People tell me all the time: Stop talking about Ronald Reagan. No one remembers that stuff. It’s a bit like feeling nostalgic for Calvin Coolidge. We have to move on with new messaging and new themes.
I get the point, but actually, the best lessons for the way forward today are readily available via a closer look at the experience of 40 years ago. And it’s not just about Reagan. It’s about the ethos that the period represented. We still have so much to learn from that. We could do much worse than to return to the fundamentals that drove that change.
Certain features of our times are a reminder of the great transition from the Carter years to the Reagan years. Somewhat hyperbolically, people called it a revolution. That’s a bit strong, but the change was dramatic. In only a few years, the American economy went from overregulated, overtaxed, and hyperinflated to a new era of enterprise, sounder money, and new opportunity. The key turning point was due to a philosophical shift.
The late 1970s are like our own times in some ways: Failure is all around us. The most obvious mark is inflation. The indexes for both consumer and producer prices this week came out, and commentators were at pains to put a good spin on 7 to 8 percent increases simply because they show a slowing in the pace of monetary depreciation. This is like saying you’re achieving your dietary goals because you gained only 5 pounds last month after you gained 10 the previous month.
Meanwhile, credit card debt is soaring as Americans dig ever deeper to maintain their lifestyles amid declining real income. The switch from 2020 to 2022 is for the ages. The government faked out millions of people who believed they had obtained new wealth in the midst of lockdowns, only to find out a year later that the bill came due in the form of high inflation. The entire period amounted to a culling of wealth, not to mention one of the most dramatic transfers from the middle class to the very rich.
The rest of us are stuck with the bill and no income or savings to pay it.
![(Data: Federal Reserve Economic Data [FRED], St. Louis Fed; Chart: Jeffrey A. Tucker)](/_next/image?url=https%3A%2F%2Fimg.theepochtimes.com%2Fassets%2Fuploads%2F2022%2F11%2F16%2F1-JAT-2022.11.16-1200x931.png&w=1200&q=75)
With real income having fallen for 19 months and credit card debt rising, it’s not a surprise to find that savings rates are at historic lows. It doesn’t require a high degree of economic intelligence to see that this is unsustainable. It’s a candle burning at both ends. It has to come to a close, and the most likely result will be a deep recession, one that will become very evident in the next year.
The Fed is so far doing its part to make matters right, with a campaign to raise federal funds rates to make savings worth doing again. The downside is going to be continued doldrums for real estate, continued job losses in highly leveraged industries such as Big Tech, and economic pain for all deeply indebted sectors, including and especially government.
It’s best to look at this time as an opportunity for a restoration of honest money and an enterprising economy. The fashionable push for zero carbon and ever more control of the population must give way to a renewed appreciation of the idea of freedom itself. It’s really the only way out of the deepening morass.
We’ve been here before. The late 1970s were a time of tremendous despair, and there seemed to be no way out. The modeling and theories of the decade had failed to achieve their goal, and President Jimmy Carter seemed to capture the moment with his announcement of a national malaise.
It was into this mess that Ronald Reagan entered with a long reputation as a solid anti-communist, but his real advantage was the intellectual backing he had with so-called supply-side economics. It was a restoration of 19th-century classical economics with a modern twist drawn from the work of F.A. Hayek and Ludwig von Mises, as interpreted by innovative thinkers such as George Gilder and David Stockman. They rallied behind deregulation, open and free markets, and sound money, even to the point that the gold standard itself was written into the 1980 platform.
As Stockman has written, the fullness of the dream was never achieved, but the attempt itself caused the historical trajectory of decline to flip in the other direction. Reagan was enormously popular when he won in 1980, and the confidence he inspired allowed the nation to weather a very serious recession for two years. But those hard economic times—again assisted by a Federal Reserve that was newly serious about stopping inflation—prepared the way for a spectacular economic recovery on the other side.
It’s no secret that the economics and politics of the Trump years of the Republican Party veered far from the optimistic vision of the Reagan Revolution. Trump’s politics had more in common with those of Richard Nixon, who was loved only for the enemies he earned. But let’s not forget that the Nixon years ended in great disappointment. So too with the Trump administration, which capped a tumultuous three years with a disastrous decision to lock down the nation for a respiratory virus. Everything we’re experiencing now—from the rising debt and inflation and economic stagnation—traces to that fateful decision.
The rise of Ron DeSantis, who won broad support in his reelection, offers a real opportunity for a fresh start to do for the country what he has done to make Florida so free and prosperous even in the midst of the chaos of the past three years.
It’s not the personalities that matter so much as the principles. Free trade as an ideal needs to make a return, as well as the ambition of a growing economy that benefits everyone in all classes. Reaganism was criticized in those days, wrongly, as a policy that favored the rich, but these times are different. It’s the rich that are heavily invested in Bidenism, and a reboot of Reaganism can sincerely claim to be a policy for everyone else.
In addition, today we have new problems, such as rampant censorship and regulatory capture of Big Tech and Big Pharma. The threat posed by the administrative state is worse than ever, so a new Reaganism should and must seek a complete dismantling of that machinery.
The core principle is summed up in a single word: freedom. We need that now more than ever. The candidates who articulated that vision well in the midterms did very well at the polls. It resonates as well today as it did in 1980.
In many ways, the crisis of today is worse than it was 40 years ago, but the answer to the crisis remains the same. Reaganism can make a return. It need not have that name because it’s the principles that matter: power to communities and individuals and away from administrative bureaucrats who have caused so much wreckage. We need a new morning in America and a fresh start.
