Who Invented the Reagan Revolution? Jimmy Carter!

Jimmy Carter: the founder of Reaganism.

Jonathan Chait relays ED Kain’s observation that Jimmy Carter saved American beer by deregulating it, thereby allowing the flowering of local microbreweries.  But neither Chait nor Kain see fit to mention that Carter was one of the great deregulators in American presidential history.

It was Carter who hired the great Alfred E. Kahn as head of the Civil Aeronautics Board, and Kahn promptly put himself out of business by deregulating air travel.  If you get cheap airfares, thank Carter.  (And if you hate the hub system, you can hate Carter for that, too).  A good description of all this is Tom McCraw’s classic (and in this case, somewhat mis-named) Prophets of Regulation, which has a whole chapter on Kahn.

Even more significantly, in the wake of the 1979 oil shock, Carter decontrolled oil prices, a move that eventually led to a six-year decline in their price.   But precisely because of Carter’s indecisiveness and atrocious sense of political timing, the initial price increase fell under his administration, and the long-term decline under Reagan’s.  The vast increase in oil prices sent the economy into a tailspin that had already begun, of course paving the way for the Gipper’s election.  Thus, not only were Carter’s actions a precursor of Reaganite deregulatory philosophy, but his ham-handedness brought us President Reagan.

Somehow I’m not expecting Carter to fall into the pantheon of conservative heroes, though.

UPDATE:  A commenter reminds me of the Motor Carrier Act of 1980, which Carter really pushed.  This Act substantially deregulated interstate trucking, greatly facilitated the development of the FedEx/UPS “just-in-time” delivery system, and also reduced truckers’ wages.  A Reaganite’s dream!

Author: Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic - Land Use, the Environment and Local Government. He grew up and still lives in the San Fernando Valley, about which he remains immensely proud (to the mystification of his friends and colleagues). After graduating from Yale Law School, and while clerking for a federal appeals court judge in Boston, he decided to return to Los Angeles shortly after the January 1994 Northridge earthquake, reasoning that he would gladly risk tremors in order to avoid the average New England wind chill temperature of negative 55 degrees. Professor Zasloff has a keen interest in world politics; he holds a PhD in the history of American foreign policy from Harvard and an M.Phil. in International Relations from Cambridge University. Much of his recent work concerns the influence of lawyers and legalism in US external relations, and has published articles on these subjects in the New York University Law Review and the Yale Law Journal. More generally, his recent interests focus on the response of public institutions to social problems, and the role of ideology in framing policy responses. Professor Zasloff has long been active in state and local politics and policy. He recently co-authored an article discussing the relationship of Proposition 13 (California's landmark tax limitation initiative) and school finance reform, and served for several years as a senior policy advisor to the Speaker of California Assembly. His practice background reflects these interests: for two years, he represented welfare recipients attempting to obtain child care benefits and microbusinesses in low income areas. He then practiced for two more years at one of Los Angeles' leading public interest environmental and land use firms, challenging poorly planned development and working to expand the network of the city's urban park system. He currently serves as a member of the boards of the Santa Monica Mountains Conservancy (a state agency charged with purchasing and protecting open space), the Los Angeles Center for Law and Justice (the leading legal service firm for low-income clients in east Los Angeles), and Friends of Israel's Environment. Professor Zasloff's other major activity consists in explaining the Triangle Offense to his very patient wife, Kathy.

13 thoughts on “Who Invented the Reagan Revolution? Jimmy Carter!”

  1. He also deregulated interstate trucking, leading to UPS and FedEx being what they are today and hence the just in time inventory system.

  2. There's an odd symmetry in the (Republican, mainly, but not only theirs) historical memory of Carter and Reagan: the Carter that they so avidly recall was the worst Liberal President that America never had, and the Reagan that they idolize was the best Conservative President that America never had.

    I say "never had" because so much of what we're told about these iconic Presidents is simply wrong. We're told that Carter was an appeasing pacifist wimp, but it was he that started the military build-up that Reagan is credited for, and he who started the policy of backing the proto-Taliban in Afghanistan, in response to the Soviet invasion. We're told that he was a big-government Socialist, but as this post demonstrates he actually launched a lot of deregulation, and was certainly less of a Socialist than was Nixon – Nixon actually had price and wage controls!

    Meanwhile, we're told that Reagan was a tax-cutting hero, but in fact he actually raised taxes as often as he cut them (and especially the Payroll tax, which hits working people the hardest and is taken out of everyone's paycheck before you even get the money, with an equal amount paid, in effect near-invisibly, by the employer). We're told that he was a fearless and extreme cold warrior, ready to back down to no one – and yet he used the military far less than either Bush, Clinton, or indeed Obama: he backed down in Lebanon and mainly used US troops to pointlessly invade Grenada, with the main risk being overcrowding of a small island. Sure, his record drips with the blood of combatants and especially of innocents, but that was all done by proxies. And, of course, Reagan was (eventually at least) in favor of nuclear disarmament.

    The Reagan that is idolized by the modern Conservative movement is unrecognizeable to anyone who pays attention to the actual historical record, just as the Carter they vilify is not the one who actually served a term in office. There's a lesson there, someplace.

  3. Carter is a much underrated President. His appointment of Volcker, which unfairly cost him reelection, was critical to the strong economy that followed the predictable 1980-2 recession.

  4. Help me understand why beggaring truck drivers, undermining unions was good for the trucking industry? Like Fed Ex and UPS would not have developed in a regulated trucking world? Come on fellas, we gotta do better than this.

    At least we realize now that Carter was an economic "conservative," who de-regulated the airlines, de-regulated trucking (Stephen Breyer, who served with Teddy Kennedy to get Ted to go along; corporate America thanks you, Stephen!) and passed a capital gains tax cut in 1978 and was planning a military build up with Harold Brown, his secretary of war (defense), that was not much different than Reagan.

  5. Mitchell, I don't know whether Carter was any good on unions. And I don't know much about his deregulation of the trucking industry, or whether similar progress could have been made towards efficiency without unduly harming the truckers. But reading about the state of trucking in the 70s it's pretty clear that before Carter it was massively abusive of the customer, the environment, and the economy – and I somehow doubt that the working stiffs behind the wheel were taking home most of the increased revenues those abuses were extracting. Certainly the popular impression I was exposed to is that truckers were getting squeezed and exploited by their employers.

  6. Carter also signed the Staggers Rail Act that deregulated railroads. Rail shipping prices decreased, and traffic and profits increased. After the demise of many large carriers in the 70s, deregulation probably hastened the recovery of the rail industry.

  7. Actually, what happened when the trucking industry was de-regulated, was truckers found themselves more and more becoming independent contractors, without benefits, and working longer hours–despite laws on the books limiting those hours. Without unions, individual trucking companies that sprung up were either too small to fight back against abuse from larger companies that wanted goods delivered, or were themselves abusive of individual workers. Truckers were more squeezed with de-regulation than they were before.

    Carter was horrible to unions. He fought against and ultimately killed labor law reform in Congress in 1978, and instead pushed for the capital gains tax cut that wound up doing little for the economy, and much lining of pockets of the economic elite.

    I was in DC as a congressional intern (no sex, just working for an old pol from NJ and his very nearly equally elderly wife) and saw it all up close. It was a tragic thing to see. I will also never forget hearing rich people in the halls of Congress complain about not being able to live on $250,000 a year (at least double that in today's dollars) and then walking three blocks from the Capitol and seeing people who could not afford a pair of shoes. DC had at the time and may still have some of the most abject poverty I've ever seen in a major US city.

  8. See, the politics we see and decide on don't mean doodalie in the big picture. Well into the Depression, when there was some political will, Herbert Hoover, after large tax cuts when fist elected, raised taxes bigtime, the top rate from 24 to 63 percent. He also set up the Emergency Relief Construction Act and the Reconstruction Finance Corporation. Franklin Roosevelt, few remember, campaigned against Hoover's over-taxing and over-spending. Roosevelt's running mate, John Nance Garner, even accused Hoover of leading the country to "socialism" (sounds weird, huh?). So Roosevelt trounced, put the RFC and the ERCA on steroids Hoover's hike made possible, called it the New Deal, and left Hoover sitting by a stream, casting for trout, thinking "WTF" for the next 30 years. (Hoover also appointed Benjamin Cardozo the the Supreme Court, but hat's another story).

  9. We haven't even spoken of Carter's greatest and most lasting contribution:

    He gave us great beer!

    E.D. Kain makes the case over at Balloon-Juice that Carter's deregulation of brewing weakened the iron grip of Big Beer and led, more-or-less directly, to the reappearance of good beer on these fair shores!


    Three cheers for JC (yay, yay, …)

  10. UPS and FedEx (even more so) don't have much to do with interstate trucking. FedEx was established explicitly as an aviation operations; most of its surface operations have to do with pickup or delivery. Also, hubbed passenger operations were beginning to develop before deregulation — the logic of networked service in that kind of setting is too strong.

    The Economist had a nice recent survey of US freight rail http://www4.economist.com/node/16636101 and Depaul University did a nice set of interviews with people who were in the middle of airline deregulation (Alfred Kahn, Michael Levine and Robert Crandall of American Airlines) at http://www.law.depaul.edu/centers_institutes/avia

  11. What I like about this post is the usual claptrap of trolls and drones aren't infesting this blog with the usual talking points. Finally a win for reality? Oh where oh where is little Brett Bellmore?

  12. Carter definitely deserves more credit (or, in some cases, blame) than he gets for pushing deregulation for all of those industries.

    Contrary to E. D. Kain's original post, however, Carter did not deregulate the beer market. Carter signed the bill that allowed homebrewing (for "personal and family use, and not for sale"), thus 'deregulating' personal rather than commercial behavior (in that case).

    The larger point about Carter and deregulation is still valid, but the brewing industry should not be considered one of those he deregulated.

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