The Life and Death of Reagan: A Sadly Educational Experience

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The
accepted practice among those who write obituaries is to speak no
ill of the dead. Perhaps that’s because some consider it impolite
to excoriate those who aren’t in a position to defend themselves.
Or maybe it’s because of an atavistic fear that their shades (or
at least their friends) will come back to seek revenge.

But
I put a bigger value on truth than on politesse, at least if my
obits of people like Nixon, JFK Jr., and Princess Di (among others)
are indications. The question is, of course, what is the truth?
So let me give you my version about Reagan.

I
have mixed feelings about Reagan. On one hand, he seemed like a
genuinely nice and decent human being – something you can’t
say about many U.S. presidents. His heart seemed to be in the right
place on most issues, and he said many appropriate and noble things.
On the other hand, his administration was 95 percent talk and only
5 percent action when it came to rolling back the State. Of course,
even just talk and good intentions are better than nothing. But
let’s look at his record.

Reaganomics

In
theory, Reaganomics (unfairly characterized as Voodoo Economics
by the disastrous elder Bush – one indication of his principles)
boiled down to reducing taxes and the size of government. Bravo!
Who but the malevolent or terminally ignorant wouldn’t approve?
In practice, however, it was something else entirely, amounting
mainly to a reduction of the top marginal tax bracket from 70 to
28 percent. It was a laudable start, but largely offset by many
negatives.

In
1980, the final year of the benighted Jimmy Carter, the federal
government spent $591 billion, with a $73.8 billion deficit. In
1988, the last year of the sainted Ronald Reagan, federal spending
was up to $1.064 trillion (an increase of 80 percent), with a deficit
of $155 billion (an increase of 110 percent). Sure, the money was
worth less under Reagan – but that was mostly due to the outrageous
deficit spending of the government he controlled.

Few
now recall that Reagan promised to eliminate the horrendous Carter
deficits. Instead, he more than doubled them, creating an artificial
boom – and a belief in government circles that deficits "don’t
matter" … the result of which will be, in time, a gigantic
bust and likely an unprecedented economic disaster.

Reagan’s
reduction of the top tax was excellent for many reasons I needn’t
bother discussing here. But in fact, the overall tax burden wasn’t
cut at all. First, Social Security taxes were raised significantly
(from 6.13 percent on the first $25,900 in 1980, to 7.51 percent
on the first $45,000 by 1988). SS taxes only serve to prop up the
scandalous Ponzi scheme until it collapses in a war between the
generations. In the meantime, it hurts the little guy worst.

Second,
the rapid inflation of the dollar resulted in "bracket creep,"
which pushed almost everyone automatically into higher brackets.

Third
was the elimination of "tax loopholes" – for example,
the abolition of numerous shelters, the elimination of the deductibility
of IRA contributions, the imposition of the Alternative Minimum
Tax, lengthening of depreciation schedules, the tightening of investment-related
deductions, a clampdown on offshore activities, and overall tightening
of IRS enforcement – among many other things.

In
fact, there can be no such thing as a reduction of taxes unless
there’s a reduction of government spending. That’s because if the
government doesn’t get revenue from society directly through taxes,
it must take it indirectly through inflation of the currency. Or
borrowing, which simply puts off taxation and inflation into the
future.

Meanwhile,
amid a lot of rhetoric about reducing the size of the State, the
beast grew like Topsy under Reagan.

Early
on, when he boldly canned the air-traffic controllers for striking,
it seemed as if he might make some serious changes. But he didn’t
go on to abolish the FAA or any other federal agency. Not even the
completely redundant and wasteful Department of Energy, which he
had explicitly promised to do. Not even the Selective Service, even
though in 1979, he said it "rests on the assumption that your
kids belong to the state … That assumption isn’t a new one. The
Nazis thought it was a great idea." Good rhetoric around a
core of hot air.

Reagan
talked the talk, but rarely walked the walk. I don’t know why he
failed. Maybe he became overwhelmed. Maybe the bureaucracy was just
too entrenched. Maybe he was surrounded by too many bad influences
in the top rungs of his regime. Maybe he just got to like things
the way they were and was corrupted by the power.

Early
in his regime, there was a catchphrase among the more libertarian-oriented
members of his administration, mostly second and third-tier players:
"If not us, who? If not now, when?" Well, they were right.
It wasn’t going to be them, or then. If it proved impossible to
roll back the State under what seemed like ideal conditions (a generation
ago), it’s going to prove to be three times as hard today, because
it’s that much bigger and more entrenched.

What
really bugs me …

So,
sure, I’m disappointed in Reagan’s failure, but certainly don’t
hold that against him. He was a decent, honorable man who probably
did the best he could. What bothers me are the myths, lies, and
bogus traditions that seem to surround the man and his death. The
conversion of a man into a hero for ulterior motives.

The
custom of apotheosizing dead politicians of whatever stripe is a
very bad one. In a free society, when a man dies his memorial is
created and paid for by his friends and family. But it’s shameful
to distract a whole nation for a week over the death of every ex-president.
And even worse to force everyone to pay for it, whether they approved
of the man or not.

Presidents,
certainly ex-presidents, are simply citizens. And politicians. They’re
not emperors or royalty. And the idea of treating anyone as if they
were should be hateful to Americans. The talk of putting him on
a coin only shows how degraded the ethos of America has become.
Times were (before 1909, with the Lincoln penny) we wouldn’t dream
of putting dead politicians on coinage. Like the Romans of the Republic,
our coins only had images of things like Virtue and Liberty. But
like the Romans, we’ve been transformed into an empire. Fortunately,
we don’t yet have sitting rulers enshrined on the worthless tokens
in our pockets.

Was
Reagan a unique force, personally responsible for winning the Cold
War and economically revitalizing America? No. Fact is, in all societies,
at all times, there are many men with intense desire to achieve
power. Why do only certain ones succeed? I’d say because what they
represent caters best to the spirit of the times. This becomes clear
when we look at history, especially turbulent times of crisis.

For
instance, in the ’30s and ’40s, all over the world leaders were
cut from pretty much the same cloth: dictators, or virtual dictators,
were the order of the day. Stalin in Russia, Mussolini in Italy,
Hitler in Germany, DeGaulle in France, Churchill in England, Roosevelt
in the United States, Franco in Spain, Tojo in Japan, Chiang and
Mao in China. Don’t be shocked to see them listed together. These
men differed from each other only in style, what their societies
would let them get away with, and the degree to which they trampled
both civil and economic liberties.

After
the economically disastrous ’70s, all the world was looking for
leaders with the common sense to take a different tack. It wasn’t
just Reagan in the United States and Thatcher in England who saw
that socialism was a dead duck – it happened throughout most
of the world. Even Russia and China, the last places on earth where
one might have expected it to happen, went to market economies.
The prize for the best rhetoric absolutely goes to Reagan and Thatcher,
and rhetoric is important. But the leaders of at least two dozen
other countries should get the prize for the actual degree of constructive
change that occurred under them.

What
about the assertion that Reagan’s defense buildup is what collapsed
the Soviet Union? I consider that complete nonsense. In fact, Reagan’s
huge rearmament program (combined with an adventurist foreign policy
(exemplified by the Grenada invasion and the bombing of Libya) very
nearly precipitated World War III. Remember Reagan was surrounded
by most of the same Neo-Conmen who surround Bush today. The difference
is that, although he was certainly no rocket scientist, Reagan was
both a lot smarter and wiser than Bush; he kept them under at least
a modicum of control. As important, Reagan had a good heart, whereas
Baby Bush is as mean as a snake.

The
USSR had always been an economic basket case – it sustained
itself only through the export of roughly processed raw materials
and loans from the West. As economically illiterate as the Soviet
nomenklatura were, they knew they were basically nothing more than
a large Third World country with a powerful military – which
was bankrupting them. When they saw Reagan’s arms buildup they were
faced with a choice: Start World War III while they still had a
chance of "winning," or do nothing and hope for the best.

Thankfully,
they waited. But Reagan’s arms buildup didn’t precipitate their
collapse – they were already vastly overcommitted to the military.
We escaped World War III by the skin of our teeth. But we’re not
going to escape the nasty economic and social consequences of Reagan
committing America to Perpetual War for Perpetual Peace.

What
did bring down the USSR? Its demise was inevitable, but the timing
was brought on by the collapse of oil and other commodity prices
after 1980. Reagan’s excellent rhetoric (like, "Mr. Gorbachev,
take down this wall!", and calling the USSR an "evil empire")
did add some important psychological impetus. It was important for
the slaves in the communist world to see somebody, finally, calling
a spade a spade. But the USSR would have collapsed anyway. Just
as the Chinese would have free-marketized anyway, simply because
people can ignore reality for only so long.

I’m
afraid Reagan can only take credit for being a nice guy who led
a full and interesting life. Politically, he played a minor supporting
role on the plus side, while nearly starting a global thermonuclear
war, further entrenching the State, and undermining the currency.
Was he a popular president? I guess so, and he deserved popularity
more than most presidents.

But
my guess is that most of the people in tank-tops and shorts you
saw lining the path of his funeral procession knew nothing about
what he did or was supposed to represent. They were mostly just
curiosity-seekers and idlers, Boobus americanus out to kill some
time and take in a spectacle.

July
9, 2004

Doug
Casey (send him mail) is
the author of the best-selling Crisis
Investing

and The
International Man
,
and editor of the newsletter International
Speculator
.


        
        

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