Reagan and Economic Policy
source: http://www.therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival...
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- peterzylstramoore
- added this
http://www.therealnews.com/t2/index.php?option=com_content&task=view&id=...
On deregulation,..."you can make an argument that in certain cases there could be--you know, of--in goods markets, that there might be regulations that were inefficient that were well drafted. You know, certainly a lot of times legislators might take a first pass at regulation which, two or three years down the road, it's discovered to have problematic side effects. You know, you can debate around that issue. But financial services, you have companies that have state guarantees. That's the bottom line with the banking system. Ever since the 1930s, we in advanced economies have made the decision we're not going to let the banking system fail. So if you don't regulate banks, you have set up the situation that we have now, which is that you have socialized losses and privatized gains. And what have we seen come out of that? Financial crises. When we had a heavily regulated financial system, we had nearly 40 years of hardly any financial crises. When we started deregulating the banks, you saw increasing in frequency and increasing in significance financial crises directly resulting from that."
Yves Smith has written the popular and trenchant financial blog "Naked Capitalism" since 2006. Yves has spent more than 25 years in the financial services industry and currently heads Aurora Advisors, a New York-based management consulting firm specializing in corporate finance advisory and financial services. Prior experience includes Goldman Sachs (in corporate finance), McKinsey & Co., and Sumitomo Bank (as head of mergers and acquisitions). Yves has written for publications in the United States and Australia, including The New York Times, The Christian Science Monitor, Slate, The Conference Board Review, Institutional Investor, The Daily Deal and the Australian Financial Review. Yves is a graduate of Harvard College and Harvard Business School.
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KSirys
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Wow... great info peterzylstramoore!!! hope everyone checks this out!
- 1 year ago
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KSirys
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peterzylstramoore
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I had posted on an earlier article a response to the idea that Reagan is responsible for both curing inflation and getting the economy going again, so I'll include it here...
Reagan had nothing to do with the drop in inflation. First off, inflation during the Carter years was heavily connected to oil prices. The first oil crisis nearly doubled the rate of inflation from 6.2% to 11.0%. As oil prices dropped, inflation dropped to 7.6% and then it basically doubled again to 13.5% during the second oil crisis. Finally, it was Vlocker and the Fed that brought down inflation by causing a huge rise in interest rates, to cause a recession until prices came down. As inflation came down Vlocker and the central bank in the summer of 82 flipped to expansionary monetary policy and the economy roared back to life. Most high ranking members of Reagan's staff were vehemently opposed to Vlocker's actions. Again it wasn't Reagan.
On economic growth, economies usually grow at their fastest rate coming out of recession (except when the recession is caused by a housing market bubble, because one of the basic tools to expand the economy is bringing interest rates down, which has the biggest effect on buying, building and fixing homes-- when there is a housing market bubble people still do not want to invest in homes b/c they remain overpriced, and so both purchases or renovations are not profitable). Reagan benefited from coming out of the Recession (caused by the Fed to defeat inflation), when the Fed switched to expansionary policy.
On economic growth distribution Matters.
Under Reagan
quintile total change change per year
Poorest 20% +7.6% +0.9%
Second 20% +11.3% +1.3%
Third 20% +12.0% +1.4%
Fourth 20% +13.8% +1.6%
Richest 20% +27.0% +3.0%Under Bush Sr.
quintile total change change per year
Poorest 20% -7.9% -2.0%
Second 20% -6.5% -1.7%
Third 20% -5.7% -1.5%
Fourth 20% -3.1% -0.8%
Richest 20% +3.3% +0.8%Under Carter
quintile total change change per year
Poorest 20% +16.9% +2.3%
Second 20% +15.4% +2.1%
Third 20% +15.2% +2.0%
Fourth 20% +15.0% +2.0%
Richest 20% +18.9% +2.5%To everyone but the richest 20% did better under Carter compared to Reagan.
Reagan also pushed a hyperactive sort of free trade that led to the offshoring of American industry, and combined this with deregulating finance, which started the de-industrialization and financialization of the American Economy. Unfortunately this obsession with free trade and deregulation has continued since, and was largely pushed by Carter as well. But it was under Reagan that these policies took off.
Reagan had terrible economic policies.
http://www.paulkienitz.net/reagan-vs-clinton.html
http://www.huppi.com/kangaroo/L-carterreagan.htm - 1 year ago
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peterzylstramoore
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peterzylstramoore
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peterzylstramoore:
The numbers on the image are from Larry Bartels "Unequal Democracy"...
- 1 year ago
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peterzylstramoore
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peterzylstramoore
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peterzylstramoore:
Also just to make clear that the Democrats are no princesses and are not socialists however we try to chastise them, that all sectors growing approximately equally at between 2 and 2.5% means everyone's income would double about every 30 to 35 years.
This means if someone is making a million dollars his income will double on average to 2 million in 35 years, gaining an entire million.
A person from the bottom quintile if he were say on average making 20,000 his income will also double and so will increase by 20,000.
It only means that under Democrats our incredibly unequal distribution of income won't get increasingly worse as a percentage though the absolute disparity will increase.
- 1 year ago
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peterzylstramoore
