An economic system that craetes a welfare state for the rich , in otherv words the Freemarket System .
Globilization.... reagan began it.... the idea of importing....more than we export. importing cheap stuff... -MT
Reagan didnt begin globalisation, in its modern form it is more a creation of the early 20th century, with definite roots back into the industrial evolution. What Reaganomics did was soak the middle classes and poor to give money to the rich. And prepare American society to be at the forefront of the econmic changes of globalisation, which he did quit well. It was also about expanding the gvt size. http://www.cbo.gov/showdoc.cfm?index=3521&sequence=0
Well, you could say so... Obviously more right wing people than myself would have different ideas. Mind you, the link I posted came from a different website, and was posted by a conservative whos a little hacked off with George Bush, because of various laws, international adventures, and his snuggling up to the religious fundamentalists. As for wikipedia, its often interesting to read the discussion page behind the article.
In general, hail Wikipedia, but that article was too pro reaganomics for my taste. Reaganomics according to me: 1. The idea that diverting money from middle and lower class consumers to the wealthy helps all classes become wealthier because the wealthy invest and create production facilities and jobs. 2. The idea that lowering tax rates increase tax revenues by increasing the incentive and ability for individuals to earn more money and therefore increasing the base of economic activity that is being taxed. 3. The Idea that less regulation will benefit the economy and society more than regulations benefit the economy and society Reaganomics also known as supply side economics because it tries to fix economic problems by stimulating supply rather than Keynesian/Demand side economics which tries to fix economic problems by stimulating or supressing demand. Although reagan claimed to be a supply sider, his deficit spending was the standard Keynesian solution to a recession.
"Did it work?" I think, mostly no. You can't compare actual history to the course not taken; so you can never really say how Reaganomics worked. When you take money from the middle class and give it to the rich, the rich have no incentive to build industrial plants to produce products for consumers who can not afford to buy. There was a massive expansion of consumer credit during the 1980s that increased buying power. Building manufacturing plants in the USA when exposed to Chinese imports makes little sense. When you give money to the wealthy and the wealthy can not find businesses that they want to create, the wealthy will buy existing businesses. So giving money to the wealthy creates asset inflation. The price of existing assets has increased much more than the inflation rate for products. Reaganomics seems to be the best explanation for the run up in the stock market. PE rations are much higher today than their historic norms. The high PE ratios suggest that the ratio of money seeking investments to good investment opportunities has changed and now there is more money seeking fewer opportunities. The ratio of real estate sale prices to rents has also followed the same path as PE ratios. The rising asset prices does create a confidence among the wealthy and confidence stimulates the economy. Rising asset prices create capital gains which produce tax revenues. 1981, 1989 and 2001 were bottoms of the business cycles. Business cycles are the biggest influence on economies in the short term. Business cycles need to be factored out of any answer to how policies are affecting long term economic health. In general on "do lower taxes raise tax revenue?": realistic economists agree that this effect would be real if tax rates were arround 85%. The claims that this effect would take place when tax rate were lowered from 40% to 30% were false. Regulation really does hurt business and therefore hurts the economy, but allowing businesses to externalize producion costs onto to society as a whole or onto the taxpayers, also hurts the economy. Regulations need to be smart. Bad businesses should behave themselves more so that regulations could be less burdensome to the good businesses that did not need to be regulated. If one company is externalizing costs by forcing others to bear the costs, then it's competitors will also have to externalize costs in order to compete. Throwing money at the rich is not more beneficial than throwing money at the poor. You can give the rich money but you can't make them build. If the opportunities to invest in new production don't look attractive then they will just drive up asset prices. Of course, for every buyer of a stock or appartment building, their must be their must be a seller of a stock or appartment building. Eventually after several rounds of asset inflation the extra money that flows to the rich from reaganomics must be spent on something other than bidding up the price of existing income producing investments. There are only three places the money can go: new income producing facilities, charity, or luxury goods and services. I think most of the money ends up going to luxuries like fancy restaurants, cars, bigger houses, cosmetic surgery, and private luxury boxes at sporting events.
Nirakar, I htink you missed another option for the rich- looked at from the view of inside one country, the rich can take their money from said country, and instead of driving up asset prices in said country, put it into the international casino known as the global stock market. this will then not drive up local prices, but aid the growth of new competition to the original country from lower wage developing countries. Remember the 80's was the era of stock market deregulation. But you covered all the rest of it fine.
