Reaganomics

[EconChick]

But this debt crisis did not originate with George W. Bush. It can be traced back primarily to President Reagan, who arrived in the White House in 1981 with fanciful notions about restoring America’s economic vitality through massive tax cuts for the wealthy, a strategy called “supply-side” by its admirers and “trickle-down” by its

I think that the proper way to address such a challenge is to ask the critic "Compared to what?"

If we hadn't embarked on the path Reagan set us on, what path would we have followed? The liberal path models that which is found in Europe.

So, let's compare the US economy since 1980 to various European economies which followed the model preferred by Democrats.

In 1980 US GNI/Capita (in constant dollars) was 12,394
In 1980 French GNI/Capita (in constant dollars) was 12,562
In 1980 German GNI/Capita (in constant dollars) was 11,674
In 1980 Dutch GNI/Capita (in constant dollars) was 12,941
In 1980 United Kingdom GNI/Capita (in constant dollars) was 9,509

In 2000 US GNI/Capita (in constant dollars) was 36,618
In 2000 French GNI/Capita (in constant dollars) was 22,080
In 2000 German GNI/Capita (in constant dollars) was 22,350
In 2000 Dutch GNI/Capita (in constant dollars) was 24,804
In 2000 United Kingdom GNI/Capita (in constant dollars) was 25,232

The US economy grew by 195%
The French economy grew by 76%
The German economy grew by 91%
The Dutch economy grew by 92%
The UK economy grew by 165%

After this point we run into EU integration problems - the nature of the economy changed in Europe. It's interesting to observe the UK experience - Thatcherism seems to produce the same results as Reaganism.

So what is/was the liberal alternative? Slower growth for America.

If we followed the French model, US GNI/cap in 2000 would be 21,813 instead of 36,618
If we followed the German model, US GNI/cap in 2000 would be 23,672 instead of 36,618
If we followed the Dutch model, US GNI/cap in 2000 would be 23,796 instead of 36,618
If we followed the English model, US GNI/cap in 2000 would be 32,844 instead of 36,618

Frankly I don't see the appeal of choosing a path which makes the nation purposely poorer. Then again, I'm not a liberal and I don't share the mindset that equality bought by making everyone poorer is a better outcome than everyone being better off even if that increases inequality.

I thought it was great stuff, Rik! I have a bad habit of speeding through threads and missing lots of posts. But RIGHT ON!

 

[pinqy]

First of all, you realize there are 6 unemployment rates, don't you? U1 through U-6. I can't believe you'd post a graph that doesn't even show you which rate you're trying to tell the audience you're referring to.

You're doing that either out of ignorance or deceit. Neither one is good.

Ok, I have to nitpick here. Besides the fact that you yourself have referenced the UE rate without specifying each one, there are NOT 6 unemployment rates. The U-1 and U-2 measure aspects of unemployment (long term unemployment and job losers) and the U4,5, and 6 include people who are not unemployed in the numerator, with the U-6 including millions of employed. They are measures of Underutilization.


Also, the current measures didn't come into being until 1994, and it's not possible to reconstruct earlier, so any graph or set prior to 1994 will necessarily be what is now the U-3 but was the U-5 from 1976-1983 and the U-5b from 1984-1993.

So he couldn't have been using any other rate, and, as you've demonstrated yourself, simply saying UE rate is understood as being the U-3

Once again, Pingy, you're completely off.

No, i'm really not.

As you showed yourself, there's an apples to oranges problem,

How did I show that? And what is the problem you're thinking of?

and no it is not assumed to be U-3.

Ok, that should be easy enough....show one example from the media, government or academia where "unemployment rate" without any other adjectives/qualifiers refers to anything other than Unemployed/Labor Force.

You said it was not possible to reconstruct the graph before 1994 that looks comparable to today's U3-U6, but people extrapolate and do it all the time.

A link would be helpful. I've never heard of anyone giving any numbers for the U-4, 5, or 6 for before 1994. Obviously the official rate goes back to the 1940's

They just make sure they're consistent on the following definitions.


*U3 – Unemployed as share of labor force (the official rate)3
• U4 – (Unemployed + discouraged) as share of (labor force + discouraged)4
• U5 – (Unemployed + discouraged + “marginally attached”) as share of (labor force + discouraged + “marginally attached”)5
• U6 – (Unemployed + discouraged + “marginally attached” + employed part-time for economic reasons) as share of (labor force + discouraged + “marginally attached”)

That would be terrible. Since Discouraged workers are a subset of marginally attached, they would be double counting discouraged.

But the main problem is that the data available for the U=4 to U=6 doesn't exist. That's what makes it impossible. Marginally Attached was not collected and discouraged only had quarterly data available and then was radically redifined. Any chart going back would be the official rate, which had one minor definition change and some small effects of the overall redesign, and so is really fine to use as historical comparison unless you're doing really technical analysis.

But now that we've gotten this meaningless piss ant point of yours addressed,

You're the one who raised the topic with your attack when it was pointed out that you were just making up that Reagan inherited near 12% unemployment rate. But since your attack was patently ridiculous in that you were insisting which unemployment rate be mentioned when in this very thread you've referred to the UE rate without specifying U-3, I thought it appropriate to point out that even your attack was pointless.

what does it have to do with my bigger point that Reagan brought down high interest rates, high unemployment rates, and high inflation? He decimated the Soviet Union and had high growth.

It doesn't change that point in the least.

Well, the fact that you completely made up the unemployment numbers Reagan was facing was kind of the point. "The real truth is Reagan inherited just short of 12% unemployment from the Carter Administration." and then when you're corrected you attack and yet get your attack wrong. Jan 1980 rate was 6.3 and was 7.4 when he took office. That's way short, not "just short", of 12%

 

[Listening]

Folks,

This thread is about Reaganomics.

Discuss his policies and what people mean when they use the term.

Arguments over data for comparison are O.K. by me as long as it isn't to be used in comparing Reagan to Carter.

 

[Listening]

There is a thread over in the political section entitled "The Failure of Reaganomics."

It opens with anything but a discussion of the economic policies of Reagan. It goes after immigration, Lebanon, Iran-Contra....

But it does nothing to discuss the idea of Supply Side Economics. Then you've got someone on the board who can't let go of Demand Side Economics.

There is NO ARGUING that things got worse under Reagan and then they got better.

Three is also NO ARGUING that our debt increased under Reagan.

Now, I say under Reagan. Even though R.R. had a degree in economics, my guess is that he wasn't up at night masterminding some kind of grand economic program. I could be wrong, but that is a guess. Just like I don't think Obama is masterminding his program either.

So, without the smoke screens of the garbage that goes on in the Political section, let's see what people have to say about the ECONOMIC POLICY called Reaganomics.

I'll start with a few posts.....

What was was Reaganomics ?

 

[Abishai100]

Billboard Soapdish

Someone should mention that it was during the era of Reaganomics that consumerism really took off (the big '80s).

It was during the 1980s that we enjoyed Hollywood (USA) movies such as "Wall Street" (1987) and made mix tapes on high-quality audio cassettes.

This is not the first time this has happened in American history. During the Roaring Twenties, over-investments trickled down into a pageant-styled American culture which culminated in the Great Crash. Likewise, critics of Reaganomics cite the post-1980s balloon bust.

Why does society celebrate top-down overindulgence?

There seems to be something about 'wealth enthusiasm' that catalyzes talk about political cooties.







Federalism - Wikipedia the free encyclopedia

 

[Politico]

What was was Reaganomics ?

Something that happened thirty years ago that has no bearing on anything happening now.

 

[Where_r_my_Keys]

This is an article that is found on the web under a number of different titles. It will always be titled "The Abject Failure....."

The Abject Failure of Reaganomics

Talking about the Bush Run up in debt....which I totally deplore....it says:

But this debt crisis did not originate with George W. Bush. It can be traced back primarily to President Reagan, who arrived in the White House in 1981 with fanciful notions about restoring America’s economic vitality through massive tax cuts for the wealthy, a strategy called “supply-side” by its admirers and “trickle-down” by its critics.

*************************

So, Bush was Reagan's fault ?

Somehow Reagan causes Bush ?

But the same article says that:

During 1993, Clinton’s first year in office, the new Democratic administration pushed through tax increases, partially reversing the massive tax cuts implemented under Reagan. Finally, the debt problem began to stabilize, with the total debt at $5.7 trillion and heading downward, when Clinton left office in January 2001.

Indeed, at the time of Clinton’s departure, the projected ten-year surplus of $5.6 trillion meant that virtually the entire federal debt would be retired.

*****************

So Reagan takes over in a recession. Runs up the debt...but Clinton has the base from which to retire the debt.

BUSH CAME AFTER CLINTON

So the way I see it. They are not connected at all. And there is good reason to believe that some of Clinton benefited from Reagan's time in office.

Oh, and let's not forget. The American People threw out a democratic house and senate in 1994. But Newt and Co. had nothing to do with this great financial performance (sorry....had to say it).

Just another example of how Reagan gets a rap, in my estimation, he does not deserve.

If I am missing the connection, please tell me. This is in the CDZ for a reason.

This is the same straw reasoning the Left brings to every instance, wherein an action demonstrates the innate failure of the Left and the superior nature, of Nature.

"Reagaonimics"... is merely the natural order of economics. Wherein people go about their business freely exchanging goods and services with one another, to the mutual and respective profit of all participants.

All Reagan did was to drag the encumbrances common to government, particularly government infected with foreign ideas hostile to the natural order of economics and every other aspect of American principle....; Reagan's adherence to the natural principles of economics produced the largest increases over the longest period of economic growth in human history and, for that, the Intellectually Less Fortunate HATE him for it.

 

[Where_r_my_Keys]

Let's stick to the Short and Long Term Policy failures of Reagan.

There are no Reagan Failures, neither short, nor long term!

 

[Crystalclear]

Reaganomics is a good economic policy. Lower taxes for the rich means that they can invest more. Production goes up, more jobs are needed, so welfare costs go down.

 

[sameech]

Agreed. Those threads tend to get pretty personal pretty fast.

It seems he was of the opinion that tax cuts would stimulate the economy. He cut taxes on the wealthy. They got that much wealthier. Did everyone else.

Many indicators would say no.

But was it Reaganomics or just the globalization period we were going through.

Probably a combination. I think Reagan naively believed that if he enacted policies that were favorable to capital, that all these capitalists would be good civic minded people and do the right thing for America. Unfortunately, we also had the largely unchecked thug Carl Ichan who showed the world how it was easier to raid other people's capital rather than actually create wealth by constructive investment in additional production capacity.

 

[Bush92]

Reagan did a half Mellon supply side. He cut taxes, lowered domestic spending, but increased defense spending which helped win the Cold War. So the massive budget deficits during 1980's were necessary for defense, but unnecessary on domestic spending, but that's not Reagan's fault. Democrats controlled both houses of The Congress and Tip O'Neil and Teddy Kennedy were not going to give up all those wasteful federal programs.

 

[jasonnfree]

Reaganomics is a good economic policy. Lower taxes for the rich means that they can invest more. Production goes up, more jobs are needed, so welfare costs go down.

And then Reagan does an amnesty to fill those jobs he supposedly created.

 

[Picaro]

There is a thread over in the political section entitled "The Failure of Reaganomics."

It opens with anything but a discussion of the economic policies of Reagan. It goes after immigration, Lebanon, Iran-Contra....

But it does nothing to discuss the idea of Supply Side Economics. Then you've got someone on the board who can't let go of Demand Side Economics.

There is NO ARGUING that things got worse under Reagan and then they got better.

Three is also NO ARGUING that our debt increased under Reagan.

Now, I say under Reagan. Even though R.R. had a degree in economics, my guess is that he wasn't up at night masterminding some kind of grand economic program. I could be wrong, but that is a guess. Just like I don't think Obama is masterminding his program either.

So, without the smoke screens of the garbage that goes on in the Political section, let's see what people have to say about the ECONOMIC POLICY called Reaganomics.

I'll start with a few posts.....

"Reaganomics' is a misnomer, in any case. His Presidency was dominated by 'Volkernomics', not Reagan's economic dumbassery.

 

[Picaro]

I don't know what country you lived in but there was no boom... there was a great loss of jobs ... loss of retirement plans.. under reagan with his deregulating of the saving and loans companies ... that cost the middle class billions of dollars and more lost jobs ... were you get this notion of economy boom is beyond me ...

And of course resulted in yet another Wall Street bailout as well.

 

[Picaro]

Sorry, Billyrock, I'm sure you're a nice, hardworking guy, but you don't know how to read the stats at all.

Well, given how stats are massaged and likely inaccurate or outright false to begin with, especially government generated stats, this isn't really a problem, since they're made up anyway.

 

[Picaro]

No, the unemployment rate had gone up after Reagan's inauguration, but barely just after he had submitted his budget and given it a chance to take affect. That means the high UE number was due to Carter's policies.

this is funny stuff; Carter's policies had little to do with unemployment numbers, the oil crisis did. Reagan's policies weren't much different than Carter's, i.e. cutting capital gains tax rates, adding tax deductions that actually let the middle classes benefit, etc.

Once Reagan's policies took effect, the numbers dropped steadily till he left office. Not like Obama's that go up and down.

It can just as easily be claimed the economy improved when Carter's policies took effect. It was Carter who appointed Volcker, after all, and Reagan kept him on. But the reality is the economy didn't really improve, some market bubbles were artificially created, which isn't the same as an improving economy.

He left office at 5.2% Unemployment.

And how was unemployment calculated at the time? ...

But more importantly, inflation had dropped so drastically that the price of everything...a house, food, cars, etc.....things that matter to the middle class....had come way down.

No, inflation didn't drop way down, the rate of inflation merely slowed down, which isn't the same thing. That inflation is still there today. It never went away. Prices on some things dropped because the stock and housing markets sucked vast amounts of capital into the bubbles, leaving the rest of the economy short of cash and customers. In any case the housing bubble crashed late in Reagan's term, and on into Bush's term, along with the usual major rash of bankruptcies, failed banks, and consumer borrowing against grossly over-valued housing deflated prices for a few years, while millions took advantage of easy bankruptcy laws to welch on their debts and then turn around and do the same thing all over again.

And what else was a great thing for the middle class??? Interest rates had gong as high as 20% under Carter but were brought wayyyyyyyyyyyyy down by Reagan so people could afford homes.

lol more nonsense; if all those homes were so 'affordable' there wouldn't have been such a wave of bankruptcies, particularly of Saving and Loans. As for interest rates 'going down', that is also misleading, since people were borrowing against grossly over priced 'assets', like houses.

Which is actually the cheaper interest cost, a 10% loan on a $10,000 house, or a 5% loan on the same house priced at $100,000? ...

This is why people loved the 80s.

Actually only crooks and the dishonest loved the '80's.

As for Clinton, he enjoyed the heavy lifting Reagan did at ending the very costly Cold War.

Gorbachev ended the Cold War; Reagan kept it going for two years longer than it needed to go.

Clinton got the benefit of that with defense cuts left and right...

George H. Bush and Dick Cheney cut the Defense budgets, not Reagan; Reagan spent massive amounts of money on 'defense', usually on worthless programs, like refurbishing old obsolete battleships the Navy didn't even want but Republican Senators and Congressmen wanted for their districts. Newt Gingrich in particular carried astoundingly huge amounts of pork back to his district; it was unrecognizable by the time the boom there ended.

.and after Reagan had cleaned out the cobwebs in the economy and gotten it firing on all four cylinders.

Yes, even more bubbles were artificially generated, true.

 

[Picaro]

Reaganomics is a good economic policy. Lower taxes for the rich means that they can invest more. Production goes up, more jobs are needed, so welfare costs go down.

And then Reagan does an amnesty to fill those jobs he supposedly created.

Indeed. I'm still waiting for anybody to post the history of retail meat prices after he issued thousands of visas to the meat packers so they could bust the unions there. People keep babbling about 'inflation has been defeated', but the prices are still way above 1970 prices, for some reason. I thought Reagan ended inflation n stuff.

 

[Listening]

There is a thread over in the political section entitled "The Failure of Reaganomics."

It opens with anything but a discussion of the economic policies of Reagan. It goes after immigration, Lebanon, Iran-Contra....

But it does nothing to discuss the idea of Supply Side Economics. Then you've got someone on the board who can't let go of Demand Side Economics.

There is NO ARGUING that things got worse under Reagan and then they got better.

Three is also NO ARGUING that our debt increased under Reagan.

Now, I say under Reagan. Even though R.R. had a degree in economics, my guess is that he wasn't up at night masterminding some kind of grand economic program. I could be wrong, but that is a guess. Just like I don't think Obama is masterminding his program either.

So, without the smoke screens of the garbage that goes on in the Political section, let's see what people have to say about the ECONOMIC POLICY called Reaganomics.

I'll start with a few posts.....

I always enjoy this one.

The left loves Volker and claims he made things work for Reagan.

But then the left turns around and says Bush practiced Reaganomics (which he didn't) assuming a bad connotation.

Which is it. If Volker was right then Reagan was right. And calling Bushcraponomics Reaganomics is pure bullshit.

"Reaganomics' is a misnomer, in any case. His Presidency was dominated by 'Volkernomics', not Reagan's economic dumbassery.

 

[Listening]

Reaganomics is a good economic policy. Lower taxes for the rich means that they can invest more. Production goes up, more jobs are needed, so welfare costs go down.

And then Reagan does an amnesty to fill those jobs he supposedly created.

Indeed. I'm still waiting for anybody to post the history of retail meat prices after he issued thousands of visas to the meat packers so they could bust the unions there. People keep babbling about 'inflation has been defeated', but the prices are still way above 1970 prices, for some reason. I thought Reagan ended inflation n stuff.

He did.

When did these prices go up ?

I know for certain that as crude oil has gone up, so have food prices. Corn, soybeans and Canola all go to make biofuels and can be done so without subsidies (provided there is an outlet which there seems to be). This means that food prices will float on the price of crude.

What was crude in Reagan's day ?

What is it today ?

 

[Zander]

Reaganomics is a good economic policy. Lower taxes for the rich means that they can invest more. Production goes up, more jobs are needed, so welfare costs go down.

And then Reagan does an amnesty to fill those jobs he supposedly created.

Indeed. I'm still waiting for anybody to post the history of retail meat prices after he issued thousands of visas to the meat packers so they could bust the unions there. People keep babbling about 'inflation has been defeated', but the prices are still way above 1970 prices, for some reason. I thought Reagan ended inflation n stuff.

He did.

When did these prices go up ?

I know for certain that as crude oil has gone up, so have food prices. Corn, soybeans and Canola all go to make biofuels and can be done so without subsidies (provided there is an outlet which there seems to be). This means that food prices will float on the price of crude.

What was crude in Reagan's day ?

What is it today ?

Wouldn't the price of cherry's be more apropos?


lol