EVER WONDER WHY THE RECOVERY from this current recession is taking so long?
Historically, sharp economic declines are followed by steep bounces back up. But not
this time.
The other night I was listening to the Mark Levin Show on the radio, which I do
sometimes, even though he is often so strident that it is hard to hear the substance.
This particular night the substance trumped the stridency. I caught his talk in the
middle so I was not sure but I thought he was reading something written by someone
else. A little research via Levin’s website showed he was. He was reading an article
entitled “Reaganomics vs. Obamanomics: Facts and Figures” by Peter Ferrara
published in Forbes magazine. My column this week is little more than a summary of
Ferrara’s.
Here is Reagan’s four-point economic program: Cut tax rates, reduce government
spending, restrain money supply growth and deregulate the economy.
What was the result? The Reagan Recovery (which started in November 1982 and
lasted 92 months, the longest peacetime expansion ever).
What happened during the Reagan Recovery? The economy grew by almost one-third
as nearly 20 million new jobs were created and the American standard of living
increased by almost 20% in seven years, and as this happened rich and poor and
middle class benefited together, with the poverty rate declining every year from 1984 to
1989 (dropping by one-sixth from its peak), while the stock market more than tripled in
value from 1980 to 1990. Further, inflation, the bane of every man, collapsed not to
revive for decades.
Meanwhile, what has been Obama’s economic program? (These policies may sound
familiar, in an inverted sort of way.) Raise tax rates (on the rich mostly), increase
government spending (the Stimulus), increase money supply growth (quantitative
easing) and re-regulate the economy (e.g., healthcare reform, financial industry
regulation, oil drilling moratorium).
What about the Obama Recovery? History will show the Obama Recovery never
happened.
As economist John Lott has said, “For the last couple of years, President Obama
keeps claiming that the recession was the worst economy since the Great Depression.
But this is not correct. This is the worst ‘recovery’ since the Great Depression.”
Is this non-existent recovery all President Obama’s fault? No, Ben Bernanke and John
Maynard Keynes deserve some of the credit as well. (Not to mention the Democrat-
controlled Congresses of 2007 to 2010.) Presidents are always given more blame and
more credit for cyclical macro-economic events than they deserve — but government
actions do matter. Policies do have an impact.
This is true with local business climate. (Ask any business person who ever tried to do
business in Chapel Hill/Carrboro.) This is true with state business climate. (If you were
paying attention back then, you may have noticed that North Carolina avoided to a
large degree the recession that preceded the Reagan Recovery.) And it is clearly true
with the economic influence of our current, massive federal government.
While Obama isn’t solely responsible for the Obama Non-Recovery, isn’t it interesting
that opposite policies do appear to correspond to such distinct economic trends?
Personally, I don’t blame Obama or the Democrats. I blame the Republicans — for not
nominating anyone who held firmly to Reagan’s economic philosophy since they last
nominated Reagan.
Gary D. Gaddy recommends reading the original Ferrara article on which this column is
based, which may be done by Googling “Reaganomics vs. Obamanomics facts and
figures” and by Googling “Editorial: A Tale Of Two Recessions” to see clear illustration
of some of these data.
A version of this story was published in the Chapel Hill Herald on Friday June 24, 2011.
Copyright 2011 Gary D. Gaddy
garygaddy.com 