The Legacy of Reaganomics
The Great Recession of 1979-82 came at the end of a gradual deterioration process in our economy, the dramatic culmination of a long wave in its downswing phase. Like previous manifestations of acute structural crisis, it marked a turning point. In its wake the economy had to undergo restructuring on a scale far beyond mere recessionary adjustments in the normal course of business cycles. Existing policies, no longer able to counteract rapidly worsening conditions in the economy, lost their legitimacy. New economic theories and politicians able to turn those ideas into a vision of change emerged. Frightened and frustrated voters were willing to give both a try. And so the way was paved for reform. In 1980 this scenario catapulted Ronald Reagan into the White House.
Whether they supported or opposed his policies, most Americans agree that Reagan's presidency was one of great historic significance. Very few presidents before him had managed to alter the political landscape of our nation as profoundly as he did. His policies marked a radical break with the dominant (New Deal) tradition of the past five decades. The first president since Eisenhower to serve two full terms, Reagan had enough time to implement his reform program and to see it bear fruit. In crucial areas of economic policy (e.g., taxes, budget deficits, trade, exchange rates) his administration had to change course in the face of unforeseen problems, and it did so without losing face. In the end Reagan retired with his extraordinary popularity largely intact, a truly amazing feat after such a long string of failed presidencies following Kennedy's assassination in 1963.
His political achievements notwithstanding, Reagan's policies failed in the end to revive the U.S. economy. They helped to bring about short-term prosperity, but only at the expense of deepening long-term erosion. His successor, former Vice President George Bush, won in 1988 by presenting himself as the guardian of the Reagan Revolution. Elected as a caretaker president, he also acted like one throughout his term. Having spent most of his political career in the arena of foreign policy, Bush was not particularly drawn to domestic policy