Reaganomics was a bad idea

[Magmia]

It was Reaganomics that made me abandon Conservatism and the Republican Party. It also made me have a great disdain for neoliberal economics.

Reaganomics was and always will be a disaster....

[Sociobiology]

to recap the US drops 19 ranks when you take into account how many people actually reach the potential predicted by the HDI. why is the average person in Slovakia healthier, safer, freer, and generally just better off than an American?
http://hdr.undp.org/en/statistics/ihdi/

America will never be like Europe, where everything is highly urban and public transportation, bicycles, and walking are the main modes of transport. The US is far more multiracial and very automobile centric and as a result, will never score as high on health no matter what. Denmark only has 5.5 million people vs. the US having 310+ million people, so to try to compare the US to European countries is folly. Both continents have fundamentally different lifestyles. I'm not all that impressed with Slovakia, it only has a GDP per capita of $23,300 which I consider to be pitiful.

I highly doubt that Denmark is as great as you put it, I'd be willing to bet that the cost of living would be higher over there than most, if not all US states.

cost of living is higher but then so is income.

Oh and remember Greenland is part of Denmark

France, Canada, the Netherlands, Luxembourg, Spain, and Norway (to list just a few) have a urbanization rates lower than the the US. Sorry no difference in "lifestyles" as you use the term.Not that it matters since things things are compensated for in HDI calculations
Thanks for supporting stereotypical american ignorance of other countries though.

As for Slovakia, that was my point , the US scores with them in things like health, crime and education. only our high GDP makes us seem better off. The US ranks more like a developing country than a developed one.

learn what the terms; per capita, rate, and percentage of the population.

[Tovaslavia]

The only thing that trickles down in Reaganomics is bullshit. The upper class is not the main buyer. Most rich people simply put their leftover money into savings accounts and Swiss banks. The biggest stimulator is the Middle Class, who spend money everyday to survive.

[No Water No Moon]

Now of course raising the GDP is very good and all but you haven't really improved the economy as much if the inflation raised while you were in office.
Well while president Reagan was in office and you guys were scratching your heads the Inflation lowered from the 9.37% it was when he entered to 3.76% when he left office, reducing inflation almost 2 thirds.

Source

...

So, was Reaganomics worth it? "Absolutely!".

I'm going to use the same basic format as before. I'm trying to keep all the data in as common a form as possible, for ease of comparison.

President	Term(s)	Inflation1/%	Inflation2/%	Av. Inflation/%	Ratio
Kennedy	1961-1963	1.23	1.06	1.220	31.28
Johnson	1963-1969	1.06	4.73	2.784	44.19
Nixon	1969-1974	4.73	9.08	5.617	60.40
Ford	1974-1977	9.08	6.37	7.658	36.29
Carter	1977-1981	6.37	9.37	8.042	29.46
Reagan	1981-1989	9.37	3.76	4.293	14.75
Bush (I)	1989-1993	3.76	2.19	3.050	10.66
Clinton	1993-2001	2.19	2.27	1.951	4.28
Bush (II)	2001-2009	2.27	1.06	2.392	5.27
Obama	2009-2011	1.06	2.73	1.647	2.68
Overall	1961-2011	1.06	9.37	3.865	23.93

Okay, again - assumptions made and limitations: We're working within the same time frame (which is nice), charting start and end inflation percentages. We know that Reagan had the biggest single drop (not by much, mind you - the 1975 drop under Ford brought the percentage to a couple of points short of that drop) during the first year of his first term - but it's hard to attribute responsibility for a first-year drop. Accepting that Reagan's first year was the biggest drop in pure percentage points - I've decided that overall inflation levels are a more helpful marker - showing the ongoing strength of the economy.

"Av. Inflation" is an average of the data points charted during a term. By this metric, Ford and Carter had the worst terms for inflation - which matches the general impression of the graphical track. Carter's term is worst, Kennedy's is best. Clinton's is best in the last few decades (it's too early for the Obama figures to be meaningful).

In order to match GDP and Inflation values during a term - I've calculated them as a ratio of average inflation per administration, over increase of GDP per administration (as trillions of dollars per year).

It relies on the rough idea that lower inflation is generally better, and higher increase in GDP is better. As such - the lower the value of the ratio, the better.

Of the reliable data (ignoring Obama, as above - because it's too early to tell) Nixon scores worst, by quite some margin - although the trend was already moving in that direction. Clinton does best, Bush (II) does slightly less well. Clinton has the best ratio of any of the reliable data.

In terms of Average inflation by term, Reagan does slightly less well than the average, which is somewhat affected by starting the term with near-record inflation. The advantage of analyzing average inflation rates is that Reagan's first year minimizes the impact of the near-record inflation level, and he's assessed mainly on overall performance.

In terms of the ratio - which assesses the combined impact of Inflation and GDP, Reagan does better than average, and considerably better than any term from Kennedy to Carter. But Clinton does best, with Bush (II) in second place - and they do it by a comfortable margin.

Note - this is just 'internal' data processing - no attempt is being made to 'excuse' or 'explain' either good or bad values.

In pure data terms, what we've learned so far is that Reagan did absolutely average on GDP, less than average on overall inflation, better than average on inflation-versus-GDP... but considerably less than best on any metric.

[The House of Petain]

Er. how is that wrong?

Trickle down economics =/= supply side economics.

The latter is a valid macroeconomic theory for promoting growth. The former is a sham.

Reagan talked about supply side economics to sell the trickle down theory.

Uh, I can't really disagree with you there. I just use the two interchangeably, since it has become somewhat of a politicized/derogatory term in the US for supply-side economics. Though I don't think Reagan engaged in supply-side economics, or at least only partially, which meant the actual theory was never really tried out. From what I understand of supply-side, it is largely dependent on finding at least one rate where tax revenue would be a non-zero maximum. Then again, it has been awhile since I've taken up an interest in economics, so I could be wrong.

[Saiwania]

France, Canada, the Netherlands, Luxembourg, Spain, and Norway (to list just a few) have a urbanization rates lower than the the US. Sorry no difference in "lifestyles" as you use the term.Not that it matters since things things are compensated for in HDI calculations
Thanks for supporting stereotypical american ignorance of other countries though.

As for Slovakia, that was my point , the US scores with them in things like health, crime and education. only our high GDP makes us seem better off. The US ranks more like a developing country than a developed one.

I don't believe that the HDI is all that much of a reliable indicator, especially given how unreliable the data is from developing countries and how the formula for it doesn't remain consistent. It astounds me that you point to Spain as a better country when it consistently has had 20% or higher unemployment for years. France has 5 weeks of mandatory vacation time for their workers, so that is an entire month of the year in productivity wasted. Luxembourg only has a population slightly higher than 500,000 people. So it would be far easier for them to obtain a higher GDP per capita.

What all of the countries you've mentioned have in common, is that they are either far more racially homogenous than the US, smaller in land area than the US, or have far less people than the US. So, many HDI indicators such as health and crime are inherently biased towards those countries. I don't believe any of those nations could do a better job of running an economy of 310+ million people. If the US is developing, why then does it have the most money?

[The Mongol Ilkhanate]

I don't see why income inequality is such a big deal.

Even if the rich are disproportionately richer, if the bottom guy only marginally improves, it still beats places where nobody improves.

Median household income is higher in America than it is in Sweden. Tax returns went up under Reagan.

I love this, when a Democrat implements policies two years after he takes office, and then the economy tanks more, it's his predecessor's fault, but when a Republican holds office for 8 years, the economy is bad when he takes it and good when he leaves it, the fact it wasn't better is his fault and his policies were bad.

[Wikkiwallana]

I don't see why income inequality is such a big deal.

Even if the rich are disproportionately richer, if the bottom guy only marginally improves, it still beats places where nobody improves.

Median household income is higher in America than it is in Sweden. Tax returns went up under Reagan.

I love this, when a Democrat implements policies two years after he takes office, and then the economy tanks more, it's his predecessor's fault, but when a Republican holds office for 8 years, the economy is bad when he takes it and good when he leaves it, the fact it wasn't better is his fault and his policies were bad.

And when median income growth is slower than inflation?

[Natair]

If it is the lowering of taxes on the rich (which I am assuming) then it's good and I'm all for it.

How exactly is it good? It didn't work...

Lowering taxes on the rich is a BAD FREAKIN' IDEA! Humans Americans are too greedy to use the extra money to help others.

[The Mongol Ilkhanate]

I don't see why income inequality is such a big deal.

Even if the rich are disproportionately richer, if the bottom guy only marginally improves, it still beats places where nobody improves.

Median household income is higher in America than it is in Sweden. Tax returns went up under Reagan.

I love this, when a Democrat implements policies two years after he takes office, and then the economy tanks more, it's his predecessor's fault, but when a Republican holds office for 8 years, the economy is bad when he takes it and good when he leaves it, the fact it wasn't better is his fault and his policies were bad.

And when median income growth is slower than inflation?

I'd like your source on that, because.

The Joint Economic Committee of Congress points out household income went up under Reagan, and down under anti-supply side successors.

"Reagan Income Growth versus Clinton Crunch," Joint Economic Committee of Congress, March
1996. Based on U.S. Census Budget Data.

[Corporate Councils]

I don't see why income inequality is such a big deal.

Even if the rich are disproportionately richer, if the bottom guy only marginally improves, it still beats places where nobody improves.

Median household income is higher in America than it is in Sweden. Tax returns went up under Reagan.

I love this, when a Democrat implements policies two years after he takes office, and then the economy tanks more, it's his predecessor's fault, but when a Republican holds office for 8 years, the economy is bad when he takes it and good when he leaves it, the fact it wasn't better is his fault and his policies were bad.

Wealth inequality is bad for a few reasons.

The first is that it tends to be a bit of a "canary in a coalmine" for imminent economic or social collapses, good examples being the French Revolution, the Russian Revolution, the 1920's leading into the Great Depression, and the most recent economic recession. Now to clarify, wealth inequality dosen't necessarily cause these things, but it can be a symptom or indicator of imminent market failures and/or social crises.

It's also not healthy for a free-market economy. The fact of the matter is that there will always be wealth inequality, because we value certain goods and services above others, doctors should make good money, and bosses probably deserve to make more than their workers, it's more of a matter of how much more.
If a CEO makes say 200 times more than their workers, it's probably unfair and also inefficient because that CEO dosen't create a demand that's 200 times larger.
One of the great myths of American economics is that somehow the upper class makes jobs, and that's patently false. Demand creates jobs. The last thing I as an employer want to do is to have to pay additional workers, but given an increase in demand for my product, I find that I will hire more people so long as it's profitable. Therefore an increase in demand tends to create an increase of jobs that need to be filled.

Going back to my earlier point, because a CEO or other "1%er" dosen't consume 200 times the amount of a worker, that means that he's not creating nearly as many jobs. It is more efficient to create jobs by making sure that the lower/middle classes (who generally consume as much as they make) have enough money to create demand.
Failing that, we risk creating a poor underclass that lacks the financial ability to consume and therefore keep a market economy working.
However, despite all of this, it dosen't leave the CEO out in the dark. Let's say that a CEO now only makes 100 times that of an average worker, but the number of workers and income of workers increases twofold, that CEO is making the same amount of money while his company makes even more money than it would have before.

The biggest problem with this is that it takes time, and if there is anything our modern business cycle punishes, it's short-term sacrifices for a long-term gain.

[Wikkiwallana]

And when median income growth is slower than inflation?

I'd like your source on that, because.

The Joint Economic Committee of Congress points out household income went up under Reagan, and down under anti-supply side successors.

"Reagan Income Growth versus Clinton Crunch," Joint Economic Committee of Congress, March
1996. Based on U.S. Census Budget Data.

Compare the chart in the spoiler from this post, with this:


While the above chart only has markings at every 10%, it clearly is well above the 0.6% average annual increase of the 50th percentile of incomes. Hell, it spends a good deal of time above the 1.6% average annual increase of the 99% percentile.

Edit: link to post corrected

[The Mongol Ilkhanate]

1. I'm curious to know what your source was. Median household went up by 4000 under Reagan.

http://htmlimg3.scribdassets.com/7080z9 ... a34838.jpg

[Wikkiwallana]

1. I'm curious to know what your source was. Median household went up by 4000 under Reagan.

http://htmlimg3.scribdassets.com/7080z9 ... a34838.jpg

CPI via wikipedia.
http://en.wikipedia.org/wiki/Inflation#Measures

Edit: also, there was a link error in my prior response, it has now been fixed. Please review.

[The Mongol Ilkhanate]

The CPI measures the cost of purchasing a product without accounting for the quality of the product. As a result, when consumers choose to buy higher-quality cars or computers, the CPI can increase despite the fact that lower-cost products are still available. While this occurred because the consumer was able to afford higher quality products, the resulting CPI increase can be a sign of economic difficulty. Additionally, the value to the consumer may increase by a greater factor than the cost, again resulting in an apparent decrease in purchasing power when measured in cost per car, as in the CPI, but an actual increase in purchasing power when measured in cost over value.

CPI doesn't work too well for me.

[Seleucas]

Well, to be fair, wage stagnation/decline started before him, but he certainly didn't help...

It would've gotten fixed if it weren't for his policies.

Doubt it.

[Moving Forward Inc]

Now of course raising the GDP is very good and all but you haven't really improved the economy as much if the inflation raised while you were in office.
Well while president Reagan was in office and you guys were scratching your heads the Inflation lowered from the 9.37% it was when he entered to 3.76% when he left office, reducing inflation almost 2 thirds.

Source

...

So, was Reaganomics worth it? "Absolutely!".

I'm going to use the same basic format as before. I'm trying to keep all the data in as common a form as possible, for ease of comparison.

President	Term(s)	Inflation1/%	Inflation2/%	Av. Inflation/%	Ratio
Kennedy	1961-1963	1.23	1.06	1.220	31.28
Johnson	1963-1969	1.06	4.73	2.784	44.19
Nixon	1969-1974	4.73	9.08	5.617	60.40
Ford	1974-1977	9.08	6.37	7.658	36.29
Carter	1977-1981	6.37	9.37	8.042	29.46
Reagan	1981-1989	9.37	3.76	4.293	14.75
Bush (I)	1989-1993	3.76	2.19	3.050	10.66
Clinton	1993-2001	2.19	2.27	1.951	4.28
Bush (II)	2001-2009	2.27	1.06	2.392	5.27
Obama	2009-2011	1.06	2.73	1.647	2.68
Overall	1961-2011	1.06	9.37	3.865	23.93

Okay, again - assumptions made and limitations: We're working within the same time frame (which is nice), charting start and end inflation percentages. We know that Reagan had the biggest single drop (not by much, mind you - the 1975 drop under Ford brought the percentage to a couple of points short of that drop) during the first year of his first term - but it's hard to attribute responsibility for a first-year drop. Accepting that Reagan's first year was the biggest drop in pure percentage points - I've decided that overall inflation levels are a more helpful marker - showing the ongoing strength of the economy.

"Av. Inflation" is an average of the data points charted during a term. By this metric, Ford and Carter had the worst terms for inflation - which matches the general impression of the graphical track. Carter's term is worst, Kennedy's is best. Clinton's is best in the last few decades (it's too early for the Obama figures to be meaningful).

In order to match GDP and Inflation values during a term - I've calculated them as a ratio of average inflation per administration, over increase of GDP per administration (as trillions of dollars per year).

It relies on the rough idea that lower inflation is generally better, and higher increase in GDP is better. As such - the lower the value of the ratio, the better.

Of the reliable data (ignoring Obama, as above - because it's too early to tell) Nixon scores worst, by quite some margin - although the trend was already moving in that direction. Clinton does best, Bush (II) does slightly less well. Clinton has the best ratio of any of the reliable data.

In terms of Average inflation by term, Reagan does slightly less well than the average, which is somewhat affected by starting the term with near-record inflation. The advantage of analyzing average inflation rates is that Reagan's first year minimizes the impact of the near-record inflation level, and he's assessed mainly on overall performance.

In terms of the ratio - which assesses the combined impact of Inflation and GDP, Reagan does better than average, and considerably better than any term from Kennedy to Carter. But Clinton does best, with Bush (II) in second place - and they do it by a comfortable margin.

Note - this is just 'internal' data processing - no attempt is being made to 'excuse' or 'explain' either good or bad values.

In pure data terms, what we've learned so far is that Reagan did absolutely average on GDP, less than average on overall inflation, better than average on inflation-versus-GDP... but considerably less than best on any metric.

Some very good points you made here.
Instead of bitching on some sort of bias that says "Reaganomics is good" - I'll accept this.
However. this seems to suggest that the two George Bush's were above the average in economy building (against what the liberals like to believe).
And George Bush 1 was a critic of Reagan's supply-side economics (or as some will say, trickle-down).
I must be catching on to something here...

[GoTulsaShock]

The middle class is still comparatively well off compared to the rest of the world.

No, the middle class is comparatively well off compared to the developing world.

Maybe it's just me, but I like an idea where we try to elevate our poorest elements, not find increasingly disadvantaged populations to compare them to.

Of course, "Hey, at least you're not starving in the Sudan" is a lot cheaper and easier than "Let's fix our problems".

That's not what I said. The average middle class guy in America has a nice house, a yard, at least one car, and a dog. That is FINE. That is not POOR, as people are suggesting. Just because the middle class doesn't occupy mansions doesn't mean they should be occupying (insert location here).

[Corporate Councils]

That's not what I said. The average middle class guy in America has a nice house, a yard, at least one car, and a dog. That is FINE. That is not POOR, as people are suggesting. Just because the middle class doesn't occupy mansions doesn't mean they should be occupying (insert location here).

The problem with this idea is that the average middle class American is a vanishing species Though the average American can still expect to bring in ~$48,000/year, that money is buying less and less, especially with the price of education and healthcare increasing at a rate that outstrips that of the rate of income growth. Moreover, this says nothing about the millions of poor Americans who don't bring in nearly that much amount of money who have to go into increasing amounts of debt to pay for everyday living expenses and have no chance to responsibly save.

[GoTulsaShock]

That's not what I said. The average middle class guy in America has a nice house, a yard, at least one car, and a dog. That is FINE. That is not POOR, as people are suggesting. Just because the middle class doesn't occupy mansions doesn't mean they should be occupying (insert location here).

The problem with this idea is that the average middle class American is a vanishing species Though the average American can still expect to bring in ~$48,000/year, that money is buying less and less, especially with the price of education and healthcare increasing at a rate that outstrips that of the rate of income growth. Moreover, this says nothing about the millions of poor Americans who don't bring in nearly that much amount of money who have to go into increasing amounts of debt to pay for everyday living expenses and have no chance to responsibly save.

That's why they call it a recession.

[Wikkiwallana]

The problem with this idea is that the average middle class American is a vanishing species Though the average American can still expect to bring in ~$48,000/year, that money is buying less and less, especially with the price of education and healthcare increasing at a rate that outstrips that of the rate of income growth. Moreover, this says nothing about the millions of poor Americans who don't bring in nearly that much amount of money who have to go into increasing amounts of debt to pay for everyday living expenses and have no chance to responsibly save.

That's why they call it a recession.

Nope, the two are not the same thing. This has been going on since well before 2008.

[GoTulsaShock]

That's why they call it a recession.

Nope, the two are not the same thing. This has been going on since well before 2008.

Was it after a certain LIBERAL signed Nafta into law?

[Wikkiwallana]

Nope, the two are not the same thing. This has been going on since well before 2008.

Was it after a certain LIBERAL signed Nafta into law?

Before then. And is there a reason for the random attack of capslock?

[GoTulsaShock]

Was it after a certain LIBERAL signed Nafta into law?

Before then. And is there a reason for the random attack of capslock?

Cart then?

[Wikkiwallana]

Before then. And is there a reason for the random attack of capslock?

Cart then?

Only if he pulled it off the minute he took office.