Transcript The Reagan “Revolution”

America in the Reagan Years
The Reagan “Revolution”:
The Claims
1. Optimism and national selfconfidence: 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, Godblessed, 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
Tax Cuts +
Increased Federal
Spending
Huge Fiscal
Deficits
High Interest Rates
on Treasury Bonds
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 1983present (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 reevaluations)
• 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