Reaganomics

The term Reaganomics, a portmanteau of Reagan and economics, was used to describe, and decry, the economic policies of U.S. President Ronald Reagan during the 1980s. Reagan assumed office during a period of high inflation and unemployment, and his economic theories are claimed by his supporters to have eventually led to a strong recovery.

Support for Reaganomics

A study from the Cato Institute (a Libertarian think tank, which supports many of the premises that lie behind Reaganomics) said:

Related Topics:
Cato Institute - Libertarian - Think tank

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• Real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford-Carter years and 2.1 percent during the Bush-Clinton years.
• Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years. (source)

Laffer and Reagan were vindicated by the results of the Reagan tax cuts. Real per capita GDP increased at an annual rate of 2.6% from 1981 to 1989, after languishing at a 1.6% rate during the Carter years of 1977 to 1981. Citation: Louis Johnston and Samuel H. Williamson, "The Annual Real and Nominal GDP for the United States, 1789 - Present." Economic History Services, March 2004, URL : http://www.eh.net/hmit/gdp/

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Reagan's supply-side model changed the paradigm of government involvement in the economy. Keynesian economists were at a loss to explain why the aggregate demand increases of the 1970's did not result in improved national economic performance. Likewise, they could not explain how to reverse the shift in the Phillips curve. The Reagan-Laffer-Volcker-Milton Friedman model of improving economic performance by reducing government involvement in the economy has since gained wide currency. President Clinton ran as a "New Democrat": fiscally conservative and trade-friendly. Poland, Estonia, Latvia, Slovakia, Serbia, Romania, Georgia, Ukraine, as well as Russia and Iraq have variations of the flat tax. Governor Bill Richardson of New Mexico cut personal income taxes in 2003 "to spur growth and investment". http://www.upi.com/view.cfm?StoryID=20030219-071745-7704r

Related Topics:
Phillips curve - Milton Friedman - Bill Richardson - New Mexico

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