Reagan / Thatcher Economics discusion

Recently I have been reading about the stagflation of the 1970's and also listening to various economists on this issue. It seems that the postwar Keynesian policies, while very successful up until the 1970s, caused the labour markets to become too tight, and allowed for an inflation crisis to occur at the same time as a recession (which was seen as impossible beforehand). Then Reagan and Tatcher came along and shifted the economic policies of their countries away from targeting unemployment, and towards reducing inflation. They achieved this by privatization, deregulation, union crackdowns, globalizing the labour market, etc. These policies did reduce inflation, but they also lead to a whole other set of problems. Reagan/ Thatcherism has now basically morphed into neoliberalism, which is the current world order it seems. Now, as a traditional leftist, I am obviously not happy with the way things turned out; but as an economic illiterate, I also do not know what the alternative was to the stagflation crisis. Will Keynesian policies always inevitably lead to this problem? What are the solutions?

People cherry pick Keynes. He said governments should spent during a recession. Politicians picked right up on that. But he also said governments should save during boom times in order to spend during the next recession, thus leveling out the normal highs and lows of Capitalism. Politicians ignored that part.

There is a fine line between not regulating enough and regulating too much. Bill Clinton abandoned Glass-Spiegal which kept investment banking and commercial banking separated. Specifically, now being allowed to underwrite insurance led to lots of bad loans, and a bubble in the housing and financial markets. We all know the result.

Capitalism does have it's ups and downs; trying to level them out has been the goal of regulation for many decades. This fine-tuning of the economy has had mixed results, largely due to unintended consequences.

The main reason we have low inflation today is technology is inherently de-flationary. Renewables replacing fossil fuels drives down costs. Computers doing more work more efficiently lowers costs. Electric cars replacing combustion engines is more efficient and will be cheaper. Even medical technology is now driving down costs as more efficient diagnostic tools become available.

Our economic problem for the future is that all economies, in all countries, are based on a growth model. Continued growth is the only way they stay successful. But can the planet, which is finite, support unlimited population growth? Can it afford 10 billion people who all want red meat, air conditioning, bigger, better homes, cars and the American middle class lifestyle? IMO; we have to develop a successful model not based on unlimited growth. A few people are working on it, but nothing I can see as do-able yet.

I can not say about Thatcher, but the Reagan years had a high amount of government stimulus to the economy. Economic growth lagged behind the increase in federal government debt on a % and actual dollar basis

His admin increase the debt to GDP from 31% to 51%

His admin increase the dollar value of the debt from 994 billion to 2867 billion. A 288 % increase, higher than any president since at least 1960, and yes higher than Obama or Bush 2

The good times of the Reagan years was due to massive government stimulus (ie running large deficits)

As for inflation, that was tamed by Paul Volcker who jacked interest rates up in 1981-1982 leading to a large recession. After which inflation was contained

SeAnThOmAs said:

Recently I have been reading about the stagflation of the 1970's and also listening to various economists on this issue. It seems that the postwar Keynesian policies, while very successful up until the 1970s, caused the labour markets to become too tight, and allowed for an inflation crisis to occur at the same time as a recession (which was seen as impossible beforehand). Then Reagan and Tatcher came along and shifted the economic policies of their countries away from targeting unemployment, and towards reducing inflation. They achieved this by privatization, deregulation, union crackdowns, globalizing the labour market, etc. These policies did reduce inflation, but they also lead to a whole other set of problems. Reagan/ Thatcherism has now basically morphed into neoliberalism, which is the current world order it seems. Now, as a traditional leftist, I am obviously not happy with the way things turned out; but as an economic illiterate, I also do not know what the alternative was to the stagflation crisis. Will Keynesian policies always inevitably lead to this problem? What are the solutions?

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You should ask the moderators to move this thread to the Government Spending and Debt forum where you will have a more lively discussion.

Lord Tammerlain said:

I can not say about Thatcher, but the Reagan years had a high amount of government stimulus to the economy. Economic growth lagged behind the increase in federal government debt on a % and actual dollar basis

His admin increase the debt to GDP from 31% to 51%

His admin increase the dollar value of the debt from 994 billion to 2867 billion. A 288 % increase, higher than any president since at least 1960, and yes higher than Obama or Bush 2

The good times of the Reagan years was due to massive government stimulus (ie running large deficits)

As for inflation, that was tamed by Paul Volcker who jacked interest rates up in 1981-1982 leading to a large recession. After which inflation was contained

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Interesting, thank you.

So what would you have had Reagan do that would have made his good times real instead of slight of hand?

Lord Tammerlain said:

I can not say about Thatcher, but the Reagan years had a high amount of government stimulus to the economy. Economic growth lagged behind the increase in federal government debt on a % and actual dollar basis

His admin increase the debt to GDP from 31% to 51%

His admin increase the dollar value of the debt from 994 billion to 2867 billion. A 288 % increase, higher than any president since at least 1960, and yes higher than Obama or Bush 2

The good times of the Reagan years was due to massive government stimulus (ie running large deficits)

As for inflation, that was tamed by Paul Volcker who jacked interest rates up in 1981-1982 leading to a large recession. After which inflation was contained

Click to expand...

Thats bull **** of-revisionism of-course.
We blew through 10 Trillion dollars under Obama and that included his stimulus and never cracked 2 percent growth of GDP

In fact the Obama economy remained so anemic throughout his Presidency that the FED was forced to zero out their discount rate for the entirety of his two terms, and it still didnt help

Massive amounts of wealth and investment capital sat idle, Corporations kept trillions offshore and Banks depositied trillions of dollars in excess reserves at the FED where it sat idle earning a whopping .25 percent.

Govt stimulus didn't lead to substantial economic growth under Obama, it led to massive new debt and deficits, and it wasn't responsible for the economic boom we had during the Reagan years.

A supply side pro-growth tax and economic policy were responsible.

SeAnThOmAs said:

Recently I have been reading about the stagflation of the 1970's and also listening to various economists on this issue. It seems that the postwar Keynesian policies, while very successful up until the 1970s, caused the labour markets to become too tight, and allowed for an inflation crisis to occur at the same time as a recession (which was seen as impossible beforehand). Then Reagan and Tatcher came along and shifted the economic policies of their countries away from targeting unemployment, and towards reducing inflation. They achieved this by privatization, deregulation, union crackdowns, globalizing the labour market, etc. These policies did reduce inflation, but they also lead to a whole other set of problems. Reagan/ Thatcherism has now basically morphed into neoliberalism, which is the current world order it seems. Now, as a traditional leftist, I am obviously not happy with the way things turned out; but as an economic illiterate, I also do not know what the alternative was to the stagflation crisis. Will Keynesian policies always inevitably lead to this problem? What are the solutions?

Click to expand...

yeah, I could NEVER wrap my brain around the whole idea that gazillions of red blooded Americans some how saw RayGun as such a great POTUS, when I see RayGun as some cheap second rate GOP actor guy that gave Iran a bunch of weapons, claimed he couldn't remember what was for breakfast when questioned by The Tower Commission (I met John Tower in Dallas, TX not long before he was murdered), and placed the US in a never ending cycle of EXPONENTIALLY increasing DEBT.

That whole idea of 'trickle down' is basically like, OK; we're the rich mother****ers & IF you guys get a damn thing it might be a Hershey bar .........

RayGun, what a great president ............................................. FFS ..............

Speaking of stag-flation... #AuditTheFed & we need a balanced budget amendment. The congress can only cause stagflation, because they're allowed to be irresponsible with our money. Pushing something we can all agree on like balancing the budget, will put Congress on watch.

Fenton said:

Thats bull **** of-revisionism of-course.
We blew through 10 Trillion dollars under Obama and that included his stimulus and never cracked 2 percent growth of GDP

In fact the Obama economy remained so anemic throughout his Presidency that the FED was forced to zero out their discount rate for the entirety of his two terms, and it still didnt help

Massive amounts of wealth and investment capital sat idle, Corporations kept trillions offshore and Banks depositied trillions of dollars in excess reserves at the FED where it sat idle earning a whopping .25 percent.

Govt stimulus didn't lead to substantial economic growth under Obama, it led to massive new debt and deficits, and it wasn't responsible for the economic boom we had during the Reagan years.

A supply side pro-growth tax and economic policy were responsible.

Click to expand...

What is bull about it

The % debt increase was the highest under Reagan than any other president. Reagan used government debt to stimulate the economy

Fenton said:

Thats bull **** of-revisionism of-course.
We blew through 10 Trillion dollars under Obama and that included his stimulus and never cracked 2 percent growth of GDP

Click to expand...

First off fenton, that is factually inaccurate. GDP cracked 2% several times. I believe your inaccuracy is related to your emotional need to believe conservative narratives

https://www.bea.gov/iTable/iTable.c...rvey&1903=1&1904=2009&1905=2018&1906=a&1911=0

Second, you're ignoring that the Great Bush Recession was the worst recession since the depression. Bush's destruction of the economy was massive and thorough.

Third, you simply can not underestimate the effects of republican obstruction and sabotage on the recovery. Republicans sudden concern for deficits was only to hamper the recovery. Even you cant deny their flaming lying hypocrisy concerning deficits. And the impact of continually telling their obedient base that the stimulus will cause "hyper inflation, dollar collapse, market to zero" and "President Obama is an out of control Kenyan muslim terrorist" cant be measured but its impact was surely negative. Buts it only purpose was to scare people and the obedient fear from conservatives allowed republicans to undermine the recovery with no accountability.


Now fenton, when you can address my post honestly and intelligently, we can then discuss your factually inaccurate claim of how much was added to the debt under President Obama. Your special word choice of "blew through" tells me you already know its not correct.

Vern said:

First off fenton, that is factually inaccurate. GDP cracked 2% several times. I believe your inaccuracy is related to your emotional need to believe conservative narratives

https://www.bea.gov/iTable/iTable.c...rvey&1903=1&1904=2009&1905=2018&1906=a&1911=0

Second, you're ignoring that the Great Bush Recession was the worst recession since the depression. Bush's destruction of the economy was massive and thorough.

Third, you simply can not underestimate the effects of republican obstruction and sabotage on the recovery. Republicans sudden concern for deficits was only to hamper the recovery. Even you cant deny their flaming lying hypocrisy concerning deficits. And the impact of continually telling their obedient base that the stimulus will cause "hyper inflation, dollar collapse, market to zero" and "President Obama is an out of control Kenyan muslim terrorist" cant be measured but its impact was surely negative. Buts it only purpose was to scare people and the obedient fear from conservatives allowed republicans to undermine the recovery with no accountability.


Now fenton, when you can address my post honestly and intelligently, we can then discuss your factually inaccurate claim of how much was added to the debt under President Obama. Your special word choice of "blew through" tells me you already know its not correct.

Click to expand...

VERN, when it comes to factually inaccurate and dishonest post, threads and posters here at DP, youre public enemy #1

If I were forced to describe your influence here I would describe your contributions to DP as an infection, as a highly resistant strain of syphilis and that the forum is worse off for them

No one here currently or has ever taken you or the trash you leave behind seriously, and the fact your oblivious to that is absolutely hillarious

Fenton said:

VERN, when it comes to factually inaccurate and dishonest post, threads and posters here at DP, youre public enemy #1

If I were forced to describe your influence here I would describe your contributions to DP as an infection, as a highly resistant strain of syphilis and that the forum is worse off for them

No one here currently or has ever taken you or the trash you leave behind seriously, and the fact your oblivious to that is absolutely hillarious

Click to expand...

Fenton, I was hoping you would respond to my post honestly and intelligently. You clearly did not. Your angry deflection and incessant whining about me is not debate. Anyhoo, I pointed out your GDP claim was factually inaccurate and provided a link to prove it. I also explained the republican obstruction to sabotage the recovery.

Instead of being angry that I was right, why not graciously accept the truth? Its crazy I know but you have to do start some time.

SeAnThOmAs said:

Recently I have been reading about the stagflation of the 1970's and also listening to various economists on this issue. It seems that the postwar Keynesian policies, while very successful up until the 1970s, caused the labour markets to become too tight, and allowed for an inflation crisis to occur at the same time as a recession (which was seen as impossible beforehand). Then Reagan and Tatcher came along and shifted the economic policies of their countries away from targeting unemployment, and towards reducing inflation. They achieved this by privatization, deregulation, union crackdowns, globalizing the labour market, etc. These policies did reduce inflation, but they also lead to a whole other set of problems. Reagan/ Thatcherism has now basically morphed into neoliberalism, which is the current world order it seems. Now, as a traditional leftist, I am obviously not happy with the way things turned out; but as an economic illiterate, I also do not know what the alternative was to the stagflation crisis. Will Keynesian policies always inevitably lead to this problem? What are the solutions?

Click to expand...

Keynes was not followed by the planners of our economy. Keynes assumes that in good times, the coffers are filled and that the surplus is drained as needed when bad times hit.

Only the second part has been followed. Our elected thieves decided that getting votes was their only job and that buying votes was the best way to get that job done.

Stagflation was the issue and the Reagan prescription fixed the "Stag" part of the word, but the in "flation" part raged on. At least there were jobs to gain after Reagan took the reigns.

Labor markets too tight? I'm not sure what you are saying in that. With the influx of better cars from foreign sources, the Big Three automakers were displaced as the only show in town and the better shows drew much of their audience. Every manufacturing job supports 4 or 5 other jobs. The job market in my view was far too loose.

Keynes had nothing to do with GM producing butt ugly, underpowered, unstable, uncomfortable, rattling, rusting relics obsolete before they left the showroom floor.

I feel you may be making an unjustified link between unrelated ideas that happen to have occurred at the same time.

Vern said:

Fenton, I was hoping you would respond to my post honestly and intelligently. You clearly did not. Your angry deflection and incessant whining about me is not debate. Anyhoo, I pointed out your GDP claim was factually inaccurate and provided a link to prove it. I also explained the republican obstruction to sabotage the recovery.

Instead of being angry that I was right, why not graciously accept the truth? Its crazy I know but you have to do start some time.

Click to expand...

Remember to clean up after yourself VERN.
The forum is starting to look like a Californian homeless encampment, and the trash you leave behind is a big reason why

Fenton said:

Remember to clean up after yourself VERN.
The forum is starting to look like a Californian homeless encampment, and the trash you leave behind is a big reason why

Click to expand...

Oh fenton, because I feel sorry for you, I'll ignore your cowardly and dishonest deflection. Its not your fault you cant address your factually inaccurate claims.

WarmPotato said:

Speaking of stag-flation... #AuditTheFed & we need a balanced budget amendment. The congress can only cause stagflation, because they're allowed to be irresponsible with our money. Pushing something we can all agree on like balancing the budget, will put Congress on watch.

Click to expand...

lol ... Far from "all of us" agree on a balanced budget being a good idea.

The problem is not adjustments to system. But the system itself.

Capitalism is dying & were all living though it.

Vern said:

First off fenton, that is factually inaccurate. GDP cracked 2% several times. I believe your inaccuracy is related to your emotional need to believe conservative narratives

https://www.bea.gov/iTable/iTable.c...rvey&1903=1&1904=2009&1905=2018&1906=a&1911=0

Second, you're ignoring that the Great Bush Recession was the worst recession since the depression. Bush's destruction of the economy was massive and thorough.

Third, you simply can not underestimate the effects of republican obstruction and sabotage on the recovery. Republicans sudden concern for deficits was only to hamper the recovery. Even you cant deny their flaming lying hypocrisy concerning deficits. And the impact of continually telling their obedient base that the stimulus will cause "hyper inflation, dollar collapse, market to zero" and "President Obama is an out of control Kenyan muslim terrorist" cant be measured but its impact was surely negative. Buts it only purpose was to scare people and the obedient fear from conservatives allowed republicans to undermine the recovery with no accountability.


Now fenton, when you can address my post honestly and intelligently, we can then discuss your factually inaccurate claim of how much was added to the debt under President Obama. Your special word choice of "blew through" tells me you already know its not correct.

Click to expand...

2% is wrong. Obama's annual GDP growth never hit above 3% though. which is an anemic economy at worst stagnant is a better term. The feds and economist shoot for 3% or higher for a nice growth economy annually.
I get sick of hearing about the recession.

The recession was the recession. If you combine both of bushes recessions the first one in 2000 and the 2nd one in 2001 or shortly after they are about comparable.
TARP had little to no impact on the recession. why? the money was not spent correctly and wasted by governments.
They would have been better off giving all the money to american families. that would have given each american family 9,500 bucks in their pocket.
that would have had a bigger impact on the economy than anything that TARP did.

the impact was negative because the banks used all the funds to shore up their reserves. there are multitudes of issues.

https://www.factcheck.org/2008/10/who-caused-the-economic-crisis/

please see The Real Deal at the bottom.
It wasn't just bush.

kjwins said:

The problem is not adjustments to system. But the system itself.

Capitalism is dying & were all living though it.

Click to expand...

not really we would be way worse off.

ludin said:

not really we would be way worse off.

Click to expand...

Things will get worse. Hence were living though it. This country is no shape to take the pain that is coming.

SeAnThOmAs said:

Recently I have been reading about the stagflation of the 1970's and also listening to various economists on this issue. It seems that the postwar Keynesian policies, while very successful up until the 1970s, caused the labour markets to become too tight, and allowed for an inflation crisis to occur at the same time as a recession (which was seen as impossible beforehand). Then Reagan and Tatcher came along and shifted the economic policies of their countries away from targeting unemployment, and towards reducing inflation. They achieved this by privatization, deregulation, union crackdowns, globalizing the labour market, etc. These policies did reduce inflation, but they also lead to a whole other set of problems. Reagan/ Thatcherism has now basically morphed into neoliberalism, which is the current world order it seems. Now, as a traditional leftist, I am obviously not happy with the way things turned out; but as an economic illiterate, I also do not know what the alternative was to the stagflation crisis. Will Keynesian policies always inevitably lead to this problem? What are the solutions?

Click to expand...

I believe you are mischaracterizing both Keynes and what happened in the early 1970s.

One basic point, the Federal Reserve has a dual charge of maximizing employment and keeping inflation within boundaries, currently 2%. The early 1970s were plagued with the 1973 oil embargo that radically raised fuel prices, hence inflation as prices of everything rose — while also resulting in scale back of spending, which is recessionary.

By the 1980s, when Reagan was president, the economy already adjusted. The economic growth under Reagan wasn’t as robust as the economic expansion under Clinton, and is undeserving the Reagan lionizations. Clinton did all the opposite policies of Reagan and the economy boomed bigger.

There is no evidence that anti union policies, reductions in regulations, etc. are good for the economy.

kjwins said:

Things will get worse. Hence were living though it. This country is no shape to take the pain that is coming.

Click to expand...

*sigh* ambiguous arguments are not really arguments.

ludin said:

*sigh* ambiguous arguments are not really arguments.

Click to expand...

True, but seeing that most of the country has not recovered from the 08 crash, which was a result of these neoliberal polices. Its not hard to predict the next crash will be worse.

Were making all the same mistakes that lead to 08. People in this country are not ready to deal with our fading supremacy, that at this point is held together with the paper & glue that is the petro dollar, that is our military.

I have even heard that the last crash could have ended the empire if Russia & China had called in their bets. China said NO because it needed the US market to buy the stuff they produce. As Americans run out of credit China will not be so nice when the next bubble of capitalism blows.



Lets also not forget that the country is home to 300 million guns. Hard times & guns could never be a good mix.


Ambiguous YES, but also possible.

kjwins said:

True, but seeing that most of the country has not recovered from the 08 crash, which was a result of these neoliberal polices. Its not hard to predict the next crash will be worse.

Were making all the same mistakes that lead to 08. People in this country are not ready to deal with our fading supremacy, that at this point is held together with the paper & glue that is the petro dollar, that is our military.

I have even heard that the last crash could have ended the empire if Russia & China had called in their bets. China said NO because it needed the US market to buy the stuff they produce. As Americans run out of credit China will not be so nice when the next bubble of capitalism blows.



Lets also not forget that the country is home to 300 million guns. Hard times & guns could never be a good mix.


Ambiguous YES, but also possible.

Click to expand...

Umm yes the markets have more than recovered from the 08 crash.
No we are not making the same mistakes. Lending is at a reasonable level.

We are not running out of credit.
the conspiracy theory forum is ----->