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Jimmy Carter’s economic legacy

Jimmy Carter left office under a hail of scorn, but his reputation has improved over the years. I personally would take this only so far. Carter wasn't a great leader. His malaise speech was a bad idea even if he never used the word malaise. Purging his cabinet in 1979 was an act of public desperation. And while he was unlucky in the timing of the Iranian revolution, he probably also mishandled the situation with the shah. He was also politically tone deaf and straitlaced, as he showed right out of the gate by primly opposing politically untouchable water projects in the West.

At the same time, his substantive legacy was really quite respectable. He was the first president to make human rights a centerpiece of our foreign policy, a stance that Ronald Reagan adopted to great effect and something that’s been a part of American diplomatic relations ever since. He managed to return the Panama Canal to Panama, a courageous but politically costly fight that could have been disastrous if he’d lost it. He helped make peace between Israel and Egypt at Camp David. He appointed Paul Volcker as Fed chairman and allowed him to begin squeezing inflation out of the economy — something that very possibly cost him the 1980 election. He began the wave of deregulation that Reagan and others extended for the next 30 years. He started the war against the Soviets in Afghanistan. And although his efforts to push energy conservation died after he left office, they look prescient now.

It's also worth taking a second look at Carter's economic policy. "Stagflation" was the word that haunted him, and the economy was hardly stellar during his presidency. Still, economic growth was surprisingly strong:

Wages declined under Carter, but starting in 1973 they declined under every president until Bill Clinton. Whatever happened, it had nothing to do with Carter:

Finally, there's inflation, the great bugaboo of the Carter years. But memories aren't always reliable. Take a look at the record:

The great inflation of the '70s started under Nixon and Ford, but Carter was the first to do anything about it. Both the much derided G. William Miller, followed by Paul Volcker, raised interest rates substantially to fight inflation—with Carter's full approval even though it promised to be politically damaging. But it worked. Inflation peaked in 1980 and had already fallen nearly three points by the time Reagan took office. Rates kept coming down after that, but it was the doing of Volcker and the man who appointed him. Reagan played no role at all.

Unemployment was probably Carter's biggest real failure. It went down and then up and he left it no better than he found it. It took the end of the Volcker recession to bring it down for good.

So that's the story. Carter presided over strong growth; got caught in the middle of a two-decade wage decline; and showed more courage in fighting inflation than any president before or after him. It all came undone at the end, but that was due to the Iranian revolution and the oil embargo, events that were outside of anybody's control.

Carter shouldn't be remembered as an economic failure. He should be remembered as a president who was dealt a bad hand but generally played it honestly even at the risk of political blowback. That's better than most.

58 thoughts on “Jimmy Carter’s economic legacy

  1. Altoid

    "[declining inflation] was the doing of Volcker and the man who appointed him. Reagan played no role at all"

    One small point: it seems to me that Reagan's firing of the unionized air traffic controllers who had endorsed him, and the depth of his administration's opposition to, and loathing of, unions that it showcased right at the beginning of his first term, contributed very materially to both the ongoing wage-decline trend and the nascent decline in inflation.

    It might also be worth mentioning, as some other writers have, that Carter started the deregulation trend that Reagan got most of the credit for. It was Carter, advised by Alfred Kahn, who started the deregulation of airlines, trucking, and railroads, on the theory that creating a declining-price shock in the very strategic (because unavoidable) transportation sector would ease upward price pressures throughout the economy and possibly reverse them.

    1. Jasper_in_Boston

      It was Carter, advised by Alfred Kahn, who started the deregulation of airlines, trucking, and railroads

      Natural gas, too, if memory serves.

      Carter's deregulation policies were correct on the merits. The benefits unfortunately didn't kick in early enough to provide much help to the economy on his watch.

      1. JohnH

        They also suggest why the left of the party, looking to Kennedy, disliked him. He did pick some honest ones on their merits, though. He's a fascinating case of the good-hearted even saintly technocrat. I admire him a lot, but still a tough case.

        1. Jasper_in_Boston

          Carter also didn't do much do advance the safety net. I don't recall the policy specifics of the time (I was a kid) but I do know Carter had a trifecta, so I don't really know why he didn't take a serious stab at, say, expanding healthcare access. So yeah, he wasn't a beloved by the left.

          But Carter, of course, was vulnerable: the Kennedy people sensed weakness. Thirteen percent inflation will tend to do that.

            1. bethby30

              And yet both Obama and Clinton pushed hard to get greatly expanded health care coverage. Republicans and the mainstream media did all they could to torpedo Clinton’s perfectly reasonable plan. After Bill Kristol sent out a memo to Republican leaders urging them to deny Clinton any kind of win on healthcare so they could win the midterms — even though healthcare has been a top issue in the ‘92 campaign. Bob Dole completely reversed his position that we desperately needed healthcare reform and declared our system wasn’t broken after all. Then thd disinformation machine kicked into high gear with little pushback from the media.

              “A Triumph of Misinformation”
              James Fallows
              https://www.theatlantic.com/magazine/archive/1995/01/a-triumph-of-misinformation/306231/

          1. zic

            He certainly helped my family. In 1969, my parents split, leaving my mother to raise myself and my two younger siblings alone. My dad was busy supporting his new wife's kids, and couldn't be bothered to pay for us (and there were no laws against this at the time.)

            My mother enrolled in a lab-technician training program offered through Carter's CETA program, and it lifted us out of very desperate poverty.

    2. OwnedByTwoCats

      It was Carter, advised by Alfred Kahn, who started the deregulation of airlines, trucking, and railroads,
      You left out an even more important industry. Brewing. Carter signed the law that made home-brewing legal again (it had been banned by Prohibition, and the ban wasn't lifted until 1978). Home-brewing led to craft breweries.

  2. Pittsburgh Mike

    "At the same time, his substantive legacy was really quite respectable. He was the first president to make human rights a centerpiece of our foreign policy, a stance that Ronald Reagan adopted to great effect and something that’s been a part of American diplomatic relations ever since. "

    Not sure on what planet Reagan, who funded the Nicaraguan Contras, adopted Carter's view of the centrality of human rights to foreign policy. Perhaps you mean Reagan's "Tear down this wall" speech, but RR was more anti-communist than pro-rights.

    1. Jasper_in_Boston

      Came here to say the same thing. My teenage recollection of the Reagan years involves human rights abuses in Central America featuring US fingerprints, or at least indifference. Also a lot of coddling of the Apartheid regime in South Africa (they were dutiful Commie-haters, doncha know?).

    2. JohnH

      And of course it's only continued under Trump, who has never seen a dictator he doesn't admire, until finally China stopped flattering hm.

    3. tango

      Although being anti-Communist is also pro-rights; has there ever been a Communist government that respected human rights?

      Which also brings up another topic --- the defense buildup that people credit Reagan for that pressured Gorbachev and the Soviets really began under Carter.

      1. Jasper_in_Boston

        Although being anti-Communist is also pro-rights

        Not automatically it isn't—far from it. Hitler was pretty fucking anti-Communist. So was Pinochet. So was Franco.

        1. tango

          Anti-Communism is a pro-human rights STRATEGY. But yes, as you note, the TACTICS can vary widely. For instance Germany in 1940 and 1960...

      2. MikeTheMathGuy

        > "Although being anti-Communist is also pro-rights"

        Not if the means of opposing Communism involved massive violations of human rights. See: US policy toward El Salvador.

    4. MikeTheMathGuy

      > "RR was more anti-communist than pro-rights."

      Very, very true. My go-to example is the Reagan policy on Central America. In Nicaragua, there was an armed resistance to a left-wing dictatorship; in El Salvador, there was an armed resistance to a right-wing dictatorship. Reagan called the armed resistance in Nicaragua "freedom fighters." He called the armed resistance in El Salvador "thugs who are trying to shoot their way into power."

    5. HokieAnnie

      Yep! Reagan wasn't about human rights, he was all about corporation rights. Communism as "sinful" because it wasn't a free economy. The Contra rebels were to be supported even though they were murdering nuns and priests because they were anti-communist.

      I remember my government class in 1984 - Catholic HS and at that point was chocked full of Reagan loving acolytes including the nun teaching my US Government class. We had an class exercise where we were to take sides on the Contra issue - I pulled out that week's edition of US News and World Reports from the back of the classroom where she had a table of magazines and the cover story was on the atrocities committed. I went through the article to argue that we were backing bad people and should stop funding them. The guy arguing the other side whose family was from South America, paused and turned to the nun and said, I can argue against what she said, there's no argument to be made to support evil.

      I always delighted in getting the best of that nun and her Reagan Idolatry.

      1. Art Eclectic

        I think that idolatry part gets overlooked. Reagan came in the door as a known face and had a fan base (muck like Trump). He also personified an image Americans have of themselves - tough, Christian, and rugged. Trump, on the other hand, personified a newer image Americans have of themselves - tough, masculine, and bully.

        Americans simply love celebrity and masculinity. That led them to scorn men like Carter.

        Frankly, I'm glad Carter passed while Biden was still President so he can have the full dignified final moment in the sun he deserved. I have zero doubts that Trump would consider him a loser and find a way to bury him on a golf course. Public discourse would have been ugly, as we've become an ugly people.

        1. bethby30

          The Kool Kids at Beltway High also really looked down on people from rural small towns, especially in the South. The constant framing of Carter as a peanut farmer, not a former governor or Navy nuclear sub vet was evidence for that disdain. Just yesterday Brian Williams, who had been an intern in the Carter White House, made a comment about all the staffers “from Georgia — of all places”. Clearly it’s the media who are the ones guilty of disdaining people from rural areas. When they lecture Dems about that they are projecting their own snobbery.

          Also Kevin is wrong about the “malaise” speech. It raised Carter’s approval ratings 11 points and the public said they appreciated his honesty. The media hated it, kept mocking the speech and gave it the name “malaise”. That showed their utter disdain for the American people’s opinion and their ability to create, nor report, the news.

    6. jte21

      Pundits like William F. Buckley and foreign policy hawks like Jeanne Kirkpatrick were continually savaging Carter for what they saw as his "naive" concern for human rights around the world when communism was a much bigger threat. The cornerstone of Reagan's foreign policy was to continually harp on freedom and rights in communist countries like Cuba and the USSR while turning a blind eye to abuses by right-wing authoritarian regimes like Chile.

  3. iamr4man

    This country would be a better place if the people who call themselves “Christians” acted more like Carter and (much) less like Trump.

    1. Salamander

      NPR this morning cited a meeting between President Carter and representatives f the self-proclaimed "Moral Majority." As these stalwarts of morality left the Oval Office, one was heard to remark that the President ought to consider "becoming a Christian."

  4. Jasper_in_Boston

    I met Jimmy Carter on a flight to Beijing—my first time crossing the Pacific—ten years ago. As I boarded the plane our eyes met. I instantly recognized him, of course (he was seated in first class), and I think he knew I recognized him (I suspect by that point a fairly high percentage of Americans perhaps didn't recognize him). Anyway, about ninety minutes into the flight he strolled up and down the aisles of the 777 to say hello and shake the hand of every passenger who wanted to. "This is a great honor, Mr. President," said I. "The honor is entirely mine" came his reply, in that inimitable old-school Georgia drawl. I suppose he had said that about three million times in his life up to that point.

    Thrill of a life time (especially for a liberal political junkie like me).

    And I find it a bit...I dunno...meaningful? Wistful? that I met President Carter (the only POTUS I've met) just as I was starting a new life abroad, and he departs this world just as I prepare to leave it (Beijing, that is).

    A great American, and a life truly well-lived.

    1. HokieAnnie

      Classic story. I met Jimmy Carter when he participated in a History seminar at VA Tech in 1987. He was kind and gracious answering a ton of questions about his administration even the not so nice ones from the Reagan airheads as my circle of friends used to call them.

      1. Art Eclectic

        I met him on shared plane ride out of Colorado in 1998. It was a small flight (maybe 20 people total) and we sat in the terminal wondering why the flight was delayed for 45 minutes - it turned out they needed to run a bunch of security and background checks on everyone getting on the plane.

        Jimmy Carter walked through the entire plane and shook all of our hands, he was gracious and kind.

    2. MikeTheMathGuy

      Wonderful remembrance! Thanks.

      (The only political leader I ever spotted on a plane was Karl Rove. Oh, well... Fortunately, he did not come back to greet us.)

    3. RZM

      Jimmy Carter changed me. I grew up in the suburbs of New York. When I first heard Carter speak my gut reaction was negative. I just kind of assumed he wasn't well educated or even all that smart. Jimmy Carter disabused me of that prejudice. Whatever else he was - and he was a lot of things, mostly admirable - he sure as hell wasn't stupid. But just as I recognized my own bias I also saw it in my northeast liberal peers many of whom also misjudged him.
      The comparison to Donald Trump is unavoidable. Like Carter, we northeast liberals misjudged Trump. And there the similarities end. Everything that is admirable about Carter is missing in Trump. Everything.

      1. jte21

        I forgot where I read it a while back, but some group of historians and psychologists once ranked Carter, a former nuclear engineer, as hands-down the smartest guy to ever have been president, even above Clinton and Kennedy, who are often bandied about as pretty damn smart (and several standard deviations away from the brain-dead, hate-addled dolt about to assume his second term).

  5. JohnH

    But then wages declined under "every president until Clniton." Hmm, sounds like quite a long, bipartisan problem. But then just who might those presidents be? Why, Beagan and his VP.

    Can't we just say that Republicans, especially the New Right, are bad for workers, even as they get elected as the ones who really care about you, unlike those free-spending (on colored people) Democrats.

    1. JohnH

      Oh, and while we're at it, although off-topic, headline in the Monday NY Times: "The Number of Murders Kept Falling This Year, but Fear of Crime Persists." In other words, lying and stoking white fear works, right across the board.

  6. golack

    Don't forget the meltdown at Three Mile Island--I should specify, the nuclear reacted partially melted down.
    Jimmy Carter visited, and the press mocked him for touring the control room at the time. I don't recall them mentioning that he was a trained nuclear engineer and that US plants were modeled after those in the Navy, with Adm. Rickover in charge who was also Carter's mentor.

    1. iamr4man

      I remember that well. I had just seen the movie The China Syndrome and thought 3 Mile Island was going to be a catastrophe. As I understood it at the time Carter going there was to assure people like me that things were under control. After all, they wouldn’t allow a President to go to a place that placed him in danger. It worked for me, and I really couldn’t understand why his doing this was mocked.

  7. golack

    I highly recommend the BBC documnetary,"Earth: The Climate Wars"
    https://topdocumentaryfilms.com/earth-the-climate-wars/
    (parts 2 and 3 are are on another site)

    In the 70's, some scientists worried we might be entering another ice age, and wrote the president about it. At the time, there was recent spat of very cold winters, and...scientists had just worked out the timing of glacial--inter-glacial periods. We are near the end of an inter-glacial period, roughly speaking, if the past is prologue, so it is something that should be looked into.
    The physicists on call did look at the issue, and their report came back that we didn't have to fear the next ice age, but instead global warming would be a problem. Humans were burning too much fossil fuel too fast. Reagan didn't like that report, so shelved it and had another one done. Same result. He shelved that one too, found someone who insisted humans couldn't affect climate, and had that person lead the study that said nothing to see hear.

  8. jte21

    "The great inflation of the '70s started under Nixon and Ford, but Carter was the first to do anything about it."

    That's not entirely true. Carter/Volker were the first to leverage the Fed's interest rate-setting power to fight it, but Nixon famously implemented a price/wage control scheme and let the dollar float on the world market for the first time -- devaluing it substantially -- to bring prices down. It just didn't work very well and further exacerbated the impact of the Arab oil embargo.

    1. Altoid

      Ford was also there before Carter, iirc-- "Whip Inflation Now" buttons and all. I don't remember that he did anything more substantive, though.

      Nixon walked into the endgame of LBJ's budgeting and exporting of inflation through the Eurodollar market, at a time when the dollar was still pegged to gold. The peg only worked as long as it was theoretical, though, and it ended when the French, I believe, took a ginormous bundle of dollars to the gold window, an amount that would have cleaned out our hoard and created havoc. Nixon suspended the gold peg, then he abolished it. (Funny that I haven't seen much vilifying of Nixon by the gold bugs, but then I don't go looking for that).

      Devaluation had already happened de facto so letting exchange rates float and officially devaluing was probably inevitable at that point. It might have helped us that oil was still priced in dollars even after we stopped converting.

  9. Winslow2

    Tom Sullivan at Digby's Hullaballoo has a tribute to Carter this morning. Jimmy Carter's legacy is global and lasting.

    Best of all, Digby pointed out yesterday that because flags must be at half-staff for 30 days to honor Carter, they'll remain so through the inauguration on the 20th. Heh.

  10. Five Parrots in a Shoe

    Everything you need to know to understand partisan politics in the US:

    Jimmy Carter installed solar panels on the roof of the White House.
    Ronald Reagan had them removed.

  11. spatrick

    . His malaise speech was a bad idea even if he never used the word malaise. Purging his cabinet in 1979 was an act of public desperation.

    It wasn't the speech itself that caused him problem. In fact it was well received. It was the action you mentioned that caused his poll numbers in mid-1979 to crater, basically triggering the Kennedy challenge which Teddy really didn't want to do but felt he had to. In this instance Hamilton Jordan's advice was bad. They wanted to get rid of some cabinet members and should have fired them if that's what they wanted to do. But to ask the whole cabinet to resign? That was just dumb, it was so unecessary.

    "And while he was unlucky in the timing of the Iranian revolution, he probably also mishandled the situation with the shah"

    What was Carter supposed to do with the Shah? hmmm? The Shah lost his throne due to his own government's actions of lack of them in some cases. Short of sending U.S. troops to protect his throne, which was never going to happen in a million years, the fact that his lavished equipped armed forces and extensive intelligence agencies could not prevent the Iranian Revolution is on him, not anything the U.S. did or didn't do. He was lucky the U.S. protected him and found him safe places to stay while in exile.

    Anyone who has gone through the history of the hostage crisis needs to realize the U.S. was on track to having good relations with the first revolutionary government in Iran throughout 1979. The students who seized the U.S. embassy (and who run Iran today) were absolute anti-American fanatics so filled with conspiracy theories and just ridiculous thinking that their planning for the takeover was well before the Shah entered the U.S. They basically wanted the U.S. as an enemy. And for whatever reason (probably to solidify his control of the country), Khomeni went along with their madness even though he had intervened to end a similar embassy takeover earlier that year.

    "It's also worth taking a second look at Carter's economic policy. "Stagflation" was the word that haunted him, and the economy was hardly stellar during his presidency. Still, economic growth was surprisingly strong"

    Indeed it was an unemployment low and even inflation at the time was tame enough that policies such as deregulation and such I think would have re-elected Carter, all things being equal. The Iranian Revolution and loss of Iranian oil from the world market sending inflation soaring to a high 18 percent in early February 1980 basically exploded all these hopes. Carter had to do something to get it under control even if it meant adopting Volker's monetarism simply because the Administration had no choice. You can't call for deregulation and then impose wage and price controls. I think more could have been done with government spending and stimulus perhaps to mitigate the affects of these policies but Carter also imposed austerity too which was too much for many Democrats to accept and thus split the party. There was wiggle room for compromise I believe, he just didn't take it and politically he should have been more pro-Labor to prevent a primary challenge because Kennedy would not have run if he had no labor support.

    Carter did a lot that was right in retrospect I agree, but events and unfortunately his pride and just not handling the politics correctly ultimately led to his demise. It could have been different. It should have been. I've always loved the idea of Jimmy Carter. But the practice just didn't work out.

    1. zic

      "The students who seized the U.S. embassy (and who run Iran today) were absolute anti-American fanatics so filled with conspiracy theories and just ridiculous thinking that their planning for the takeover was well before the Shah entered the U.S. They basically wanted the U.S. as an enemy. And for whatever reason (probably to solidify his control of the country), Khomeni went along with their madness even though he had intervened to end a similar embassy takeover earlier that year."

      Before the revolution, I lived on the Comm Ave. mall in Boston, a basement of building that was being reonvated into condos above us every day; a bunch of Berklee musicians living there for the summer. I was just moved to Boston from Maine, quite fresh off the farm, and still not adapted to live in the city. I would practice sitting in the park out front early mornings., and I met a woman (I wish I remembered her name,) dressed in a black burkah. First I'd ever seen. She stopped and listened. We began meeting regularly, we would go to Emack and Bolios, and chat about our lives, though we really didn't understand each other at all, my Maine hippie pidgin and her broken English and extremely foreign culture. One day, she came to apartment, and showed me her hair. She told me she lived here to care for her brothers who were going to college and they lived on Charlesgate. And that they were going to go home and overthrow the government.

      And they did.

      I was 17, and had know idea how important that bit of information might have been to Jimmy Carter's presidency.

  12. spatrick

    Tim Kraft, who was one of Carter's top politicos and one of the best campaign organizers in the Democratic Party of the 1970s said after the 1980 election "We should have taken all the money we spent on advertising and spent it on having and maintaining extra helicopters so the rescue mission could have been successful." Indeed, politics basically comes down to events and how people react to them. Even if it were just a few that made it back, that would have been enough that Carter could have won re-election in spite of "stagflation".

  13. bharshaw

    Cxtarter the first to tackle inflation? Wrong. Remember Ford and his WIN buttons (whip inflation now), not to mention Nixon's price freeze

    Give Carter some credit on unemployment--I believe he was seeing the peak of the boomers entering the labor force. Not all that much a president can do in that context.

  14. camusvsartre

    Overall I agree with Kevin that Carter gets too much of a bad rap on economic issues during his Presidency. Still, I find Kevin's ready endorsement of Paul Volker's Fed policies to be surprising. Inflation was primarily driven by the oil price surge. Driving interest rates sky high to "rid the system of inflation" was just as crazy then as it is now. Ultimately, Volker cost Carter the election while somehow Reagan got credit for beating inflation and creating "morning in America."

  15. ColBatGuano

    1980 was my first Presidential vote. Unfortunately, Carter had already lost before the West coast polls had even closed. It was the start of a run of terrible Presidential results.

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