The statistics reveal three major trends during the 80s:

First, the Reagan-Bush era greatly polarized the nation's wealth and income. The administration pursued multiple policies (tax cuts being only one) which helped redistribute wealth from the middle class to the top 1 percent. In response to their eroding standard of living, Americans formed two-paycheck households and went deeply into personal debt. Despite these efforts, this will be the first generation unable to live as well as its parents. Today, America has the greatest level of inequality in the entire industrialized world, not to mention its own postwar history. The fact that we have still not restored the tremendous growth we enjoyed from 1939 to 1973 is a damning indictment of the effectiveness of concentrating capital in the hands of a few.

Second, America went from being the world's greatest creditor nation to its greatest debtor nation. The public perceives this as a much greater problem than economists do, however. Often overlooked is the fact that we got something for our debt. Also overlooked is that we owe most of the money to ourselves. However, this should not diminish the true problems caused by the debt. The debt crowds out private investment; interest rates make debt an inefficient form of spending money; and the interest is collected by the banking community, which only adds to our inequality of wealth and income.

Third, the economy experienced growing turbulence in the 80s, as entire industries rose and fell. But several trends were visible. The economy moved from a moderated meritocracy towards a more unrestricted one. Congress favored the approach that regulation of business should not be improved or fine-tuned, but eliminated completely. The fierce competition that resulted produced a record number of business failures -- arguably, a healthy by-product of competition, since it weeds out the weak. But unrestricted competition also resulted in a record number of corporate mergers and takeovers. Today, productive and economic power is concentrating in the hands of a relatively small group of players. The problems of monopolies (price hikes, non-competitiveness, inefficiency, abuses of power, etc.) are well-known. One of the advantages of moderated meritocracies is that they allow sustainable competition.

Other than these three developments, very little changed in the 80s. Supply-siders were not successful in fulfilling their promise of restoring the economic growth of postwar America. The economic trends that are currently affecting America are deep and measured in decades, and the 80s were only a small part of them. At best, Reagonomics only slightly improved or worsened these long-term trends. In most cases, they became somewhat worse; perhaps the most troubling development was the decline of American leadership in the global economy.

Policy recommendations to undo the damage are difficult to make, because true political scientists and economists admit that these problems are deep and poorly understood. (Interestingly, those who know the least are usually the ones who claim to know the most.) But although specific policies remain elusive, there are a few clearly desirable outcomes that Americans should seek, one way or another. Debt of all kinds should be reduced; savings and investment should be increased. The middle class should be strengthened by making it larger and wealthier. And we should move to a sustainable economy, not one judged successful only if it grows. Sooner or later economic and population growth are going to reach their limits, and we will certainly be kinder to ourselves than nature would be in determining how those limits are reached.

Your comments concerning this webpage are welcome. I am committed to improving or correcting all arguments and statistics brought to my attention. My e-mail address is

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