The Foreign Service Journal, March 2022

THE FOREIGN SERVICE JOURNAL | MARCH 2022 89 In 1971 the United States was both smart and lucky. for Connally, a three-term governor of Texas, and Nixon himself, they were all nonpolitical people, highly educated, deeply experienced, middle-aged (Burns at 67 was the eldest by nine years), male and white. Readers are free to speculate how the dynamics of the weekend, and the deci- sions ultimately taken, might have differed if the group had been diverse in the current meaning of the word. Connally in Garten’s phrase was “hyper-articu- late,” able to “ingest massive amounts of information, synthesize it, and recall it.” He was then a Demo- crat (he switched parties in 1973), but his talent, political savvy, outspoken nationalism and what Henry Kissinger called his “swaggering self- assurance” won Nixon over. He was very much in charge during the weekend. The president scheduled a speech to the nation for Sunday evening, a dead- line that would speed the Camp David debates and ensure that Connally could force agreement. Discussions were serious and disagreements were sharp, but such animosities as emerged were based on policy, not personality. (George Shultz, for example, “egged on Nixon’s growing hos- tility toward Burns, telling the president, ‘Arthur has a way of holding the money supply hostage to [fiscal] policy.’”) Without computers, the principals often had to send out for data, like cramming students sending out for pizza. The policy process was top-down. The day before the Camp David meeting, Connally and Nixon had agreed on a set of policies that Volcker had developed over the past two years. Connally bullied it through essentially intact, but with few details—a map with destinations but no routes. The U.S. would stop selling gold until negotiations could reset the gold price and the exchange-rate matrix; in the interim, an import surcharge, set somewhat arbitrarily at 10 percent, would be imposed to give negotiators leverage. Wages and prices were to be frozen in place, also “temporarily.” Tax incentives would go to U.S. businesses only—for example, excise tax relief for U.S. cars, but not for imports. As the package came together, the State Department was not consulted. Nixon’s Sunday night speech began with a defense of the strongest peacetime government intervention in the econ- omy since the New Deal. It concluded, however, with a paean to what Garten calls “the core Republican philosophy of individual responsibility, individual initia- tive, and the need to reduce government involvement in everyday life.” The president knew his audience. “In the days after the speech,” Garten writes, “the reaction in the United States was, with a few exceptions, wildly support- ive.” The New York Times praised Nixon’s “boldness,” and Democrats, who con- trolled both houses of Congress, could only complain that Nixon stole their ideas and took the credit. Stocks rose in New York and fell in Europe and Japan. By December, Connally and Volcker had negotiated a realignment of exchange rates, and U.S. lifted the import surcharge. But the Camp David program soon eroded and then collapsed. By 1976, the U.S. fol- lowed its trading partners and let the dol- lar float, ending any connection between the dollar and gold. The program did not last, but it was not a failure. It was, says Garten, “part of a fun- damental transition that the United States had to make” from postwar domination to “a new environment where power and responsibility among the allies had to be readjusted.” In 1971 the U.S. was both smart and lucky. The Camp David program hit what it did not aim at: the effort to preserve fixed exchange rates ended with floating rates that strengthened policy flexibility; unilateral U.S. action led to greater inter- national coordination; and an attempt to devalue the dollar ended with the dollar as dominant as ever in international trade and finance. Wage and price controls, however, had no such redeeming out- come. Inflation was already rising when President Gerald Ford ended controls in 1974; it then surged and would remain strong for a decade. Writing at the end of 2020, Garten says the United States is “again in a major transition,” away from globalization and toward “rebuilding the engines of growth and the social safety net.” Like the shock of Nixon’s unilateral actions, the “even big- ger shock” of the Trump administration’s disdain for international cooperation “creates an opportunity … to pick up the pieces and establish a new set of global arrangements to deal with the formidable agenda ahead.” Let’s hope we are smart and lucky again. n Harry W. Kopp is a former Foreign Service officer. He is a frequent contributor to The Foreign Service Journal and a member of its editorial board.