Well, let's see, Reagan initiated a boom after a period of stagflation, and set up the conditions for the 90s economy, as well as won the Cold War. Not bad:
On the economy, here are some comparisons (this is Administration to Administration, and thus includes the Volcker recession):
The poverty rate averaged 14.08 under Reagan, vs. 13.71 under Clinton.
GDP (per annum, average): Reagan/3.36, Clinton/3.75
Median family income (constant dollars): R/43,046, C/45,500
Median black family income: R/25,536, C/28,668
In fact, the Reagan Years look quite respectable, especially with the need to flush out stagflation. The boom years, taken alone and including the first couple of Bush years (to allow for policy lag) look even better.
These comparisons came from a pro- Clinton site, but the figures can't hide that Clinton's record is unimpressive, when one factors in the 81 recession.
zzpat.tripod.com
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The Reagan Boom was a supply- side recovery, not Keynsian. The evidence? In a demand driven economy, the rate of inflation goes up, as more dollars chase a lagging production of goods and services. In the '80s recovery, the rate of inflation went down, as one would expect when increased production of cheaper and improved goods and services was stimulating a lagging demand.
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Response to possible objections:
First, the impact of computerization on productivity is largely a '90s phenomenon. Remember, the PC had a capacity of about 2megs RAM or less during the '80s, and the Internet was not fully available to businesses for e- mail and such until the early '90s. In any case, inflation declined much too swiftly in the mid- '80s to show much correlation. Second, deregulation was the primary reason for the drop in energy prices, and again, the decline in energy prices was less rapid than the decline in inflation. Finally, although there was progress in trade liberalization, mostly you had major treaties negotiated in the Reagan or Bush era, and ratified under either Bush or Clinton. Thus, again, the effects of liberalization mainly were felt in the '90s, rather than as part of the Reagan recovery. To put it bluntly, the things cited are the reason for robust growth and low inflation under Clinton, and they were largely the legacy of the Reagan and Bush policies......
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The Soviet Union didn't have an economic collapse. It had a political collapse. Its economic difficulties were an important factor in the political collapse, but were not sufficient to cause it. The main thing that caused the political collapse was liberalization, primarily "glasnost".
There were two main reasons that the reformers had a relatively free hand: the fear that the Soviet Union could not sustain an acceleration of military competition with the United States, due to SDI, and the overall desire to counter Reagan's success in creating a new hardline against neutralism in Europe and Soviet adventurism in the Third World.
Thus, Gorbachev mounted a "peace offensive", to try for "detente two"; he instituted "glasnost" both to show the face of a new, improved Soviet Union to the West, and to provide a steam valve for popular discontent; and he had vague restructuring plans ("perestroika") to improve the condition of the economy, both to bolster the consumer sector, and to provide a better long term basis for the military. It is doubtful that Gorbachev would have been given the top spot without Reagan, but even if he had, it is very unlikely that he would have been allowed to progress so far with political liberalization had he not had some success with negotiating with Reagan. In other words, the attempt to oust Gorbachev would have occurred much sooner, and almost certainly been effective, had it not been for Reagan.
By the time the Politiburo moved against Gorbachev, the political situation was out of control, and Yeltsin rallied the people of Moscow to defend Gorbachev. Subsequently, things spun out of even Gorbachev's control, since people were disillusioned with the central government, and the Army was falling apart due to bad morale. (The rate of desertion became staggering at the end of the Soviet period).
SDI was not the sole reason that the Soviet Union collapsed. Additionally, our willingness to counter the Soviets in Afghanistan (begun under Carter); our countering of Cuba in Central America and Angola; our ability to counter the European peaceniks and place intermediate missiles in West Europe; our support of Solidarity; our rhetorical support of a free and united Germany ("Mr. Gorbachev, tear down this wall") and of the liberated Baltic States; and other such things all contributed.
Ronald Reagan created the political conditions where a person like Gorbachev looked like the best bet for the Soviets to calm down an aroused West, after the provocations of the Brezhnev years, and to get breathing space to deal with its domestic problems, without totally losing the strategic competition. The additional fact that Reagan was willing to treat Gorbachev well, as long as Gorbachev made positive reform efforts and seemed to be earnest in bargaining at the summit, increased Gorbachev's value to the Politiburo, and made them more tolerant of politically risky reform. Thus, Reagan was the key to the political demise of the Soviet Union.......
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Businesses realize that carrying debt is smart, because it allows them to snatch growth opportunities when the timing is right, without raising prices or curtailing dividends, thus either undermining sales or harming the price of their stock. The government should also be willing to incur debt under certain circumstances, instead of acting as if "pay as you go" is the norm. If taxes are too high, lower them. If the military needs an upgrade, spend the money. In the long run, appropriate borrowing will leave the country better off. Lower taxes increase economic growth. An improved military ensures that the interests of a farflung commercial nation in stability and freedom of the seas are upheld, and that our national security is not compromised by terrorists or rogue nations. Billions of dollars of assets, as well as an appalling number of unquantifiably valuable human lives, were lost in the September 11th attacks; tourism was dealt a severe blow, triggering, for example, an airline crisis; and we have not finished the clean up and rebuilding process. What would it be worth to avoid a nuclear blast in the middle of Anyplace, USA?
Ronald Reagan, although eager to restrain the growth of spending and reduce deficits, did not go to the mat with the Democrats, some of whose votes he needed for more important matters. Instead, he concentrated on lowering marginal tax rates (which, incidentally, did increase revenue), closing loopholes (which distort investment), deregulation, and winning the Cold War. All of that seemed worth the increase in debt, which was low compared to some of our allies, as a percentage of GDP, and whose service, as a percentage of the budget, was tolerable. And, of course, the dire predictions of liberal economists did not come to pass. Credit did not become tight, the '90s did not become a Decade of Burger Flippers, and deficits did not continue to grow. Instead, we had a peace dividend, another decade mostly characterized by robust growth, and eventual surpluses. It was a pretty small price to pay. |
