It should not take a death to remind Americans that there are public servants who put country before party and personal interest. But when a leader such as Paul Volcker passes, the qualities that made him an essential leader spring to mind.
Known for cheap suits, cigars and incorruptibility, Volcker was a lifelong civil servant in the best sense of the term, working in the Treasury Department under three presidents before leading the Federal Reserve Bank of New York and, eventually, the entire Federal Reserve System. This is where Volcker would make his heroic stand.
In 1979, the year Volcker became Fed chair, inflation was 13.3%. Prices had been rising relentlessly, along with anxiety about whether paychecks would rise in step. Americans borrowed more, spent quickly — lest prices spike the next month — and invested less. Inflationary psychology had a firm grip on the nation.
Dismayed at years of fecklessness at the Fed, Volcker prescribed tough medicine, quickly announcing that the central bank would limit the amount of money in the economy. Mortgage rates surpassed 18%. An economy that had experienced several recessions in little over a decade saw another deep contraction. Unemployment rose into the double digits. Angry farmers, builders and car dealers assailed the Fed. But Volcker broke the spiral, returning inflation to low single digits. Growth ensued.
Presidents Jimmy Carter and Ronald Reagan promoted and supported Volcker in crucial moments, despite the economic pain that accompanied Volcker’s drive to tame inflation. Carter’s stand may have cost him re-election, and Reagan was steadfast even though high interest rates shadowed much of his first term.
Today the nation has another Fed chair, Jerome H. Powell, who is acting with integrity as he charts a policy intended to enable growth without triggering inflation — but a president who, unlike Carter and Reagan, bullies and politicizes the Fed to set it up as a scapegoat if the economy goes south. President Donald Trump’s cowardice can only spur nostalgia for two presidents strong and patriotic enough to allow public-spirited federal officials to do their jobs without fear of humiliation.
Of course, primary credit for Volcker’s accomplishments belongs to Volcker. While his predecessors had shrunk from the hard task at hand, he embraced it, resisting pressure from the public and much of official Washington to restrain his inflation-fighting. His refusal to bow ranks him among the chief architects of modern U.S. prosperity.
Volcker deserves gratitude from the public he served — and emulation from the current generation of leaders.
FROM AN EDITORIAL IN THE WASHINGTON POST