Kevin Graham wrote:In July 1980 unemployment was at a thirty year high at 7.8% but went down gradually until Reagan took office January 1981.
Blaming the Carter recession won't work because the rates were improving until Reagan took over. Comparing this to the recession Obama inherited, which is the worst since the great Depression, is just ridiculous.
As usual, because you have no understanding of economics whatsoever, nor of how free markets work and why tax rates, regulation, fiat money creation, and other forms of government manipulation and intervention in the economy alter economic dynamics and economic behavior, posting a series of numbers such as this is utterly useless as analysis unless you have a substantive, coherent theory and template for understanding what was actually happening to produce those numbers. Just listing them is worthless.
The nation had faced three severe recessions up to 1983-84 when Reagan's tax and deregulation policies began effecting the economy and the incentives and calculations that underlie human economic behavior. The first in 1969 and the last began in 1981. In 1979, inflation hit double digits (the European norm, generally speaking) and unemployment hit 10.8% in Reagan's second year in office. The entire inflation/unemployment/economic decline syndrome was grounded fundamentally in fallacious and/or ideologically driven economic policies that, over more than a decade, devastated the American economy and moved it toward European style economic sclerosis (where Obama is desirous of taking it today).
Keynesian demand-side deficit spending, the creation of ever more new money out of thin air, high, expropriationary tax rates, bracket creep, the eating up of the value of money by "galloping" inflation (another government created tax, in essence), and an ideologically anti-business, anti-free market animus within the Carter administration (as is the case today); wage and price controls (Nixon and Carter), and blood red populist class envy chum ("windfall profits" taxes etc.) thrown to a generation of Americans suckled on the black milk of class resentment, all took their toll.
Inflation hit 11.3% in 1979, and then 13.5% (nice, European rates of inflation here, of the cutting-America-down-to-size kind so beloved of people like Obama and Chu et al). Double digit inflation hit 21.5% in 1980.
Oh, but that's not all. The poverty rate, which the "war on poverty" was initiated to alleviate, begin an uphill climb (another one actually, as welfare rolls had been expanding dramatically since the late sixties, and especially in the seventies, under Nixon) in 1978. It peaked at around 33% (up from 11.4% to 15.2% on average). Real median family income declined dramatically. Stocks collapse during the late seventies, the Dow Jones losing some 70% of its real value.
This is why just listing unemployment figures for a series of years and pointing out that Reagan was President for part of the time those same numbers had been deeply embedded in the American economy is without analytical weight. By 1989, unemployment was at 5.3% In 1984 alone, real economic growth hit 6.8% - a fifty year high mark. Those same policies initiated the longest peacetime economic boom in United States history, creating almost 20 million new jobs (most in median and upper wage areas such as construction, engineering, middle management, and a large small business boom), and brought inflation down to 6.2% by 1982 - essentially cut in half from the time Reagan entered office. A year later, it halved again, to 3.2%.
The crux of all this is that there is a small grain to truth to what Graham is saying. The only way to bring rampaging inflation of the kind underway at that time was a policy of tight money - the creation of phantom money in the quantities traditionally sought by Keynesian theory had to stop, and Reagan stopped it. Part of the 1981- 82 recession was in consequence of those tight money policies. Other aspects of it were long term holdover effects from the fundamental nature of the economy as it had developed in the seventies. Once inflation was under control, and American business had been weened of its addiction to so much funding of its activities through inflation, the economy begin to heal, and finally, took off.
It was only George H.W. Bush and a new class of "moderate" Republicans in league with the traditional leftist Democrats who killed the rate and depth of the expansion after 1989.
I could go on and on, listing the really amazing successes of the overall "Reaganomic" program, as its an object lesson in how to roll with the fundamental laws of economics (praxology) instead of kicking and screaming against them because they are ideologically indigestible.
One interesting point, however, is that, while the Reagan recovery averaged 7.1% economic growth across its fires seven quarters, Obama's policies, to the degree that they've actually had anything to do with the recovery that has occurred at all, have averaged a 1.8% economic growth rate (and remember "creating jobs" per se has no necessary relation to economic growth).
If Obama's policies have helped at all, they haven't helped very much. This is a poor substitute for what works.
Here are the monthly unemployment rates for Reagan's first term:
1981
January - 7.5
Feb - 7.4
Mar - 7.4
Apr - 7.2
May- 7.5
Jun - 7.5
Jul - 7.2
Aug - 7.4
Sep - 7.6
Oct - 7.9
Nov - 8.3
Dec - 8.5
1982
Jan - 8.6
Feb - 8.9
Mar - 9.0
Apr - 9.3
May - 9.4
Jun - 9.6
Jul - 9.8
Aug - 9.8
Sep - 10.1
Oct - 10.4
Nov - 10.8
Dec - 10.8
1983
Jan - 10.4
Feb - 10.4
Mar - 10.3
Apr - 10.2
May - 10.1
Jun - 10.1
Jul - 9.4
Aug - 9.5
Sep - 9.2
Oct - 8.8
Nov - 8.5
Dec - 8.3 9.52 average three years
1984
Jan - 8.0
Feb - 7.8
Mar - 7.8
Apr - 7.7
May - 7.4
Jun - 7.2
Jul - 7.5
Aug - 7.5
Sep - 7.3
Oct - 7.4
Nov - 7.2
Dec - 7.3
As you can see Reagan's unemployment rate averaged
9.52% over his first three years.
Now compare this to Obama's first three years which has an
8.7% monthly average.
As usual, FOX News and Droopy have no idea what they're talking about.
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