Conversation 112-002

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I think the judgment of almost everybody, your new economic policy is working and has worked.

And it represents a very bold and courageous set of unprecedented moves that you and I have sought.

Especially if I'm talking to you.

The hero belongs to the senator.

I'm trying to grow a hero here in Florida.

The phase two part of it, I think, is a terrific example of cooperation between the government, between the private sector, between business and labor, between the members of the pay board and the price commission and various other units in the economic stabilization program.

It would not have worked without that high degree of cooperation and voluntary compliance and interdependency.

The goals, we didn't quite make it on the CPI, it's about 3.2%.

The deflator's a little lower, so I like to use that.

WPI is a little higher, but if you look at tamales, less food, it was very good.

If you look at food, it was not so good.

But I think there are other parts of it that are important.

The bureaucracy was kept small, as you asked, and I think to the credit of the people in this room.

If you're not cycled with growth of the economy, which you were concerned about, the need to reduce the unemployment level, whatever it was, 5.9%, is now down to about 5%.

So clearly the administration at this moment did not get hit with that growth.

We were concerned about that.

I think also the fact that you wanted this to be considered a tech work program has changed.

One second.

Hey, John.

Why are you here?

What are you doing here?

I need to talk to you about a couple of things.

I've got to get up.

The other part of the mandate was that it be separate from the issue of absence concerning Phase 2, indicating that Phase 2 was operated in a way that it conserves the transition from the phrase of greater control back towards the kind of freedom that all of us...

hope for and wish for in some competition.

I would add only this final thought that there's an awful lot of talk about how tough wage price controls is, and it is.

There's a lot of talk about all the difficulties of public service, and I know that there was a great sacrifice by the people on the pay board and the people on the price commission.

But I think that all of them agree with this, that it's been a tremendously enjoyable and interesting time.

And it's a rare opportunity to really be involved in the design of something, the establishment of it, the administration of it, and the conclusion of it.

And so I, for myself, and I know for the others, want to thank you for being included.

I think that economic historians like Marnie and others will

Mary Hamilton here will be writing and trying to figure out the cause and effect of each low aspect of it for the next four days.

All I know is that you asked people in this room to do a job, and my judgment, they did it darn well.

Do you want to say anything, Judge?

I will not owe you anything, Jack.

Well, I'm delighted that you're here.

Well, I too regard it as one of the greatest experiences of my life.

You're a lot more beautiful than that.

I don't want to do it again.

I don't have experience to do it.

Well, it was a tremendous experience, of course.

I wouldn't suggest it.

I wouldn't say that.

of the unit that we had.

It was a tremendous team effort, the like of which I've never seen before, and I'm not sure I'll ever see it again.

It was a dedication.

dry and desired.

We had a relatively average load of heat in our place.

They worked night and day and everything else without any concern about overtime pay or anything.

And it was a magnificent thing in the field.

And to see it operate, it's just a wonderful thing.

And I want to pay my respects to those unsung heroes.

And that really did her a job.

Now of course, board members do know how Dr. G. May has performed.

So we had a privilege of being the leader of the judging group, at least now we're the leader.

But it was an original honor and I cherish it very much.

Well, I told you last words.

I think I can echo what the judge was saying about the tremendous experience.

I hope it doesn't have to be repeated.

I don't think it will.

But it has been something that I wouldn't have missed for anybody in this world.

It's been a privilege to work with the people here in this room.

Totally.

particularly the price commission members themselves and the staff.

It's been one of, as the judge said, one of the greatest experiences is to find that level of dedication and commitment.

And really, I know what the words in the public interest really mean now.

They mean much more to me than they ever did before.

And I think phase three is a tremendous step in the right direction.

I'm currently committed to the ideals of moving back to the free market, and I think I hope phase four is a complete return.

I thought Walmart predicted that phase three would work with the price inflation.

No, I don't think the couple was sitting there.

When I say he heard it right before, Bill was a great honor.

When you look at his management of the Fed,

I just think that the right the things have been tested over time now where people know some of the problems with these leads and lags and I think everybody's learned from some of that experience and I think we can do the job basically that is designed

You feel that, what do you think about the concern of the business community regarding the page?

Are you very worried about it?

Sort of, did they rather remind you that they were all worried about page 10 site?

Remember how the market bubbled around and you didn't like it?

being in a position to not owe any stocks, even, because I look at it very, very casually.

I just watch the real estate.

But the market is really, really, really expensive.

Someday I'll have to study it.

at the time of phase two, the market would be like slipping five points, ten points, so forth.

And you can really easily dispatch them.

We've got a board of head day owners around a number of times around the

Oh, sure.

No.

I started with three experts in here.

Almost invariably, they said, why did the market go down?

But they only did one or two things.

One was the war.

Up or down.

Over.

Right.

Now we have come around to phase two of the way, and phase three, and now the war is over, and now it's all phase three, and of course we turn to the actual monetary situation.

Do you want to start?

No, I sold all my stocks.

I used to write a stock market column, and I know what this is.

That's right.

They always have some reason to go out in the market to pay.

Well, seriously, people in the market just pay money or not pay because they're hungry.

And so they have the reason.

Do you think the devil's advocate in phase three, there's not going to be one of those things?

Let's take a closer look.

I think they're waiting to see.

That watchful waiting.

And this uncertainty is what supposedly the market never likes, and yet that's the name of competition.

The name of capitalism is uncertainty.

And in a sense, they're reacting to some of the freedom, which ought to be something that is positive.

And I think for the moment, there is this period in which they are trying to test the heat of the water.

I suppose all of you approve of our rather drastic moves in terms of open stuff on food and subsidy and that sort of thing.

That is just one plus out of it.

We never could have done that, you realize, even a year ago.

Never could have done it.

We're going to have quite a time with the agricultural lobby as it is, but this could have been done 20 years ago.

And of course we have to realize that it's just because of what happened in phase one and phase two.

It happens in the world today.

I mean, the Soviet had a ban, or not a ban, but a crowd failure.

Of course, the Japanese needed more arms and that, and the other thing, the World War I, Mr. Gamble, that helped make the pressure off of our other services.

And then, of course, the demands of the world for food went up.

And this wasn't about the high prices of food.

It wasn't about the heat, it was about the people.

And he was fighting out for the people.

And the British country was even higher than here.

I guess nobody's at all there, but nevertheless, in a sense, it's rather good because it reflects the fact that throughout the world, despite all the ups and downs, and obviously, you know, those horrible things, you can't get a Christian person to do that, and so on and so on.

And when Marcus, you know, he turned authoritarian, he said, don't be.

and the worries that were out there getting worse and worse.

Overall, when you look at the enormous increase, and not only demand, but the ability to satisfy that increase, what it is, it's not only the United States, which is the best country in the world, but there are many other countries in the world.

And this is good.

We've got to find ways now to deal with it.

You know, I'm just reflecting a bit.

I'm right in the middle now.

We get through with one crisis, we get through with another.

Now it's the energy crisis.

And listen, CBS, two years ago, they had talkers last year, this year, and this case is always held to the truth.

And it's the energy crisis.

Talk to people.

about it, it is that first there are uncertain items like what's going to happen to committees

Are those governments, the Saudis, the Gulf Straits and the rest, are they, in Algeria, are they so potentially unstable that the sources of supply will dry up as they did in Mosaddegh over in Iran a few years ago?

And, of course, even the Shahs.

That's only part of the problem.

Overall,

The thing has turned completely around from what it was when George Shultz, if you remember Tom, had headed a committee for oil imports.

It's hard to realize that was three years ago that report was made.

It's hard to realize that at that time he, of course, advocated a greatly expanded increase

It's got real wood cores, basically, not totally.

And you'll remember the heat that came down here from the independent oil to be true all over the country.

Just crazy.

The devil about it.

And because of the heat, we found that we could, we lived in the country.

Democrats, Republicans were out there through the Great Plains days.

This is 1974, actually.

And so we've backed off.

Now you have a situation where they just can't compete with your office.

We've got to get it in.

We should have built the Alaska pipeline like yesterday.

We've got to return the independent oil producers in this country.

We've got to do all right.

But why?

It isn't just a question of .

It's a question of an enormously increased demand by the world, which we have encouraged, and which is slowly but surely moving in that direction, becoming more and more industrialized, which needs the energy.

So this is a good thing.

If your food shortage is due to the fact that people have the ability to buy more, that is, of course, a side trait.

If your energy shortage is due to the great part of the fact that all over the world, countries that were previously privileged, what do people think of that?

of, shall we say, something like central heating, let alone central air conditioning.

Now we're moving toward it.

So, there is a demand for energy such as we never believed would exist, and these great untapped resources, Soviet nuclear plants, and all the rest, these are some of the problems that

That's, of course, what all of you have done.

In fact, as you have dealt with what is really, we trust, a temporary problem.

One that has to be watched very closely, tightly.

Because now, not only what government does to the demand, we're trying to hold back what the private sector of the company does to the demand.

And so both prices and wages will be a critical factor.

You know, Mr. President, these people in the room had to deal with the problem of food prices in the last year and a half, but they also got the cost part of it in line with what you're saying, because as the economy got stronger and as real spendable weekly earnings went up, people had more money and real results went up.

There's no question that that contributed to demand for food and for better cuts of meat.

And so you're quite right.

As the economy's healthy and grows, it expands to people who have more money and more desires.

Can we take credit for that?

No.

Well, I think you have to be careful of it.

You know, it worked for the separation of church and state, but we ought to do this to subsidize the second-day Adventists in our whole long crusade.

Stop that.

You know, we get a lot of people say that this is a huge mistake.

They don't have to flower.

They didn't.

People didn't want to.

That's what I'm trying to say.

That's what I'm saying.

We should try to come up with one.

Well, the rock-solid solution to the increase in health costs is to have a massive shipment of keto scriptures by Mary Baker Eddy, all over the country, and it boosts the amount of people using health care.

They're not able to sell it anywhere else.

There's a lot of that.

I'm trying not to.

You just get the religion out of it.

That's right.

If you go too far with this, Don, then what are you going to do about subsidizing, subsidizing those religious groups in this country that are against abortion and invite the Supreme Court?

That's right.

That's true.

Well, that's not good.

Well, I want to express appreciation of the back and forth of your groups so many times.

Thank you.

You really have done, it's a,

so many times groups like this engage in activities that you can't see in your time whether it works or doesn't.

And in your case, you came in at a time when I would say the majority of opinion among, I would say the bottom of the Congress, I think the majority of opinion

It was very central on phase two.

We stopped the briefings and then came the vote.

We had four days to go back and read all the television commentary.

At least what we see here, we know it would work and it was reflected in the market.

And I remember you were under barrage, and you were under barrage, and you said, well, this is not going to work.

Every decision was, should we allow this increase, or should we try to put this down?

And we come on to a situation where you lived through all that, and now at the present time, at the end of this year, 3.2, you're able to see that maybe it didn't work.

I believe that's the time to get out.

But seriously, we are...

Of course, we're talking about phase three.

We want it to succeed.

Because we don't want to have to call you back here to run another phase two.

Or, of course, we just go back to phase one.

Not a joke, everybody.

whatever happens in the future let me say the members of this group are not responsible you've laid the foundation and now if we don't if we drop the ball we don't cross the line

You brought us this far.

It's like, poor Joker, he brought us to the Super Bowl.

You brought us to the Super Bowl, and we don't win it all now.

It's not your fault.

Is that fair enough?

One of the things I'm going to say is that the business world, the private enterprise, is up to them in this case.

It's the same sort of message you've been getting.

That's why... Don't write those bookshits.

We'll be right back.

And I think it's good.

Freedom is a part of the standard of living.

Ability to have some choices and decisions made in the private sector is a part of the standard of living.

We all value it.

It's an extremely interesting job to talk to Keith, who is quite an expert in these kind of things, who is an enormous courage to bring Britain into the market.

The British, it really, the British got to say, here we had a man who was not questioned by the short-term problems.

and therefore was able to see the vision of the long-term possibilities to be brought Britain and turn it around to Europe.

And as a result, it will in the long-term possibly help Britain get the British to get down on their feet.

In the long-term, certainly it will help Europe because it will have one voice in that whole continent of increasingly inward-looking leaders and people, one voice that still looks out

And so that's very much to our interest.

And while the grid cannot be obviously our agent, we're quite aware of that.

And they would not want that.

For us, we would not want it because it's not working for other reasons.

On the other hand, his taking that leadership position is an indication of courage.

And as you know now, he's moving the pace.

He saw what we do.

He's trying to make the same mistakes.

But on the other hand, whatever the case may be, his problems are infinitely greater because of the lack of discipline.

to judge him on labor.

It's interesting to note that we had our consensus on labor, and we will continue to in our meeting in Miami today.

We'll probably talk about food prices and shit, but the fact that American labor didn't like it, but still went along with it, enormous tribute to labor.

The fact that many segments of business didn't like it, but still went along with the indication that

We still have a sense of discipline in this country that is quite good.

That one wondered whether it could be developed in peacetime after we went through what we did in the period immediately after World War II, but will it just move off without the stimulus of war or what?

Here in peace, I am working.

That's what I'm really, so I hope you too, and your boys should get it across as an enormous tribute to the American people, business people, labor people, consumers, et cetera, that they did this because without, well, you know how much strength you had.

You know how small your staffs were.

You know what, how the criminal, so-called criminal,

were in this instance.

This would not have worked had it not been for the fact that you had out there in this country of 200 million people, you had a great number of people who made decisions, who decided to do the right thing.

You all helped.

And we're, I think this is maybe an encouragement to the future.

It doesn't mean that in our private enterprise, that any citizens and businessmen and labor people we can expect in the future are going to make decisions on what's best for the common interest.

They won't.

They're going to make decisions on what is best for their selfish interest.

Their enlightened selfishness is what brought us where we are and will bring us a long way further.

But I'm inclined to think that on both sides, they realize

that their selfish interests would not be served by allowing these inflationary pressures to go up.

They were just chasing their tables off or on a treadmill, put it any way you want.

And responsible labor leaders saw that, responsible business leaders saw it.

And as a result, we have done rather well.

But we can only hope that phase three, which will require even more sense of discipline, it will.

Of course, there are a lot of market forces we trust who are working in our direction.

What do you think about, Arnie, about Bill Martin's suggestion?

I dreaded his marketing paper.

I think he's a little bit pessimistic, or, well, he was going to add up three, three, I think it wasn't three yet, that the council says 2.5.

That seems to be very optimistic.

It is.

Well, 4.5 is a little too pessimistic.

I think that's the outer edge of pessimism.

I think the critical factor...

is what's going to happen to food for two reasons.

One, because that's an important component to the index itself.

And secondly, this factor that you were just talking about, Mr. President, the sense of consensus, labor's capacity to act responsibly is going to be

a reflection of the feelings of the rank and file.

The extent that food prices go up, it would be very difficult to keep wage increases within a tolerable limit.

So I think it's a nervous situation, and it can be achieved, but that was probably reflecting that, like I said earlier.

And then perhaps as well, we should have somebody out there holding it that morning.

And he has done that very well.

Well, I just checked with my aide here, and I know you've been here before, to try to give you compensation for your unpaid time.

And something that you don't have to report.

Because everybody here has got cut legs.

That's right.

We have here today, for this group of people that are

The old, apologies to the American Can-Chew Society, is an ashtray.

It has a presidential seal, and if you don't want to put ashes in it, it's nice for bomb-ons.

So that will be the market for, that's your first deal.

We don't give these to everybody.

It's not that expensive, but we, yeah.

for those who serve and pay for the price of mission.

You visit each other's homes, you see the ashtray, that's the indication that you serve or are beyond the call of duty.

And this government is actually true to the President.

We're trying in a small way to say how much we appreciate it.

I appreciate what you've done.

I appreciate the way that you handled yourself so superbly publicly.

It was difficult, but you took the heat.

You handled it.

You walked back and stated the position to the result of your leadership.

You contributed enormously to where we are today.

As I say, I give you the credit for the progress we've made today.

I will take the responsibility for what happens in the future.

So that's a pretty good deal.

Thank you very much.

The first one.

It doesn't work out.

I'd like to tell you something stupid right there.

If it were stupid, you would have to report it.

Thank you very much.

Thank you.

Oh, you're hiding one on the end.

Oh.

Oh, I'm sorry.

I always take it away from you now.

I'm sorry.

Thank you.