Wrong! Reagan was the greatest president of the second
lalf of the 20th Century.
What made the Volcker rate hikes work is that
*simultaneously* Reagan convinced Congress to cut taxes.
Without these cuts, we would have witnessed the great Depression.
When Reagan took office, many sectors of the US economy
were regulated and thus did not have any competition:
oil, gas, trucking, telecommunications. The oil and gas
deregulation was single-handedly responsible for the sharp
drop in the oil and gas prices that created a favorable
environment for economic expansion. Similarly, before
Reagan, the tax system was a total disgrace where high
marginal rates where accompanied by all sorts of tax
preferences that encouraged investments in completely
unproductive sectors. The tax reform of 1986 created a
simple tax code that not only lowered marginal tax
rates, but also wiped out complex tax preferences,
making it possible for money to be allocated strictly
based on expected returns.
Finally, Reagan created a more even playing field between
unions and employers which relieved inflationary pressures.
Reagan did all the heavy lifting in terms of structural
reforms that made the current economy possible. Europe
is still struggling with its inability to perform
similar reforms, and as a consequence jobs creation has
been closed to nil (except for govt jobs) in Europe for
the last 10 years.
I think all these accomplishments put together are
even greater than winning the Cold War.
While I am not nearly as found of Bush Sr, it should
be remembered that he cleaned out the Savings and Loan mess,
which left unattended would have dragged us down in
the same way as the bank mess in Japan. The cost of
the SL cleanup was then used to beat him over the
head into agreeing to a tax increase that destroyed him.
To understand why the US economy is performing so well,
you must first look at the European and Japanese economies
and understand why they are failing to keep up. After that,
it becomes easy to see the importance of Reagan's
contribution. |
