20 July 2010

Policies of St. Ronnie Ruined America

Cross Posted from Jobsanger

If you listen to conservatives you might think that Ronald Reagan was one of our greatest presidents. Even today, they are preaching a return to the policies of the dead president. They point to the time of his presidency as a time of economic benefit for almost all Americans.

They may have a small point. During the early years of his presidency, Americans were doing well. But they were doing well thanks to the efforts of the administrations that preceded the Reagan administration. The sad fact is that the policies that Reagan put into place started a long slow slide into the economic mess that we are now experiencing.

Reagan's idea was that if we just removed the regulations inhibiting Wall Street and American corporations the resulting economic growth would be of benefit to everyone in the society. He called it the "trickle down" theory. The theory said that as businesses (mainly the giant corporations and financial institutions) prospered, much of the money they made would trickle down to workers.

This simply didn't work. Actually less money filtered down to workers as the unregulated corporations depressed wages to make even larger profits, and the poor were left completely out of the equation. It didn't work because Reagan (never an economic genius) bought into the corporate lies and got economic reality exactly backwards -- money doesn't trickle down in a capitalist economy, it flows upward (when the workers have money everyone benefits, including businesses).

Even though the right-wing denies that the current economic mess is due to policies put into place during the Reagan administration (and accelerated during the George W. Bush administration), there is evidence that "Reaganism" had seriously hurt America. The folks over at AlterNet have published six revealing charts which show how American economic well-being has degenerated. And oddly enough, these six things started degenerating in the early years of the Reagan administration (1981-82) -- all six of them!

One of these might be a coincidence -- maybe even two. But six things traced back to the same period of time shows a clear failure of Reagan's policies. Here is what the AlterNet charts show:

1. Around 1981-82 the United States started a downward movement from a creditor nation to a debtor nation. The U.S. net international investment dropped by over 30% (as a percentage of GDP).
2. Around 1981-82 the worker's share of benefits from increased production (which had been relatively flat through both Democratic and Republican administrations) began to steadily drop. There was a small period of recovery during the Clinton's second term, but then dropped even more precipitously when Bush took office and continued Reagan's policies.
3. Around 1981-82 the concentration of wealth among the richest 10% of the population began to steadily rise. They went from owning less than 35% of America's wealth to currently owning well over half of the country's wealth.
4. Around 1982 the personal saving rate of American workers began to drop. It fell from 11.2% to a saving rate in the negative percentages (2006 was -1.1%) as workers have had to start spending their savings just to live.
5. Around 1981-82 total household debt (as a percentage of GDP) began to climb from less than 50% to over 100%.
6. Around 1981-82 nominal GDP growth began to fall from a healthy 3.0% to less than 0.5%.

Put all these factors together and you have the makings for an economy in crises -- our current recession. And every single one of them can be traced right back to policies instituted during the first Reagan administration. I'm not trying to excuse George W. Bush. He accelerated the impending crises with free-spending coupled with tax cuts. But the genesis of the current crises was the policies instituted under Ronald Reagan.

"Saint Ronnie" was not only not a good president, but he was a bad president who planted the seeds of our economic destruction.
Posted by Ted McLaughlin

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