inflation"—actually, it was serious for most of his presidency—but devotes only four pages to it. He favors his foreign policy feats, such as the peace treaty between Israel and Egypt. Ronald Reagan regarded economic revival as one of his great triumphs but emphasizes tax cuts, not falling inflation. He, too, prefers foreign policy, especially his negotiations with Mikhail Gorbachev that helped end the Cold War.29

We are losing a crucial chunk of history; indeed, its omission creates bad history. Consider the dueling explanations for the economy's impressive performance in the 1980s and 1990s.

Conservatives remember the 1980s nostalgically as Reagan's heroic moment, when he cut taxes, reduced government and revived the economy. The trouble is that much of this story is myth. Although tax rates dropped dramatically (the top rate fell to 28 percent from 70 percent), the overall tax burden barely decreased, nor did the size of government. In 1980, total federal taxes were 19 percent of GDP; when Reagan left office in 1989, they were 18.3 percent.* Lower tax rates occurred because budget deficits increased and some tax loopholes were closed. Meanwhile, liberals credit Bill Clinton's policies for the strong economy of the 1990s. But Clinton's policies were the opposite of Reagan's: He raised tax rates (to a top rate of 39.6 percent) and curbed budget deficits. Both stories can't be correct; and in fact, neither is.

* Reagan did, however, hold down growth in domestic "discretionary" programs for which Congress must appropriate money annually. These programs dropped from 4.7 percent of GDP in 1980 to 3.1 percent in 1988. Social Security, Medicare and other "entitlements" are not included in this category.

The economy performed well in both decades, and the explanation is that the major act of economic policy for both presidents was the containment of inflation. It stabilized the economy and, through the reduction of interest rates and the increases in stock market and real estate wealth, promoted strong consumer spending. Lower tax rates, even after Clinton s increases, may have helped; but they were not the decisive influence. Nor were Clinton's shrunken federal budget deficits. Indeed, budget deficits persisted through most of Clinton's tenure, disappearing only in 1998, more as a result of the strong economy and rising stock prices—which produced an unexpected floodtide of tax revenues—than as a cause. Both standard accounts of these decades are misleading and incomplete. The major economic event of this period was the conquest of double-digit inflation.

It's not just our own history that we're missing. The decline of inflation was also a global event. Among many (though not all) economists, government officials and business leaders today, there is a strong belief that high inflation is enormously destructive. Many are old enough to have lived through double-digit price increases and to remember the fallout. To a large extent, the lesson went global. Harvard economist Kenneth Rogoff has compiled figures that show the dramatic nature of the change. In the 1970s, annual inflation averaged 162 percent in Chile, 33 percent in Israel, 9 percent in Denmark, 15 percent in South Korea and 9 percent in France. Early in the twenty-first century, the rates were 3 percent for Chile, Denmark, South Korea and Israel; for France, it was 2 percent. For all developing countries, annual inflation fell from an average of 31 percent in 1980-84 to 6 percent for 2000 to 2006. For rich nations, it went from 9 percent to 2 percent. Crowd behavior makes it easier for all nations to follow low-inflation policies—and harder, though not impossible, for any nation to permit inflation to surge.*30

I have already cited one reason for the slighting of inflation: the overemphasis on the role of oil and the war in Vietnam. But there must be other explanations. An obvious one is simply the passage of time. A majority of today's Americans have never experienced double-digit inflation. It was not part of their life, as it was of mine. In 2008, slightly more than 60 percent of today's roughly 300 million Americans were born in 1962 or later, meaning that the oldest of them would have been only seventeen or eighteen when inflation peaked in 1979 and 1980. They were too young for it to have made much of an impression. Even for some of those who lived through it, the memory of inflation has faded. All this is true and, in a very superficial way, provides a serviceable explanation. But it is unconvincing, because the same arithmetic applies to Vietnam— indeed, more so, since it was an earlier event—and yet Vietnam retains a powerful grip on the national consciousness. Something else must be at work.

Closer to the truth, I think, is a collective failure of communication and candor by the nation's economists. At its base, double-digit

* Whether these gains were about to be squandered was unclear in mid-2008, as this book went to press. China, Indonesia, India and Saudi Arabia all had 8 percent to 10 percent inflation. See "Inflation's Back," The Economist, May 24, 2008, 17.

inflation was their doing. It resulted from bad ideas that—promoted by many leading economists and converted into government policies—produced bad results. There is now a widespread recognition of this, and although there are many technical studies of inflation and of the period of high inflation, there has not been much in the way of public apologies (from those who were complicit in the error) or reprimands (from those who were not, because they either dissented or were too young). There seems to be an unspoken pact of self-restraint to let bygones be bygones, perhaps out of collective embarrassment or a recognition that dwelling excessively on past failures might compromise economists' prospects as government advisers and high-level appointees.

Other possible explanations of the neglect are partisanship and historical dramatizations. Historians, economists and political commentators—consciously or not—play favorites. People try to fit the facts to their preconceived notions and political heroes. There's a tendency to render judgments for or against one set of policies and actors versus another. Our narratives tend to glorify or demonize our leaders. Inflation does not lend itself well to this sort of storytelling. For starters, when inflation begins, it usually creeps up slowly. To fight it at its earliest stages is, if successful, to engage in a preemptive attack that is largely unappreciated by the public because inflation is not yet highly visible. To fight it at its later stages is to undertake an attack that, even if successful, has awful consequences (higher unemployment, lost incomes) that are unpopular with the public. Either way, it's hard to claim bragging rights. Fighting inflation lacks the drama of a real war or of many of the public crusades and campaigns embraced by political leaders. This may help explain why it figures so little in presidential and political memoirs.

Up to a point, these explanations help resolve the puzzle. But there's a deeper cause, I think, for the oversight. It's the way we do history. To simplify somewhat: Historians don't do economics, and economists don't do history. In general, economists—even when they examine historical events—focus mainly on the economic causes and consequences. They rarely use economics as a springboard to inform a broader historical narrative. Historians suffer the opposite failing. Their landscape consists almost entirely of the political, the social and the personal. Economics baffles and bores them.* People and ideas are their prime movers. If economic forces intrude, historians typically acknowledge them without trying to explain or analyze them. And journalists? They concentrate on the here and now. They want to know who did what to whom and why—but only today or yesterday

In short, we compartmentalize. History skimps on economics, and economics skimps on history. The Great Depression—the most momentous economic event of the twentieth century—illustrates the failing. Economists have produced many ambitious attempts to explain its economic causes, ranging from John Kenneth Galbraith's The Great Crash to Barry Eichengreen's more recent Golden Fetters. From historians, we have many superb accounts of the 1930s, including Frederick Lewis Allen's Since Yesterday and Arthur Schle-

* Marxist historians are a conspicuous exception to this generalization, because Marx saw economic conflict as the cauldron for much historic change. However, few leading American historians are Marxist.

singer, Jr.'s Age of Roosevelt trilogy. But we have few, if any, syntheses that treat both the economic origins and larger consequences. If the Great Depression suffers from this lapse, it is hardly surprising that double-digit inflation—a significant but much lesser upheaval— does too. We are forgetting an important part of our past. It is time to retrieve this lost history.

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