America in the Reagan Years

The Reagan “Revolution”: The Claims

1. Optimism and national self-confidence: The Reagan Vision

2. Reversing economic decline: Reaganomics

3. Battling the “Evil Empire”: Foreign policy

The Reagan Vision

In my mind it was a tall proud city built on rocks stronger than oceans, wind-swept, God-blessed, and teeming with people of all kinds living in harmony and peace, a city with free ports that hummed with commerce and creativity, and if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here. That's how I saw it and see it still. Ronald Reagan’s Farewell Address, 1989

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“Are you better off now than you were four years ago?” (1980)

“It’s morning again in America” (1984)

The 1984 Reagan Landslide

Reaganomics

Supply-side economic theory

• Productivity growth and more investment would create growth more effectively than (Keynsian) concentration on demand

• Individual economic actors behaved rationally and predictably

• lower taxes and increased incentives for individuals (and firms) to work, save and invest would raise real output

Milton Friedman:

Nobody spends somebody else's money as carefully as he spends his own. Nobody uses somebody else's resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.

Milton Friedman:

Governments never learn. Only people learn.

The Laffer Curve

Government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else?First Inaugural, 1981

Federal Tax and Spending Trends 1974-1996

Reaganomics and the Ballooning Deficits

Huge Fiscal Deficits

High Interest Rateson Treasury Bonds

Tax Cuts + Increased Federal

Spending

The Politics of Deficits

• Growth much lower than expected; Laffer curve didn’t work; full-scale war on Welfare State avoided; huge defense build-up FY1986 deficit was BN$200 and national debt was TN$2.7

• “Reagan’s revenge”?: forced limits on spending

Mitch Snyder

Unemployment: 10% by 1983

Economic Nationalism

Share of national income (excluding capital gains) going to richest ten percent of population,

1917-1997

Income inequality

• Individualist ethos• Reaganomics: cuts in welfare & tax

cuts for rich• Decline in union membership• Immigration• Technological change (increased

demand for high-skilled labour)• Globalisation & cheap imports

(decreased demand for low-skill labour)

Reaganomics Assessed

• Defeated inflation (by supporting Fed Reserve’s tight monetary policy and with good fortune of low oil prices)

• Inaugurated longest continuous period of expansion in American history 1983-present (with brief interruption in 1990-91)

• Halted expansion of fed govt spending• Halted rise in tax burden (19% of GDP

in 1988; 19.4% in 1980)

Reaganomics Assessed

• Changed terms of debate: Monetarists “won” battle over the way to deal with inflation, the efficacy of state intervention in the economy, and the importance of the supply side of the economy

Reaganomics Assessed

• Depression of 1981-82; high interest rates and 10% unemployment

• Lower average growth (2.5%) than in 1970s (2.8%)

• Debt burden: budget deficits and national debt ballooned

• Huge increase in inequality and rise in poverty

Foreign Policy

Post WWII military spending (in constant 2006 dollars)

•“Evil Empire” rhetoric

•1983 “turn” in Cold War policy?

•Summits, faith in personal chemistry

•Abhorrence at the thought of nuclear war

The Reagan Revolution

“And how stands the city on this winter night? She still stands strong and true on the granite ridge, and her glow has held steady no matter what the storm… My friends, we did it… We made a difference. We made the city stronger. We made the city freer, and we left her in good hands. All in all, not bad, not bad at all. And so, good-bye.”

Contradictions: Reaganism and the consolidation of the “counterculture”

• 80s the decade of “greed”: decisive shift away from traditional bourgeois values of thrift, hard work, delayed gratification, self-discipline

• Huge rise in crime, especially violent crime

• Moral levelling: assault on traditional social institutions: family, heterosexual mating rituals

Contradictions: Reaganism and the consolidation of the “counterculture”

• Multiculturalism, “political correctness”, relativism v metanarrative, universalism

• Focused on individual not usefulness to society

• Triumph of counterculture? Institutions became bastions of this cultural version of “liberalism”

The Reagan Revolution

• Huge gap between public adoration and intellectuals’ scepticism (until recent re-evaluations)

• Reagan: a “reconstructive” president – changed the terms of political and economic debate, altered the way in which Americans thought about themselves, shifted political mainstream to the right even as American culture made the final break with traditional moral values

“Pragmatic Ideologue”Great Communicator

“Reconstructive” President