The Eighties-What Went Right?

RECKONING WITH REAGAN: AMERICA AND ITS PRESIDENT IN THE 1980s By Michael Schafer, S19.95, 208 pp., Oxford University Press.THE MYTH [...]

October 1 1992 by Jonathan H. Alder

RECKONING WITH REAGAN: AMERICA AND ITS PRESIDENT IN THE 1980s By Michael Schafer, S19.95, 208 pp., Oxford University Press.

THE MYTH OF AMERICAN DECLINE: LEADING THE WORLD ECONOMY INTO THE 1990s By Henry R. Nau, $29.95, 448 pp., Oxford University Press, 1990. THE SEVEN FAT YEARS-AND HOW TO DO IT AGAIN By Robert L. Bartley, $22.95, 368 pp., Free Press.

The attempt to redefine the 1980s began long before the decade ended. President Ronald Reagan was recast as a simpleminded, inattentive leader out of touch with his own administration; his policies were blamed for creating “the decade of greed” in which the rich got richer, the poor got poorer, and American competitiveness was squandered. Pivotal in this movement were a handful of writers-primarily journalists such as Lou Cannon, Haynes Johnson, and Sidney Blumenthal-who were convinced that the 1980s was a decade gone wrong and did their utmost to prove this to a public relatively happy with the direction in which its country was moving.

Now, in the wake of the 1980s, Michael Schaller, a professor at the University of Arizona, has decided it is time “for a historian to make an initial evaluation of the Reagan presidency and its impact on the United States.” Presumably, this is because an academic can provide the depth of analysis and disinterested detachment missing in contemporary accounts. Unfortunately, on this count Schaller’s “history” fails. His book, “Reckoning With Reagan: America and Its President in the 1980s,” is less concerned with chronicling the substantive accomplishments and failures of the Reagan years than with blithely repeating the liberal, conventional wisdom on what went wrong during the last 12 years-from the recession to the S&L crisis-and why it was all Reagan’s fault.

Indeed, Schaller’s book is less a history than a rehash of the political biographies and journalistic accounts published in the last several years. The Wedtech scandal is thoroughly dissected, while the Kemp-Roth tax cuts receive only cursory attention. This is not to suggest that all accounts of the Reagan years must encompass everything, only that any author who presumes to assert that “the president’s tax and spending initiatives did not alter the economic situation of most Americans” should at least attempt to discuss those policies and their impacts.

There’s no such lack of scope in Henry Nau’s “The Myth of American Decline: Leading the World Economy Into the 1990s.” Nau focuses on America‘s economic foreign policy from Bretton Woods to the present-how the country’s economic decisions, from monetary policy to limitations on trade, have affected its place in the world. Unlike Schaller, he does not see the record of the 1980s as cause for undue alarm. Rather, he is guardedly optimistic that America will return to the successful policy triad of free trade, monetary restraint, and limited domestic economic intervention, and remain the pre-eminent economic power.

Whereas Schaller skims through the superficial, Nau’s work is steeped in economic statistics. His formidable research is for the most part convincing, and it should be. It would be difficult-though some have managed-to examine America‘s role in the international economy in such excruciating detail without concluding that the policies of “price stability, flexible domestic markets, and freer trade clearly associate with the most prosperous periods of postwar performance.” Such policies were largely successful in the immediate postwar period and established a temporary policy consensus. This consensus “rejected discretionary fine-tuning of fiscal policy, affirmed policies of monetary restraint to maintain price stability, advocated tax reductions to promote private incentives, and saw microeconomic policy as a means to promote rather than suppress competition.” It was only when the U.S. strayed from this outlook that its economic fortunes began to deteriorate.

“The Reagan administration propelled the nation in new directions,” Nau says, “revitalizing a sense of pride and purpose in American democracy and setting forth a sweeping program for economic reform.”

This point is echoed in Robert L. Bartley’s “The Seven Fat Years-And How to Do It Again,” a far more readable and entertaining account of the same phenomenon. Whereas Nau’s work largely targets a more academic audience-one that would plow through his tables, charts, and statistics-Bartley’s aims more at the popular consciousness. As on the editorial page he oversees at The Wall Street Journal, Bartley combines insightful economic analysis with engaging anecdotes and a biting wit to present a powerful challenge to the conventional, liberal wisdom.

“If we want fiscal policy that speeds economic growth,” Bartley counsels, “we know what needs to be done . . . hold government spending to essentials, keep marginal tax rates as low as possible, keep the dollar sound, let the price mechanism work, avoid imposing unnecessary regulation and unnecessary costs.”

Bartley celebrates the 1980s as a period of unprecedented growth, as he should, given his role in the promotion of supply-side economics. Spurred by a rollback in taxes, tight monetary policy, and “a reassertion of American optimism and creativity,” the U.S. emerged from the economic malaise of the 1970s and began an economic resurgence. Whereas many commentators claim the benefits were reserved only for the rich, Bartley astutely observes that the fruits of economic expansion were more widely spread, and the whole nation was better-off. He decries the hordes of pundits from inside the beltway who are quick to blame the economic downturn on the misguided policies of Reaganomics. That so many are captivated by this dour economic message leaves Bartley in disbelief.

However, this is not to say that for seven years every policy was perfectly executed or designed: Neither Bartley nor Nau would make this claim. “Even as the economy recovered in early 1983, trade policy never recovered,” Nau reminds the reader. He adds: “The best years for Reagan’s international economic diplomacy passed without the necessary intellectual and political mobilization of public support, either at home or abroad, to complete the Reagan program.” This failure to institutionalize the intellectual foundations of the Reagan Revolution led to the retrenchment of protectionism and a budget deal that not only raised taxes, but also failed to curtail the federal deficit. Thus began a retreat from the politics of triumph to the politics of malaise.

The challenge now is to finish the work that began in the Reagan era. To accomplish this requires an end to politics as usual. As Bartley notes, “The miracle was less that the economic policy mix was found than that the political stasis was broken.” While Reagan was blamed for much that went wrong in the 1980s, it was his willingness to break the stasis and offer principled leadership in defense of market economics that gave the 1980s its strength.

So far, this is precisely what is missing from the 1990s.

Jonathan H. Adler is a policy analyst at the Competitive Enterprise Institute, a pro-market research group in Washington. He contributed to “Environmental Politics: Public Costs, Private Rewards” (Praeger)