Ronald Reagan was the President of the United States from 1981 to 1989. For those on the right, he was seen as a godlike figure who made America militarily strong again and symbolized a conservative economic ideology known as the "Reagan Revolution." However, for Democrats and those on the left, he is synonymous with the flaws of capitalism and the increase in inequality among classes.
In my opinion, the reality lies somewhere in between. Reagan's neoliberal policies, also known as "Reaganomics," have both legitimate and correct aspects, as well as negative effects and implementation problems. Therefore, when it comes to Reagan's economic policy, we need to consider the situation in which it was implemented, the short-term effects, the long-term effects, and the numbers.
In terms of the situation at the time of implementation, we can say that the United States was not in the best economic shape when he took power.
It was suffering from economic stagnation, nearly 14% inflation, and high energy and fuel prices. Reagan proposed two concepts: Trickle-down economics and Supply-side economics.
In other words, reducing taxes, cutting spending, reducing regulations, reducing funds for social services, and major spending on the military. This way, ordinary people would keep more of their income, while large companies would expand, create new jobs in the process, and raise the standard of living.
One of the first things he did as president was to cut taxes and reduce regulations. This policy caused a recession between July 1981 and November 1982, but it did have positive economic results in the following years, leading to a reduction in inflation from 13.5% to 4.1% and a period of robust economic growth of about a total of 30% during his eight years in office.
However, it is worth noting that Reagan did not fulfill his promise to reduce spending and the size of government. A relevant observation is that the budget deficit during Reagan's presidency increased, and the US debt increased from $738 billion to $2.1 trillion, while the size of the state apparatus did not decrease.
The reason for this is that what Reagan did was equivalent to saving $10 by cutting funds for social programs and spending $25 on the military, so the budget calculation was not positive. This was a problem that could be temporarily ignored but would certainly resurface later and could not be avoided.
And it did come back to haunt Reagan's successor, George Bush Sr. (who was also Reagan's vice president for eight years). Due to the deficits left by Reagan, Bush had to raise taxes, contrary to his electoral promise of "Read my lips: No new taxes."
In terms of the long-term effects of Reaganomics, they had a negative effect in terms of setting the Republican trend to disregard budget deficits and external debt. Additionally, through massive deregulation of large corporations, Reagan laid the foundation for the current situation where a few giant companies that disregard the needs of employees control almost the entire market. Thus, the wealth trickle-down from companies that Reagan aimed for did not occur and hurt the middle class in the long run. This undermined one of the main goals of the so-called "Reagan Revolution."
In conclusion, the "Reagan Revolution" and Reaganomics had a positive economic effect in terms of economic growth and recovery, both economically and militarily. However, they planted the seeds for the current near-total monopolization of the American market, led to an increase in income inequality among classes and after all it failed to match the tax cuts with the spending.
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