Ronaldus Reagan and The Roaring 1980s

The 1920s and the 1980s are the best examples of how capitalism pure and simple works to better society both socially and economically. They are examples of how if the government steps aside, people prosper.

While the 1920s were perhaps the best example of how capitalism works, the 1980s might just be the best second example. And this was all lead by the conservative Ronald Reagan.

The following is the evidence that the 1980s was a perfect example of what happens when conservatism-capitalism is set free. This is a perfect example of what happens when taxes and regulations are reduced, and government has a limited role on the lives of Americans.

It pretty much goes according to Say's Law, which states that supply creates its own demand. As taxes go down, this gives businesses an incentive to spend and invest, and this results in more job creation. More supply of workers paying more taxes results not just in a decreased unemployment, but also more revenue to the government.

If you get government out of the way, supply will therefore increase because people have more of an incentive to save and invest, and the economy will grow.

Consider that when Reagan took office the top marginal tax rate was 70%, and when he left office it was 28%.

Here are the stats of the 1980s. Less government results in: 

1.  Government revenue nearly doubled:  The 70% tax rate when he entered office generated about $500 billion in revenue to the federal government.  When Reagan left office in 1989, the top marginal rate was 28%, and the take, the revenue to the Treasury had nearly doubled, to almost $1 trillion. 

2.  More charitable givings. According to National Review, "charitable donations by individuals rose from $64.7 billion (1990 dollars) in 1980 to $102 billion in 1989, an increase of 57.7 percent. Moreover, after declining relative to national income during the seventies, charitable donations rose from 2.1 percent of income in 1979 to a record 2.7 percent in 1989. 

3.  Productivity tripled: A study performed and reported by the New York Times that the rate of manufacturing productivity growth had tripled during the 1980s. Likewise, the jobs created were not just hamburger flipping jobs, but jobs of the higher skill categories.

4. The poor and rich got richer: In the period of 1983 to 1989, the poorest 20 percent of the population saw their income rise 12%, and the richest 5th of the population also saw their income rise 12%.

5. Inflation was low: Inflation was low during the 1980s, as low as 5% even though economic growth was sustained during most of the 1980s. This happened despite the theory that inflation could not go down at the same time unemployment went down.

6. Despite tax cuts, tax revenue increased: Reagan cut taxes in 1983 from 70-50% on the top wage earners, and tax revenue, according to the Heritage Foundation (I wrote about this here), rose 99.4% during the 1980s, and by 1989 tax revenues increased by 54%. In fact, during the 1980s federal revenue rose from $550 billion to $991 billion.

7. The rich did not get richer at the expense of the poor: In fact, the share of total tax revenues which was paid by those making $40,000 or more increased from 45.1 percent to 48 percent. The tax burden of those making less than $40,000 dropped by the equivalent percentage.

8. Job creation: About 20 million jobs were created during the 1980s and 82% of those jobs were higher-skilled and better paying jobs.

9. Economic growth: From 1982 to 1990 the United States experienced 96 continuous months of economic growth, the longest peacetime economic expansion in history up to that time.

10. Stock market: Nearly tripled in value during the 1980s

11. Average real family income grew by well over 15% from 1982 to 1989, according to the U.S. Bureau of the Census

12. For the poorest 5th of Americans, real income grew almost 12%

13. Families earning more than $50l000 (in 1990 dollars) went from less than 25% of families in 1980 to 31% in 1991.

14. The percentage of families earning less than $15,0000 dropped.

15. According to the U.S. Treasury's Office of Tax Analysis, of those who were in the bottom-5th income bracket in 1979, 65% jumped at least two income brackets during the 1980s. More made it to the top and stayed than made it to the bottom.

16. Incomes rose: Federal Reserve data show that families with incomes between $10,000 adn $50,000 a year experienced a higher percentage of growth in net dollars than those in the top one one-fifth income group. Households were five times more likely to have their incomes rise than have them fall.

17. The rich paid more taxes: The top 1% paid more than 25% of all federal income taxes in 1990, a 40% increase over 1980, according to the Congressional Budget Office. The bottom 60% paid 11% of federal taxes in 1990, 20% less than in 1980. Plus, all income groups paid less taxes, with the poor receiving the most relief, and the rich receiving the least relief. Yet the rich actually paid a greater share of the income tax in relation to their income.

18. Blacks made more money: The black middle class grew rapidly from 2.6 million households with incomes of $25,000 or more in 1979 to 3.9 million in 1989. In fact, while between 1979 and 1982 poor blacks rose by more than 2 million, between 1982 and 1989 the number of poor blacks fell by 400,000.

19. Fewer in poverty: Between 1983 and 1989 the total population under the poverty line decreased by 3 million people, with an unprecedented number of poor entering the work force.

20. Federal spending increased: Federal spending on poor for income, food, health care, housing, education, training, and social services increased.

21. Charitable givings increased: Charitable givings by corporations and individuals increased to record levels during the 1980s. In fact, during the 1980s charitable givings was 55% higher in the 1980s than in the previous 20 years. In 1992 Americans gave 2.01% of their income to charity, the highest rate since 1971. Donations totaled $124.31 billion, up 6.4% after inflation. Individuals gave $104.98 billion, representing the greatest percentage of total family income given to charity since 1963. This was a result of the government taking less allows people to earn more, which resulted in providing Americans with greater freedom of which to decide how to spend their money. When the government decides how to spend your money, people give less. When the government takes too much out of people's checks, they tend to hoard the money they do have. They go on vacation in sunny Bermuda until the market is more suitable to their business.

22. Everyone got richer: During the Carter years only the incomes of the top 1% grew. During the Reagan years, the incomes, and this income rose by 160% more than during the Reagan years. During the Reagan years, the incomes of every income bracket rose.

23. After tax income rose: Between 1982 and 1989, real after tax income per person rose by 15.5%, and real median income of families, before taxes, went up 12.5%

24.  Federal spending increased: Federal spending on poverty programs in 1991 dollars increased from $140 billion 1n 1982 to $180 billion in 1991, an annual growth of 3%.

25. The federal deficit Rose, but it didn't have to: The deficit rose to $230 billion in 1985. Yet every one of Reagan's spending cuts was rejected by a democrat congress. Yet even with no spending cuts, in 1987 the Federal Deficit was reduced to $150 billion. It fell because even while taxes were cut, more jobs and more taxpayers were created. Plus those making lots of money didn't need to hide money they were making, as they usually do when taxes are high.

The 1920s: Reaching Euphoria and coming back

In 1920 Warren G. Harding was elected President amid a small recession. To fire up the economy, he signed into law a big tax cut, and became almost instantly popular.

Thus, he was the first President ever to consider the benefits of cutting taxes. The benefits of his doing so were HUGE, and ultimately lead to the Roaring 20s.

The economy during the 1920s grew faster than any time in American history up to that time, and America became the richest country in the world. The stock market and land values soared, and there were more rich people than ever before.

This booming economy benefited most Americans, and they were very happy. They loved President Harding. Up to the day he died they loved him.

Unfortunately for Harding, he had hired some of his best friends to posts in his administration, and, as it turned out, they were wheeling and dealing behind his back. One of the great scandals that brought down the Harding Administration was the Teapot Dome Scandal, where his “friends” got rich selling oil that was supposed to be set aside for public use.

Half way through his second year in office he died of a heart attack. There are two stories I’ve read about this. One is that he was so stressed that his friends let him down, that he had a heart attack and died. The other, and this one is merely suspicion, is that he killed himself. He couldn't’t bare face his public and tell them that he let them down.

Either way, while he died a popular president, people were angered when they learned about the scandals after his death. Historians, therefore, judge Harding as one of the worst Presidents because he failed to hire good enough people to posts in his administration.

Overlooked by historians in their view of him as a failure are his tax cuts. Not only were people happy during the 1920s, they had superfluous money to spend. They obtained this money as a bi-product of the soaring economy secondary to the Industrial Revolution secondary to tax cuts. It was because the upper classes were not burdened with high taxes that they had excess cash to invest into the economy.

The excellent free market conditions that resulted from this lead to the Industrial Revolution. Here investors, lead by the great Henry Ford, found ways to mass produce goods and services and make them abundantly available to the public at a cheaper price. Factories were becoming a common site, and were hiring unskilled workers at a record pace.

The rich got richer, and the middle class got richer too.

As a result, the radio and telephone became common household objects, and a Ford Model T became a must have for most Americans. In essence, it was the first time in American history where average Americans, and not just the rich people, could purchase material items for selfish reasons.

People were having fun. No! They were having a blast in the Roaring 20s.

Most Americans were so indulged in their own happiness at this time that they failed to notice inflation was increasing, and so was unemployment, and there were few rules and regulations to monitor businesses, nobody monitoring to assure workers were getting fair pay and treatment, and there was little insurance on invested monies to assure this money would not become lost in case of an economic collapse.

While the economy was booming during the 1920s, Calvin Coolidge’s popularity continued to soar, as he too cut taxes so people would have more money to spend and invest. Then, after Herbert Hoover became President, the stock market crashed on Thursday, October 24, 1929. A recession ensued.

You have to realize that Woodrow Wilson had proclaimed that WWI was the War to end all wars. Then, as alcohol was believed to be the cause of all crime, Prohibition was passed. With the Roaring 20s in full bloom, people believed they had created a euphoric nation. They figured it would last forever.

They were wrong. Americans were completely caught off guard, and that is one of the main reasons people were so gloomy as the roaring 20s came to a screeching halt. People simply stopped investing in the American economy because they figured it could not be trusted, and instead placed all their money in safe places within their homes, like under their pillows. This made the economy worse.

Newspapers used for blankets in the parks of New York by people who had no jobs were thus dubbed Hoover blankets. Since he was the one in charge, he was blamed. While history still views Hoover as the reason for the Great Depression, it should also point the finger at Calvin Coolidge, who failed to see a need to monitor the greedy people who were eager to milk more money out of the cow, and didn’t always use fair tactics.

Hoover, however, did have a chance to stop the downward spiral, he just didn’t know about it. After all, this was the first recession of a new kind of economy in a modern, global world. He figured that since taxes were cut many times during the Roaring 20s, that this was to blame for the stock market crash. So, instead of cutting taxes, he raised taxes from 24 to 63 percent by signing the 1932 Revenue Act.

This was coupled with a rise in tariffs.  Thus, he took more money out of the pockets of people who already didn’t have any, and the recession turned into the Great Depression.

We poked our heads into the land of Euphoria just briefly during the 1920s, and, unfortunately, we had to come back. It was too good to be true.

Economic stimulus package works for me

I am very impressed at how fast the president and congress worked to get this economic stimulus package through. It still has to be finalized, but it looks as thought it's going to get done.

I listened to a commentary the other day where the person was complaining that Bush was not the right man to fix the economy, but I don't agree with that person. I think Bush is the perfect man, especially considering he did it before.

History has proven time and again that the best way to get out of a recession, or to stave off a recession, is via tax cuts. We can have a discussion or debate over why that is in a later post.

But historically, tax cuts have worked, so it only makes sense that this was part of the package.
Well, I don't think I'm going to get a tax cut, but businesses are. I suppose the purpose of this is to create an incentive for them to create more jobs. That sounds logical to me.

But I really like this part of the bill because my family could really use the $1,800 or whatever the government is going to give me. But I'm not going to use it the way the government hopes: I will pay off debt.

Why can't congress and the president get together and pass other bills this quickly? Why can't they get together and pass a bill to secure our borders to end the illegal immigration fiasco?

That was a dumb question I know. The answer is because George Bush is trying to create a republican dynasty, and future republican candidates need these problems to go unsolved so they can cater to voters by devising solutions to these problems.

You know the #1 political rule: In order to get elected there has to be a problem that you have the best solution to. Democrats are the best at doing this by telling poor people that they will solve their problems with more government programs catered to help them.

Democrats also cater to Mexicans by telling them they will grant illegal Mexican immigrants amnesty. And, of course, once these illegal immigrants are legal, they will be poor and in need of governmental help themselves. And, when the democrats offer them governmental solutions to their problems, they will vote democratic when they are finally legal.

Republicans, on the other hand, know there is a public outcry for a fence, and they propose to build a fence. If Bush put up that fence he might lose the votes of the people of whom this is their top priority.

Republicans also know there is a public outcry to make abortion illegal. If the Conservative Supreme Court ended up making abortion illegal, then the Christian vote would be up for grabs.

That is politics in a nutshell. Instead of just doing what is right all the time, they wait until their backs are to the wall. And, with many experts saying "recession" Bush and Congress were pressed hard against the way, and they acted.

The goal here is that people will spend this money, which sounds funny to me becasue isn't that how we got to the point we need a stimulus package in the first place, that people spent money they didn't have. How do you spend yourself out of debt.

Like I said, my wife and I are not going to spend our money, perhaps the rest of the country ought to do the same.

Part of the tax stimulus package calls for giving money to people who never paid taxes in the first place. Is that a good idea? What did they do to deserve it? Isn't' this called handouts?

Okay, so we can look past that. That's what Bush needed to throw in to get a compromise, and compromises are good because that's how we became a nation in the first place.

So, without looking at U.S economy as a whole, the stimulus package works well for me. I'm going to take my money and run.

Solving the most important issues of the day

As your new President of these here wonderful United States of America, I would hereby propose that I, together with all Congressmen and all Senators, get together in a civilized manner and solve the most important issues facing our country right at this moment.

We must not toss out words of hatred, or words of blame, or any such words that do nothing but stymie progress. What we must do, in an orderly fashion, is sort out the issues of the day and discuss them one at a time. And, to solve these problems, we must all put forth our solutions, and we must listen to all the solutions and the evidence that is provided, and then we must debate these issues in the arena of ideas.

It will be difficult, but we must put aside our differences and talk. I know we all don't see eye to eye. I know it's a truth when I say that even most members of the same political party don't see eye to eye. Not seeing eye to eye, however, is a fact of humanity. Once we are aware of that, as we are now, we can progress.

Let us simply get together and debate the issues. And, at the end of the day or week or month or year, let us have a solution to each of these problems.

A solution means more than me getting my way or you getting your way. Most solutions do not come by that way. Most solutions come by by compromising. That means that I give a little and you give a little. Now this may not always be possible. I understand that sometimes I have to get my way or you have to get your way. As is the case, sometimes, for the better of the country, one of us has to step aside.

And when it is all said and done, and we have our solutions, we must support the people who enact new policies, and write new procedures, and enforce any new laws that are enacted. We must stand together not as Michiganders, or Texans, or New Yorkers, but as One Nation. We must Never bad mouth one another. We must never accuse one of lying without proof. We must not call each other names. We must be civil.

Yes, we can disagree. We can disagree so much that we hate one another, but that should never proceed into slander, for that type of behavior is not conducive to further progress. Once the nation is set forth in one direction, we must support our leaders regardless of whether or not we agree with them.

However, support is not the same as agreement. When we slander each other, we look frivolous as a nation, and that accomplishes nothing more than to weaken us not only in the eyes of our own Americans, but the eyes of other nations as well.

And if the policies we as a nation choose are not correct, if we make mistakes (as all people do), we must regroup and form new solutions and debate those in the arena of ideas. Most important: we must debate as gentlemen. Many times, that means being patient, and waiting for your time to come.

The most important issues of the day are the following, and in this order:

1. Assuring that all Americans are safe from foreign invasion
2. Providing a sound economic environment
3. Assurance that our judges rule by the Constitution not by their opinion
4. Improving the educational system
5. Continuing to improve race relations within the United States
6. Encouraging the spread of democracy world-wide
7. Deciding how to deal with illegal immigrants, and helping Mexico improve its economy
8. Improving relations with other nations and helping them prosper
9. Continuing the struggle for peace in the Middle East

I prioritized this list according to the issues I think are most important to our nation today. Our politicians have been scratching at each other's throats regarding these issues, and progress has been slow. Well, it's time to speed things up.

As president, I would open my door and encourage anyone to come visit me who has a viable solution to any of these problems. We will meet somewhere in the middle.

Frea for president in 2008

I’m 37, and plenty old enough to run for President. Therefore, I hereby announce my candidacy to become the next President of these United States of America

Keep in mind I make only a humble salary working as an RT, so I'm going to have to rely on your donations for this thing to work.

I’m nothing special really. I wasn’t born in a log cabin, and I wasn’t born with a silver spoon in my mouth either. I wouldn’t consider myself rich, but because I went to college and worked hard all my life, I think I have a decent life.

I am just like you in that I have never run for political office before. Sure I might lack that kind of experience, but I do have experience from life. And, as my wife and friends will consest to, I'm constantly studying something because I love to learn.

I also love my country, love history, and love people, which is why I became an RT in the first place. I’ve been a hard working RT since I graduated from respiratory school in 1998, and will continue down that avenue until you succeed in helping me get my message out.

I’m also married with children, and they will attest that I am a great and fun dad. My wife will even tell you that I’ve never had an affair, am a good Christian, and could not tell a lie if my life depended on it.

I don’t know what got into me, actually. A year ago, running for President wasn’t even close to being in the cards. Besides, I didn’t want my hair to turn gray.

I don't care about that anymore. I think it's high time we had an average working class American in the White House, and I'm confident I'm the guy.

In the next few days I'll lay out my agenda.