The period when Gerald Ford was president marked a particularly tough time for the economy. From 1974 to 1977, the U.S. was suffering from nearly 10% unemployment and inflation that reached 12% at its height. The stock market had undergone a massive bear phase, and there was a worldwide oil shock.
Yet despite all of the problems, Ford was confident that things would improve. Sure, the man who was once a top college football player had a couple of fumbles along the way. Perhaps the most striking was his campaign called WIN, for Whip Inflation Now. There were actually buttons bearing that slogan that citizens could wear.
Getting tough on inflation meant high interest rates and the risk of a painful recession. And that's just what happened during the late 1970s, when Paul Volcker became the chairman of the Federal Reserve.
In the meantime, though, Ford did take a variety of significant actions. First was a move toward deregulation. Ford realized that there would be many cost-efficiencies if industries such as energy, airlines, and trucking were deregulated. It would also increase productivity and help to lower inflation.
Next, Ford wanted to demonstrate that the federal government would not always be a safety blanket. For example, in 1975, he (somewhat famously) did not intervene when New York City went bust.
What's more, Ford experimented with tax cuts to stimulate the economy, although not until Ronald Reagan came to the presidency would there be significant tax cuts, in a strategy that became known as "supply-side economics."
Keep in mind that during Ford's tenure, a variety of game-changing companies got their start, including Microsoft
No doubt, economic issues such as interest rates and taxes are important. Ford knew that. But the "X-factor" for the U.S. economy is innovation. And innovation is something that seems to happen regardless of the macroeconomic conditions or any amount of planning from the federal government.
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Fool contributor Tom Taulli does not own shares of companies mentioned in this article.