Bryan Caplan  

The Housing-Oil Analogy

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Arnold's latest post is spot-on.  I can't resist turning it into an SAT analogy...

Housing: Oil :: Today: the Seventies

In both cases, the public flipped out over the market outcome, government rushed to "do something," and ended up creating a incoherent set of morbidly expensive regulations.  And in both cases, the solution is to pull the plug and let the market work.

Maybe in 2012, we'll know the answer to:

Obama: Carter :: ??? : Reagan


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COMMENTS (11 to date)
MattFlipago writes:

Wasn't Carter the one who started deregulation of the oil market, Reagan basically just came in after they were already ending?

Bryan Caplan writes:

I thought that was for airline and trucking dereg, not oil. Anyone?

Carter carried out the transportation deregs. Reagan was responsible for the oil.

David C writes:

"The Jimmy Carter administration began a phased deregulation of oil prices on April 5, 1979, when the average price of crude oil was US$15.85 per barrel (42 US gallons). Over the next 12 months the price of crude oil rose to $39.50 per barrel (its all time highest real price until March 7, 2008.)"
http://en.wikipedia.org/wiki/1979_energy_crisis

Hyena writes:

That must really sting.

I think people should avoid analogies which both sound like witty cocktail party discussion and show their politics. It usually ends badly.

Mr. Econotarian writes:

Oil...
Nixon: problem
Carter: solution, blame

Housing...
Clinton: problem
Bush: problem, blame
Obama: blame (solution???)

Ryan writes:

Isn't it really?:

Clinton/Bush/Obama:Nixon :: ???:Carter/Reagan

Doc Merlin writes:

I agree with others and think Nixon instead of Carter would work better in the analogy.

Patrick L writes:

Obama: Ford :: ??? : Carter

R. Pointer writes:

No No no.

???: Volcker

It probably means a really painful readjustment. At this point the government is doing everything in its power to stop recalculation from happening.

Mike G writes:

A quote from the Wikipedia article cited above that gets to the Nixon/Carter/Reagan roles:

"Carter proposed removing price controls that had been imposed in the administration of Richard Nixon before the 1973 crisis. Carter agreed to remove price controls in phases; they were finally dismantled in 1981 under Reagan."

Eleven days after he took office, Reagan ordered immediate decontrol of oil prices. The action ended the Nixon-era price controls eight months ahead of the schedule set during Carter's administration.

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