By William L. Anderson, Mises Wire | December 29, 2024
The passing of former President Jimmy Carter has brought out the accolades for his post-presidential years, but not as much for his actual performance as president. As the New York Times editorialized:
There’s no predicting history’s verdict. Up to now, Jimmy Carter, who died on Sunday at age 100 in Plains, Ga., has been judged to be a middle-of-the-pack president, his one term in office remembered for circumstances and events that simply overwhelmed him: the seizure in Iran of 52 American hostages, the bungled attempt to rescue them, the gasoline lines, inflation, the Soviet invasion of Afghanistan. Yet he is also considered one of America’s greatest ex-presidents, for using the residual star power of his office to help his successors and his country as a peacemaker, backstage diplomat, human rights champion, monitor of free elections and advocate for the homeless while finding time to write poetry and, by his own example, providing the best possible case for traditional religious values.
Yes, the NYT later mentioned briefly that Carter began the process to deregulate gasoline and oil prices, but for the most part, the accolades from the progressive side of American politics have concentrated on his activities after he left Washington. Others praise his progressive measures and support for solar energy, but fail to understand how important his economic legacy really was.
I alluded to that fact in a Mises Wire piece I wrote 24 years ago praising the Carter presidency for its deregulation efforts, but even then I did not fully understand the impacts of his deregulation efforts. Furthermore, I overestimated the commitment of Republicans to deregulation, especially given their enthusiasm for tariffs and the Jones Act, which is one of the worst laws on the books, economically speaking.
No less an authority than Nobel Prize winner Vernon Smith labeled Carter as the “great deregulator,” and one should not underestimate the impact of Carter’s moves to deregulate passenger air, interstate trucking, oil and gasoline, and railroads. For example, according to economists writing for Regulation, the American railroad industry, which had been regulated since 1887:
By the 1970s, it was painfully obvious that rate regulation and associated inflexibilities had brought U.S. railroads to the brink of economic disaster.
The Staggers Act of 1980, endorsed by Carter, not only led to lower freight rates but also enabled the railroad industry to improve its capitalization, close unprofitable routes, and allow weaker railroads to merge with stronger ones. Declared Regulation:
The history of the U.S. railroad industry during the 30 years since the Staggers Act was signed is a story of enormous success. Productivity growth in the U.S. railroad sector has far outpaced the gains in the U.S. private domestic sector. The factors underlying this performance include pricing flexibility, economies of density achieved through line abandonments, industry consolidation, and the growth of long-haul coal and intermodal traffic.
Airline deregulation also was a major success. The architect of much of the deregulation efforts, Carter adviser Alfred Kahn, wrote:
Between 1976 and 1990 average yields per passenger mile—the average of the fares that passengers actually paid—declined 30 percent in real, inflation-adjusted terms. Average yields were declining in the decades before deregulation as well, thanks largely to the introduction of jets and jumbo jets. The best estimates, however, are that deregulated fares have been 10 to 18 percent lower, on average, than they would have been under the previous regulatory formulas. The savings to travelers have been in the range of $5 billion to $10 billion per year.
The Carter deregulation efforts even extended to the production of beer, making the modern craft beer industry possible:
When President Jimmy Carter signed a bill legalizing homebrewing in 1978, fewer than 100 breweries were operating in the United States. Two years ago, a study of the country’s beer scene found nine metropolitan areas with more than 100 active breweries.
While inflation has been a problem in recent years, we should remember that one of the main reasons inflation has not been in the forefront of the economy is because of the policies of former Federal Reserve Chairman Paul Volcker, who Carter appointed in 1979 to deal with the then-double-digit inflation that was ravaging the economy:
According to one post-election poll, 73% of people said that the economy was the nation’s largest problem. Certainly, Volcker’s policies were opposed by Carter’s political operatives and other top economic advisers, as his measures helped push the country into recession in 1980, and the unemployment rate jumped from 6% in August 1979, the month of Volcker’s appointment, to 7.8% in 1980 (and peaked at 10.8% in 1982). But Carter knew that the country needed Volcker’s tough medicine, even if it didn’t win him any friends politically.
“It was a tough decision,” said Carter. “But the right one.”
With progressives having captured the Democratic Party and the Republicans supporting a program of economic nationalism and massive government spending, it is hard to imagine any president today pushing the economic initiatives that defined a good part of the Carter presidency. Indeed, had Carter not pushed through his deregulatory programs, it is hard to imagine that any of his successors would have been willing to push against the political tide.
As I noted in my 2000 article on Carter, there was much to criticize about his presidency – just as there is much to criticize when it comes to the record of any American president. For example, Murray Rothbard had a scathing criticism of Ronald Reagan’s alleged free-market policies during his time in office. But it is an extremely rare thing indeed when a president actually reduces the burden of government (at least in some areas) while in office. Jimmy Carter managed to do just that, and he deserves our praise.
William L. Anderson is Senior Editor at the Mises Institute and retired professor of economics at Frostburg State University. He earned his MA in economics from Clemson University and his PhD in economics from Auburn University, where he was a Mises Research Fellow.
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