about their world, their generation, not ours.

Really, we don't have to worry about China for 10 years, not really.

They don't worry very much, very much.

So they know that somebody's got to do something about China.

Before then, you can't wait until they get something that's impossible.

That, and it's sufficient.

It's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a

He didn't know what to do.

What do I say?

Andrew, what do you make of the fact that, well, this is a revolutionary thing for us, and look how it looks from China's point of view, and try to rationalize it.

To make this consistent with what they've been saying about us, beyond the fundamental answer, it's particularly difficult for them with their friends in the world, the communist world, with North Vietnam.

uh all over the world where they say we're in the bandfire and the leader of the revolutionary movements the russians or bourgeois now here they think they say we don't need the american

It's a very, very easy kind of movement, I would call it.

But they're doing sort of meetings, of course, that are going very good, and we're going to get their minds, and they must have very powerful reasons for wanting to have some sort of communication with us, which are very powerful.

So, that's the beginning.

and discussed one of the, you may recall, shirt and the deal.

And I did very much to make an aim

well first of all i think

A move at this time would be very detrimental.

There was a few in September, but it would be a broad link with a change in policy.

I haven't figured it myself, too.

This situation is going to look a hell of a lot better than it looks today.

Oh, I think about the future, in other words, for M6100.

This is not July.

What do you see in January?

I think we will see...

I think we'll see a pretty good game.

I don't think a spectacular game in the second half of the year.

The rate of improvement will be somewhere between...

Maybe overall about, I don't see anything, I don't see anything spectacular in this picture.

But there's a continuing game.

I guess what you need is the, the king.

There's a counterpart.

Yeah.

Well, if that's all there is to that, then we can talk about a counter-partner.

We've been talking about this for a long time.

The algorithm really doesn't matter.

What they really want is that you just have to permanently suppress control.

So that is their policy.

That's it.

Well, I'm going to go along with it.

You know, there's too many of them now.

You know, they inferred around this idea and so forth, but they already did it.

They're going to leave it on permanently.

You don't want to temper it.

If you leave it straight, they say, well, it's just a way to suppress control.

That is because I had such a strong belief that we can't go that way.

Going much further down that road, I'm perfectly happy to accept that we're going to be able to talk to all these people.

I feel it's the right thing to do right now.

Isn't that also the right thing to do after January?

We're going to do it.

We're going to do it any day that we do it, and we haven't had to back out from there.

So we've got to do something, certainly before January.

But I don't think right now we should have three more months to watch for changes and so forth.

What it certainly is about that, that's the real question that we ought to get to about your own situation.

I feel it's a turn to the council and so forth.

That's good.

I really feel that you guys are having a hell of a hard time.

I mean, when you stop to think of the turnaround of the defense, and we've made 300,000 people out of the defense class, and now we are on the surface.

Well, let's put that right back in.

All right, you're on a five degree fence, four and a half percent, or five and six tenths, whatever the number is, or if the number is wrong, five and nine tenths, and it's four and nine tenths, right?

And now they work quite as well as we would like.

People say, well, why didn't you do more of this and that?

But I don't think, I personally feel, from our standpoint, speaking about it, I don't think from your standpoint, that you want to leave at a time when the policies under severe attack, the stuff that you should have done.

I think it's a, I think it's just a,

It's just going to look better.

It's sure going to look better.

Let's put it this way.

It isn't.

It's going to look some better than it looks now.

Would you agree to that?

Yes.

Oh, yes.

I think you'll see studies about spectacular improvement.

I don't give much to them when they're spectacular.

I don't want spectacular until next year.

If you have to expect spectacular improvement this year, I think I'm just sure it shouldn't happen.

No, it is.

I would have to say that I think the expansion we're getting is a little sluggy.

Right.

Well, I heard all your things said, and all the others suggested.

uh, without trying to prejudge what November might, that is, what things might look like in November that we would indicate that the gods might need to be reconsidered.

That's why we had to consider a tax addition down, uh, which I can't reach you in my favor, so I don't know how I could, I don't serve in favor of, I just can't see that a way to Christ's grace and all that sort of thing, I don't see that as benefiting the gods, I can't believe it would.

Well, I got a hell of a massive tax credit.

I mean, let's say, on the price front.

on every major settlement aren't just like we have in the middle of the street.

And those settlements are beginning to, well, some of them are closer than, of course, you see.

They held a big price that apparently got quite a bit for it when we worked the rules for it.

And I think he did.

Do you agree?

I do.

I think that means a lot, doesn't it?

I think that's a price worth the payout.

If you were to do that, it would be worth getting close to it.

It would, but I don't think, I'm not sure that seeing what is the scope for that degree of change and working with post-operative professors is like seeing fish in a barrel.

You mean they're so inefficient?

They're so inefficient that they could get freed up a little bit.

There's so much that could be done.

It seems to me that if you start installing

That what we ought to do, if you feel that basically a hell of a lot of it is psychological, because I was talking about how the economy is a little sluggish and not moving as fast as it should, and so forth and so on.

Well, you've got to compare something with something else.

And the point is that about 95% of the people are pretty damn well off.

You know what I mean?

You've got to look at it in those terms.

When you talk about the recession that we've had, sure, compared in size to the others, it was still a monster.

It wasn't very much.

I'm just a minor, uh, and, uh, and I didn't, uh, I didn't believe her, uh, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me, excuse me,

Well, I have two questions here.

One of them.

What's the right policy?

I think, I do think, we must work to get a little more of a firm stance to our policy.

They, as you, there's no criticism of John Hunter, as being, we are not going to do this, we are not going to do that, has come to be characterized as a no-no.

Right.

Good point.

My guess is that by November, although, as I say, I'm not pretentious, that we will, if that's what you make of the consideration of the month, that we might want to think in terms of somewhat of that impact.

Yeah, man, uh, sick evidence.

Yeah, sick evidence.

Yeah.

And also, uh, it may be that we're going to have to look at some of our foreign problems in terms of foreign... Well, that's just controversial as well.

I don't think we may have no other choice than the Congress to weigh in on this.

I've got a, uh, I've got a...

in a different area internationally on the quality i think i i can see i can see a weight in there i mean it's uh it has it has some leggings but i think it has a positive and quite frankly i can see i can see a way here to uh

to do some things that very much need to be done.

One is to improve our basic international competitive position.

We must do that because we're out of line.

No doubt about it.

How do you mean to do that, sir?

Well, everybody talks about whatever doesn't come.

Well, I think, here, Mr. President, that fundamentally what we're talking about is the exchange rate of the dollar.

I find that I'm rather about a client.

Well, it's just a very quick change.

Well, I don't, I didn't come in according to what you said.

In other words, do you think we better, that this is something everybody at the sales department would be expecting?

I think, I think we, I think we certainly ought not to, I can say the following about this.

For example, if you're taking the initiative of the International Economic Forum through your internet,

uh of uh redressing an envelop in our international competitive position right and attending a very sticky problem incident to the community with the enlargement of the community negatively and in a sense to the extent that it works it is it does have this inimical aspect sure because that's what it is

Yeah, of course, it's for political reasons.

That is for non-economic reasons.

I think the biggest, I think there are two major stuff in the market.

One of them is the kind of feeling, well, the fact would be interpreted as a defeat for the dollar.

Oh, I know all of that.

And it means more export is on board.

That's the thing.

And that's your goal is to improve our competitive position so if the dollar is weaker, that's just too damn bad.

And moreover, I'd rather have a conclusive act.

But once it's done, the dust will start to settle over here.

And I have to keep dragging on, every time I go to an international meeting, I'm on the defensive because when are you folks going to get your house in order and all that sort of thing.

And I've got to take a decisive action.

I do it this year.

Two months from now, one month from now, three months from now.

three months ago we might even do it now so we've got a lot of work to do first of all the reason as i say is when you're on when you're writing the crest of an international ah you might find that's a good point people are feeling good about something that you give them something that'll be important have you talked to comedy about this i'll tell you what i want you to do

We've got to start a conversation.

I'll get him on the phone.

I want you to talk to him, but I want you to talk to him.

I'll vote her.

I don't have, it doesn't mean I'm going to conference and vote her, because I don't, but I want you to tell him, I've talked to him, I mean, he's, and if you feel that you've got to fight this bullet, it takes some leadership and so forth.

What I'm getting at is this.

This or they all can't happen.

If we have a council fighting the Treasury over, it's got to come as something together.

Now, as I understand it, in the Treasury there are, as you and I guess you are aware, there are people ideologically different.

you know they grew up in the back of the woods and all that stuff and just don't want anything to change.

Why do you keep bound by all that stuff in the past?

That's the type of policy that we're in.

You know what I'm saying?

Now it's time to do something dramatic.

They waited.

How long did it take for you to get this done if you decided to move in this direction?

How long did it take for you to get this done?

Well, I don't think so.

I think we have to see if we can cut aside the gold issue from this basic issue.

And I don't pretend that again, but it's easier to do it.

Suppose we could achieve a 10% change in the exchange rate and help most nations through inflation to change the real value of their currency in that much almost a year's time.

Now, suppose we could do that, strengthen our balance of things, which would, after a while, it would take time, begin to occur.

Then the United States could be in a position

to take the initiative, well, let's think big about this, to take the initiative toward working toward a total elimination of trade barriers in the industry world.

Why could we do that?

Well, because if we start, if the exchange rate is changed 10%, we're going to cost $200 to $250 more here.

We're back on oil.

There are two or three major disadvantages.

There are the technical problems, the gold issue, and all the technical problems.

One of the disadvantages politically, most of them are criticized about the technical problems.

That's all they promise, and that's what we're answering.

So people pay the dollars, labor, and the rest.

But when you respond, you know what people think.

There are, I think, two related sets of technical problems.

One of them is, sorry, one of them is the point that all this would shake confidence in the dollar and the financial markets would never cut the dollar again.

And it would, you know, the whole disorganizing impact it would have on the financial markets.

And this is, I can't, this is a problem.

Politically, you might run into somebody who says, uh, uh, hell, uh, the, uh, the Republicans, uh, got in, and three years later, the dollar went down the drain.

That is, some sort of figure, something like that.

What does it mean domestically?

Uh, what does it mean?

Is it raised right in here?

Uh, it, uh... Is it inflationary?

It... it is slightly inflationary, but at the minimum level.

Is it inflationary because of the foreign?

You'd have to keep, I mean, your imports cost a little bit more.

But on the other hand, is it labor-efficient before it was made?

Well, I think they should because, uh, gosh, uh,

This is a way to redress this competitive envelop which we undeniably have earned thanks to you.

And so in other words, we could get back on the ballgame competitively.

We could start a leadership toward moving further in a liberal, liberalizing direction internationally.

This is an affirmative way to get at something like the community terror problem, instead of just being in a position of having to complain about it.

Well, I do also, to be sober, you know John Connolly is very strong for, he says, not for quotas, but for interactions individually with various nations to be, you know, to see that we get what's ours.

Well, this is the Yankee trigger, kind of thing.

Yeah, and if we were in a stronger position, then we could, we could take the leadership internationally.

Not in the sense of, uh, Japan, why don't you get your berries down, because we're in that case.

Uh, well, you could leave from Stratford.

Where?

Let me tell you one other thing.

There's one area.

Now, what is this?

What about the tax area?

Have you... Do you...

Uh, are we being put in some kind of a country review?

Regardless, you just got to find a way to reorient the thing.

It's really time to go for some sort of general, call it, call it an action to be very clear.

And, uh...

value-added manufacturing website, etc.

etc.

What we really have to do is we're going to talk to our experts to get some of the first connections.

off the back wall of a great mass of working Americans who earned between 5 and 20,000 dollars a year.

You get what I'm doing.

Now, our actions are more than anything else.

It's exactly political.

It's totally political.

I'm taking the work of taking the poor off the shelf.

Everybody wants to take action.

I mean, I was good before, but I didn't want to put my people on good action.

And I know in all the other points, just off the top of your head, what is your view on that event?

I know it's controversial, so it would have been this time.

No, it's, well, I think it's related to a separate issue.

On the tax structure issue,

uh i i would uh yes i i don't find the value and the sense that we needed

I don't know what I'm talking about.

No, I mean, I don't know.

I didn't mean to start you off with that, but we can throw that out on the smoke screen.

The fact of the matter is, what I really mean is, I personally believe that a national failed tax is better than an action, and I'm so sorry about that.

Okay, I would buy this, and I think you could, and this is one of the major justifications

is that we desperately need in this country to get our taxes and a lot of other things in the direction that creates or that minimizes disincentives.

In other words, we basically need to make a dollar more yearly worth earning.

And when you get high marginal income tax rates, you do get more than a dollar's worth of earnings.

so that a broad-based, sales-type tax, whether it's a bank-based or a sales tax, can find a better name, maybe.

Which one?

You know, we went through this in Michigan, and the argument was that the sales tax is regressing part of the performance, and yet full.

Well, on the, uh, on the, uh, on the, uh, I don't think, I don't think myself that my

Yes indeed.

I'm sure it would have no, certainly would have no adverse effect on the administration.

I don't think so.

But if I really thought it would, I would consider it.

I don't think it would.

On the

As for how it may look a few months from now, it is possible that that would be a better time.

Let me ask you this.

From your personal standpoint, could you do it in February?

Do you remember you were talking about your school year going around a little bit and then you run it in a quarter system?

Three semesters.

So you could go to January if you wanted to.

I think the next decision point is sort of what your economic policy is about in February.

That is, I think whoever is chairman will have to carry through the preparation of the economic report.

Exactly.

And the budget.

So I report the budget.

And the budget.

So that starts the point toward, say, mid-November.

And what I really feel that I'd like you to do is this.

I'd like you to do that.

I'd like you to carry through and do this.

Because I personally see, I'd like to say very, very candidly, if I thought...

help us to make a change.

If I thought that I had somebody else that could do the job better or somebody or something, I would go back and say, let's leave all the names out in the back of the jury.

Sure, of course, somebody leaves and they'll live for a while.

But at the present time, I am somewhat stubborn about this.

I suppose it's because I'm not

Because I've never expected this much in the economy.

I didn't expect a damn thing to go for over and back up.

I also thought, I don't think anybody has, but enough people have put enough emphasis on the enormous effect that our people have on the economy.

of the defense establishment has had on the employment problem.

I mean, that's a hell of a lot of money.

A good guy could be $300,000 in that manner out of Vietnam.

I mean, the defense plans are well on down.

I mean, you look at, for example, when you look at Southern California and Seattle, it's different.

It's nothing else.

Right?

Defense and aerospace were still there.

We'd be out there again.

But is it worth the price?

It isn't worth the price.

So what we have to do is to find a way to move.

Well, if those two were still up there, the country wouldn't be screaming so much.

Michigan's especially strong, but isn't Michigan's unemployment to a greater extent related to a lot of that, too?

related to that and to this international problem.

Yeah.

Well, 16% of our market is foreign currency.

Yeah.

And, uh, now, the auto industry, to its credit, is not protected.

I know that's a quote, but I...

They're going to get that way.

Unless we can regress it in this other way.

And, uh, this is why... Well, I think what we ought to do is... My view is that the best way to gain is to renew the stock

the other and now i like that kind of thing um and now they get off the war issue they're going to get on this one so that's fine but then we got all we got to get all the work straight we got to get this and we've got to get a plan but we aren't hard-working that's true i'd like to see us do this something in the international monetary change and then members

There's something drastic that would bother to get that to people who say, we need the dollar.

So who the hell cares about that?

Who the hell cares about it but a few hard-earned people, Paul?

And I know these people are right.

It's like the financial crisis, the so-called financial crisis that we had in the spring.

Sure, it had some detrimental effect on the stock market.

Perhaps some detrimental effect on the economic outcome here.

We had some.

A very accurate person.

He didn't know what the hell it was all about, did he?

No.

Strong market didn't go down 300 times in a hurry.

All that chat.

It never was.

And this issue here, there is one other aspect to this issue that I think is very important.

and that is that the extent to which a dragging, weak, anemic international economic position weakens your international political position.

Or to put it differently, to put it the other way around, to take decisive action to create a strong position internationally with an enormously effective international political position.

Shut up the door, we've got to slow down so we can get 50-80 degrees out of here fast.

comfortable for us, but that's the point.

This is not going to be comfortable for other people, but it might be a very hand-holdful for us, right?

It's helpful to us, and it puts us in a strong moral and political position to be moving in the direction of fundamentally without help for liberalism and other policies.

Can't go that way.

Otherwise, I don't feel right.

Otherwise, I feel better.

I can't go that way.

Well, then it would be all right to say that you do not report it.

Well, I would like to consider that.

Could we talk about it again?

Could we let me think about this?

I've seen my way through the questions.

Okay.

Fine.

And we'll look at the, uh, we'll look at the situation.

I think it's gonna look a whole lot better.

I, I, I, I, I'm more bullish than you are, I think.

The functions and all that sort of thing here.

Well, there's an awful lot of people who say, well, the rate of savings is so high, and that's too bad.

Others say it's because the inventories are so low, and that shows lack of confidence, right?

Sure, that's on the one side of the coin, but inventories will always change, and that's potentially an exposure to expansionary forces that are not sophisticated, and they lead to secret weapons.

What do you feel about that?

Very good.

that is amazing right that july period of people

I do.

I will probably be wanting to drop in a little more frequently.

Don't hesitate to do what you need to do.

And you can drop in if you want to bring some time with you on the other call.

So whatever it is, I'm just going to bring it to you.

That's your job.

But you just ask.

I'm just coming in.

I'm sorry to see you come in.

I'm sorry to see you stop.

All these people will know.

But what do you mean you're all in?

We're all in.

I want you to go over there and say, you understand, sorry, don't be bad about it.

Just do not say, God damn it, we've got to do this, we've got to take the advantage, and this is the time to do it.

And despite whatever, all we said about the $10,000, what do you mean we're not going to do it?

The government's opposed to it, I don't know.

You understand?

Say it right.

See, the whole point of this is that

Sometimes it's just a play.

Who knows whether the turn of the issues is good or bad?

Well, there's no doubt in my mind that it was good in the long run.

But good or bad, we just don't have the plan.

It's something that we are, but it changes the world.

And the next situation changes the world, too.

I just completed a meeting with Paul McCracken, and one of the subjects, the major secretary, pretty much agreed to me in regard to our international security position.

And it has to do, of course, with a part that you were not discussing, and that is our

there.

I would like, if you would, if you would talk to him, but without your, without voter, you know, in other words, so that you get his, I don't know, I don't know, I don't know what voter's position is.

I know about Bernie.

Burns or something must have raised a price of gold or something like that.

The thing to me just sounds like something we ought to throw out of the pocket and think about.

Then after you have a chance to mull it over and talk with people and we can talk, but it's the thing that's so damn explosive that he's talking about.

Well, but that's what it is.

But it relates directly to the problem that you were talking about yesterday.

Yes, and that is a problem in a more competitive position.

And, uh, he's been hanging in there for the last three hours of the day.

But, uh, would you mind doing that?

Uh-huh.

Yes, well, he and I had a long talk, and he said that, uh, he and I said, well, uh, I think it's good, and he suggested that he'd like to talk to you about it, and I said, fine.

But then my view is, Steve, your problem is that there is, there is in your shop, and there is, of course, in mine and Archer's.

And this particular speech is, you know, there are people who are like the early Christians.

I mean, they believe one way or another, and they may be right, they may be wrong, but I think you and I have got to be, put ourselves on the top of this, be bliss to everybody, and then frankly decide what we're going to be.

And so do it with a crush on an open mind, if you will.

Okay.

he could be calling himself over the five feet here, rather than doing it over there, so it would show up as an invoker.

All right, fine.

Okay, when does that installment come forward?

These two will come forward?

No, he will be, he will come about August 1st, for two weeks, and then be away the second half of August, back at the University.

And I thought we'd have the, like, the swearing-in, and about the opening of the day, I think, or two, or something like that.

Well, he, he, he's fair.

Although, there's no way we're going to win.

Although, I, uh, I knew he was stopping it in the foreign policy field, but I've taken advantage of it from these factors, and the laws, and Cambodia, and these demonstrators, and the rest.

And all the time, I knew we had to reflect the bigger picture.

I mean, that's the whole thing here.

So, uh, I'm going to have to pay for people who have said what they're going to say, and make all those plans.

Oh, yeah.

Yeah.

Nixon, McCracken & Connally on Economic policy and Unemployment

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Also recorded on July 22, 1971

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