The Sad Legacy of Ronald Reagan

This should be required reading for Conservatives...especially of the talking head variety.
by Sheldon L. Richman

On August 2, 1988, President Ronald Reagan announced that he had changed his mind about the pro-union plant-closing bill. He had vetoed it three months earlier, but now let it become law without his signature after intense pressure from presidential nominee George Bush and former Treasury Secretary James Baker, now Bush's campaign chairman. Reagan claimed that only this action would enable him to sign a Congressional trade bill almost unequaled in its anti-consumer protectionism.
Ronald Reagan's faithful followers claim he has used his skills as the Great Communicator to reverse the growth of Leviathan and inaugurate a new era of liberty and free markets. Reagan himself said, "It is time to check and reverse the growth of government."
Yet after nearly eight years of Reaganism, the clamor for more government intervention in the economy was so formidable that Reagan abandoned the free-market position and acquiesced in further crippling of the economy and our liberties. In fact, the number of free-market achievements by the administration are so few that they can be counted on one hand—with fingers left over.
Let's look at the record:

Spending
In 1980, Jimmy Carter's last year as president, the federal government spent a whopping 27.9% of "national income" (an obnoxious term for the private wealth produced by the American people). Reagan assaulted the free-spending Carter administration throughout his campaign in 1980. So how did the Reagan administration do? At the end of the first quarter of 1988, federal spending accounted for 28.7% of "national income."
Even Ford and Carter did a better job at cutting government. Their combined presidential terms account for an increase of 1.4%—compared with Reagan's 3%—in the government's take of "national income." And in nominal terms, there has been a 60% increase in government spending, thanks mainly to Reagan's requested budgets, which were only marginally smaller than the spending Congress voted.
The budget for the Department of Education, which candidate Reagan promised to abolish along with the Department of Energy, has more than doubled to $22.7 billion, Social Security spending has risen from $179 billion in 1981 to $269 billion in 1986. The price of farm programs went from $21.4 billion in 1981 to $51.4 billion in 1987, a 140% increase. And this doesn't count the recently signed $4 billion "drought-relief" measure. Medicare spending in 1981 was $43.5 billion; in 1987 it hit $80 billion. Federal entitlements cost $197.1 billion in 1981—and $477 billion in 1987.
Foreign aid has also risen, from $10 billion to $22 billion. Every year, Reagan asked for more foreign-aid money than the Congress was willing to spend. He also pushed through Congress an $8.4 billion increase in the U.S. "contribution" to the International Monetary Fund.
His budget cuts were actually cuts in projected spending, not absolute cuts in current spending levels. As Reagan put it, "We're not attempting to cut either spending or taxing levels below that which we presently have."
The result has been unprecedented government debt. Reagan has tripled the Gross Federal Debt, from $900 billion to $2.7 trillion. Ford and Carter in their combined terms could only double it. It took 31 years to accomplish the first postwar debt tripling, yet Reagan did it in eight.

Taxes
Before looking at taxation under Reagan, we must note that spending is the better indicator of the size of the government. If government cuts taxes, but not spending, it still gets the money from somewhere—either by borrowing or inflating. Either method robs the productive sector. Although spending is the better indicator, it is not complete, because it ignores other ways in which the government deprives producers of wealth. For instance, it conceals regulation and trade restricdons, which may require little government outlay.
If we look at government revenues as a percentage of "national income," we find little change from the Carter days, despite heralded "tax cuts." In 1980, revenues were 25.1% of "national income." In the first quarter of 1988 they were 24.7%.
Reagan came into office proposing to cut personal income and business taxes. The Economic Recovery Act was supposed to reduce revenues by $749 billion over five years. But this was quickly reversed with the Tax Equity and Fiscal Responsibility Act of 1982. TEFRA—the largest tax increase in American history—was designed to raise $214.1 billion over five years, and took back many of the business tax savings enacted the year before. It also imposed withholding on interest and dividends, a provision later repealed over the president's objection.
But this was just the beginning. In 1982 Reagan supported a five-cent-per-gallon gasoline tax and higher taxes on the trucking industry. Total increase: $5.5 billion a year. In 1983, on the recommendation of his Spcial Security Commission— chaired by the man he later made Fed chairman, Alan Green-span—Reagan called for, and received, Social Security tax increases of $165 billion over seven years. A year later came Reagan's Deficit Reduction Act to raise $50 billion.
Even the heralded Tax Reform Act of 1986 is more deception than substance. It shifted $120 billion over five years from visible personal income taxes to hidden business taxes. It lowered the rates, but it also repealed or reduced many deductions.
According to the Treasury Department, the 1981 tax cut will have reduced revenues by $1.48 trillion by the end of fiscal 1989. But tax increases since 1982 will equal $1.5 trillion by 1989. The increases include not only the formal legislation mentioned above but also bracket creep (which ended in 1985 when tax indexing took effect—a provision of the 1981 act despite Reagan's objection), $30 billion in various tax changes, and other increases. Taxes by the end of the Reagan era will be as large a chunk of GNP as when he took office, if not larger: 19.4%, by ultra-conservative estimate of the Reagan Office of Management and Budget. The so-called historic average is 18.3%.

Regulation
For all the administration's talk about deregulation (for example, from the know-nothing commission which George Bush headed), it has done little. Much of what has been done began under Carter, such as abolition of the Civil Aeronautics Board and deregulation of oil prices. Carter created the momentum and Reagan halted it. In fact, the economic costs of regulation have grown under Reagan.
Some deregulation has occurred for banks, intercity buses, ocean shipping, and energy. But nothing good has happened in health, safety, and environmental regulations, which cost Americans billions of dollars, ignore property rights, and are based on the spurious notion of "freedom from risk." But the Reagan administration has supported state seat-belt and federal air-bag requirements. This concern for safety, however, was never extended to the Corporate Average Fuel Economy (CAFE) rules, which, by imposing fuel-efficiency standards, promote the production of small cars. The shift to small cars will cause an estimated 10,000 to 20,000 highway deaths over the next ten years.

Bureaucracy
By now it should not be surprising that the size of the bureaucracy has also grown. Today, there are 230,000 more civilian government workers than in 1980, bringing the total to almost three million. Reagan even promoted the creation of a new federal Department of Veterans' Affairs to join the Departments of Education and Energy, which his administration was supposed to eliminate.

Trade
The Reagan administration has been the most protectionist since Herbert Hoover's. The portion of imports under restriction has doubled since 1980. Quotas and so-called voluntary restraints have been imposed on a host of products, from computer chips to automobiles. Ominously, Reagan has adopted the bogus fair-trade/free-trade dichotomy, and he was eager to sign the big trade bill, which tilts the trade laws even further toward protectionism.

Results
Reagan's fans argue that he has changed the terms of public-policy debate, that no one today dares propose big spending programs. I contend that the alleged spending-shyness of politicians is not the result of an ideological sea-change, but rather of their constituents' fiscal fright brought about by $250 billion Reagan budget deficits. If the deficit ever shrinks, the demand for spending will resume.
This is the Reagan legacy. He was to be the man who would turn things around. But he didn't even try. As he so dramatically illustrated when he accepted the plant-closing bill, there has been no sea-change in thinking about the role of government.

A Christian Flag?

"I have seen many churches with an American flag flying out front. I have seen many churches with an American flag inside, usually on one side of the church with a "Christian flag" on the other side of the church. (The fact that the Bible knows no such thing as a Christian flag is irrelevant to my post.) But the other day I saw a church with a large flagpole flying both the American flag and the Christian flag at the same time.

The American flag was on top. Now, I don't know if there is some law that says that the American flag must be on top when flown on the same pole with other flags or if the church was just following some tradition about the flying of the American flag. The sight of these two flags was a perfect picture of churches putting the state before the cross (the Christian flag has a cross on it). After all, churches have sent more soldiers overseas to kill for the state than they have sent missionaries overseas to proclaim the cross of Christ.

Why churches fly the American flag out front is a mystery to me in the first place."--Laurence Vance

And a mystery to me as well. In the early days of Christianity, the relationship between church and state vacillated between mutual suspicion and outright hostility. It was not until the various states (Rome under Constantine, England under the Tudors, America in the 1900's) realized they could co-opt religion for their own insidious purposes, did they extend the right hand of fellowship.

It is tragic that Christians have bought the lie, and that many churches have effectively inserted patriotism into Paul's list of fruits of the Spirit, without biblical license or logical reasons to do so. This is not to say that Christianity and love of country are mutually exclusive; but neither are they necessarily inclusive. Often there is a stark incompatibility.

But the fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness, self-control, and above all else, patriotism and blind obeisance to the Unites States government, especially in matters of warfare; against such things there is no law. -Galatians 5:22-23, amended.

Somalia: Statist Straw Man?

The pro-government crowd loves Somalia. It is the go-to argument for why we must have an authoritarian government. I mean, who wants to end up like Somalia? It is a truly terrible place to live. Everyone knows this.

As a syllogism, the argument goes like this:

Somalia is stateless. Somalia is a hellhole. Therefore, statelessness creates hellholes.

But there are two crippling problems with this argument. First, the facts simply don’t support the premise. They question we ought to ask is what are conditions in Somalia before and after the collapse of their government. If, under the Socialist Barre regime, Somalia was a nice place to live, and was plunged into chaos when Barre was ousted, then the argument would be a valid one. But Somalia was a hellhole before and after. What matters is the relative conditions before and after the Somali state.

Relative to Somalia under Barre, conditions have improved in virtually every measurable way, save literacy rates. (Under Barre, all of Somalia’s schools were run by the UN-this is no longer the case, which explains this anomaly).
Here is an essay that contains the relevant data. 


Stateless Somalia has seen economic growth that outstripped neighboring Kenya, Djibouti, Ethiopia and Eritrea. The average Somali has greater living conditions than they did “pre-statelessness.” The recent drought and famine, as truly horrible as it is, would likely have been just as great a humanitarian disaster with a state as without. Further adding to the problem has been the insistence of foreign nations to re-establish a government, propping up “provisional governments,” supporting one warlord versus the others, and generally undermining the Somali clan system that could perhaps bring stability to the region, if left alone.

Second, the argument that stateless Somalia is an indictment of statelessness is not more valid than the argument that Haiti or Zimbabwe prove that states lead to poverty and ruin. (although, I would argue, relatively speaking, they do.)

Again, no one is ignorant enough to argue that Somalia is a wonderful example of an anarcho-capitalist wonderland; but it is intellectually and factually dishonest to contend that conditions in Somalia were not significantly improved since the state fell.

Who will keep us safe?

“But who will keep our food and medicine safe?”

Any conversation about the superfluity of the Federal government or her legion of agencies will invariably turn to this question. It is as sure as Godwin's law; except in this case, the fascists have, inexplicably, become the good guys. Apparently, the FDA and the USDA have a stellar and unblemished track record of keeping the populace safe from tainted food and dangerous medicines. It is a measure of the success of state propaganda that such a glaring untruth is so commonly seen as axiomatic and beyond question.

One of the great challenges for advocates of a truly free society is to present their vision of how certain functions of government would be replaced by the free market and voluntary cooperation. We are no less presumptuous than advocates of central planning if we dogmatically claim a comprehensive vision of how things will be in our “libertopia.” As Murray Rothbard pointed out, the libertarian’s primary task is to “offer a few guidelines on how markets might develop where they are now prevented or restricted from developing; but he can do little more than point the way toward freedom, to call for government to get out of the way of the productive and ever-inventive energies of the public as expressed in voluntary market activity.”

While we cannot be about the business of substituting one group of central planners for “our sort” of central planners, we the nature of our argument behooves us to offer a vision of freedom; not what it must be, but what it could be.

As it pertains to the role of agencies like the FDA and USDA, we need look no further than the sustainable and organic food movement to see how the free market makes up for government failures; and it is no great leap to imagine the same market forces supplanting the public option altogether.
Perhaps ironically, it is luminaries of the modern movement toward “sustainable” food, generally confirmed statists, that furnish the crux of our argument. There is a general consensus among those who are deeply devoted to such things that the USDA Certified Organic sticker is, at best, a limited indicator of the agricultural practices involved in the production of various foodstuffs. The
USDA program is, like any government agency, bloated, inefficient, and inconsistent. It is rife with corruption, and requires expenditures of time and money that preclude many small farmers from participating.

As a result, many small producers are eschewing the USDA label as simply not worth it. Michael Pollan, an icon in the sustainable food movement, consistently encourages people to forego Certified Organic produce for local, reasoning that “It often is organic, even if not certified, and you can always ask the farmer. The cost of organic certification can also become burdensome for a small grower.” The farm which runs the CSA to which I belong is explicit in their disclosure of their growing methods, all the while explaining that they have not received “official” organic certification. In short, there seems to be a general consensus among advocates of organic and sustainable agriculture that the government seal of approval is limited in its value. But simply buying everything from a local producer is a difficult proposition for the majority of us; time and geographic concerns preclude this as a viable option. How, then, can the average consumer be assured that they are buying food products that have been produced in a manner that is consistent with their ideals? In the face of the failure of the government’s program, as usual, the free market has provided a solution. And it is in this free market solution that we see the germ of an idea that could totally supplant the government’s role in the inspection and regulation of agriculture and medicine. And do it more cheaply, efficiently, and with far greater accountability.

In the absence of a reliable government organic food regulatory agency, the market has provided several voluntary options. The Certified Naturally Grown program offers “a non-profit organization offering certification tailored for small-scale, direct-market farmers and beekeepers using natural methods.” They rely on voluntary participation and a peer-review system that is less expensive, less paperwork intensive, and more efficient than the USDA program.
Whole Foods Market has developed their own alternative for certifying certain production techniques for livestock and poultry, through a partnership with an animal welfare non-profit.
These are two options, but there are several others. All share a focus on voluntary cooperation between food producers and certifiers, and greater accountability to the consumer, as they can’t hide their flaws behind the veil of government immunity. These programs, and others like them, are infinitely scaleable, completely voluntary; and they represent a real challenge to the notion that “only the government can…”

The same organizational structure that has rendered the Certified Organic label obsolete could immediately step in to fill the void left by the absence of the FDA and USDA. Private, third party certifiers could inspect livestock and produce, and affix their seal of approval only when certain standards are met. That the reputations of the inspectors and the farmers are truly on the line would preclude much of the graft and inefficiency that is a constant feature of the current system. Certified, inspected produce would compete with un-inspected produce for shelf space and consumer demand. I’ve focused on the grocery side of the equation, but the same general principles would apply to drug development and regulation.

As Rothbard continues: “No one can predict the number of firms, the size of each firm, the pricing policies, etc., of any future market in any service or commodity. We just know—by economic theory and by historical insight—that such a free market will do the job infinitely better than the compulsory monopoly of bureaucratic
government.”

Land of the Free...

Why are so many so sure that police work couldn't be handled more effectively in a free society?
It seems like far more of their time is spent doing things like this:



or this



than "serving and protecting." At least our current president doesn't insult our intelligence by claiming that the Muslims hate us for our freedom.

The Average Politician

This is so good.

Electability or principles?

I can't tell you how many conversations I have that turn to politics and eventually include the statement: "I like candidate x, but he's not going to win, so why bother?"

Of course, the obvious alternative is vote against your ideals, just so an "electable" candidate wins the nomination. This worked out particularly well for the Republicans with Bush and McCain. Bush, by far the most electable candidate, was a fantastic president. He doubled the size of government, shredded the Bill of Rights, gave us the TSA, started two disastrous and unneeded wars, continued a monetary policy that would utterly destroy the American economy, and took the national debt to all time highs. But other than that, he was fantastic.

McCain made it possible for the least qualified, worst president in US history to be elected. Not to mention, a president McCain might have been worse. We'd be at war with Iran and probably North Korea, and the economy would still be a nightmare.

Maybe we ought to try "voting for a guy on principle," not just because the media tells us he's electable. Because that's really the situation that exists.

Conservatives often say "I like Ron Paul, but he's not electable"; a tidbit they gleaned from Fox News. Is it possible that the media, even (gasp) the Neocon News Network doesn't like Paul's message, and thus does all they can to ignore him? Failing that, they discredit and smear?

This Video kind of gives that impression:

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Indecision 2012 - Corn Polled Edition - Ron Paul & the Top Tier
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook

Now I just need enough cash to move to one of these...

Floating libertarian islands. Yes.

John Flynn on FDR and the Depression.

Out, Out Depression: FDR in 1938 - John T. Flynn - Mises Daily

This piece is incredibly applicable to our current predicament; and it was penned by John T. Flynn in the 1940's. Flynn is a significant character, one who was converted to the cause of the "Old Right" as a result of the abuses of FDR and the New Deal.

Change the names and a few figures, and it might have been written at any point in the last 3 years.

My favorite line:

"To a man of more humility the suspicion might have inserted itself into the secret precincts of his mind that, after all, he did not fully understand the vast organism he had set out to repair and that it might be he was a tinkerer rather than a mechanic, not so much a physician as a quack."

The Last of the Keynesians?

Paul Krugman, the last, best hope of Keynesian folly. A discussion of the various Keynesian fallacies promoted by the Krugman can be found here. And it's worth clicking the link.

TSA: Your security is among our priorities

This is from a former employee. His website is a compendium of related news.

Downgraded! Blame the Fed.

Crisis Averted...

When Bush signed TARP into law, he said that he was "abandoning free market principles to save the free market." We were promised that the falling stock market was a signal of an imminent collapse of the global economy, and without "decisive government action" (read: making it rain like a rapper in a strip club) we were all doomed.

TARP was passed, and the stock market quickly recovered. Or maybe it did this:

Rather than being saved, the unruly economy proceeded to enter into a horrible recession from which we've still seen no real recovery.

Then another buffoon took office, and proposed another absurd program of throwing newly created monopoly money at everything that moved. We were assured that unemployment wouldn't surpass 8%, as the White House was just waiting to roll out all kinds of "shovel ready" jobs. Instead of miraculously dropping, unemployment continued to rise. The only jobs created were government jobs, and the only shoveling taking place in Obama's America presumably involved taking the compost which the president spewed from his mouth and using it to fertilize the White House vegetable garden.
Here's another chart.

Since then, unemployment has pretty well hovered around ten percent. Of course, this doesn't take into account the "underemployed" and those who have given up.

And then the latest crisis: If we don't figure out some way for the nation to go deeper into debt, we face "economic armageddon." Or so we were told. Of course, a deal was brokered. Of course, it accomplished almost nothing except increasing the amount of debt under which our children will be drowned. But at least the stock market resumed its upward march after the glorious compromise was signed into law. You say it didn't? How shocking. As expected, another chart:

The debt compromise was signed on Tuesday. The DJIA has lost 800 points since then. Obama argued last weekend that we needed to give Wall Street some answers; apparently they didn't like the answers they got. And the credit rating that was the fundamental reason why we "had to" raise the debt limit? downgraded by S & P on Friday. The first time in US history.

What's the lesson in all this? I think there are two, actually. The first is that when Washington says there's a crisis brewing, they just mean "we want to spend money, and can't think of any other way to get that past the American people." The second, and more important lesson, is this: They can't fix it. It's not that they're not trying, it's that central planning, stimulus, and tinkering cannot fix problems that are largely the result of central planning, stimulus, and tinkering.

As Jeffrey Tucker wrote recently:

"This stuff is not going to work. Their green shoots are an illusion. There will be no stimulus. Let the market liquidate. Government should stop looting the private economy. The Fed should stop the money creation. No more bailouts. Let interest rates rise. Let bad banks fail. Above all: stop fighting the market...On the losing team are those who keep thinking that poison can cure the patient. So we say again: the stasis and depression will continue until the system is allowed to correct itself."

When government tells us that there is an economic crisis, they might be right. When they say that crisis is a result of a lack of intervention on their part, they are almost certainly lying to you. For the "Politician's Syllogism" is the basis and pattern for virtually every action of the Federal government:

A.) Something MUST Be Done;
B.) This is "Something;"
C.) Therefore, We Must Do It.

TSA agents are people, too!

Terrible people, but people. Be sure to give them "the respect they deserve." So grab them by the genitals and take naked pictures of their kids. Then refer to this sign as justification.