Reaganomics Was A Failure

Some ideas just won’t die even after they are proven wrong time after time. The actor Ronald Rayguns read his lines well, but he was a very poor economist. So are the modern day right wing entertainers.

This is such an important matter that I feel the need to quote Paul Krugman’s blog en masse:

Reagan! Reagan! Reagan!

Aha. I see that some commenters insist that I was unfair or, some insist, intellectually dishonest in my post on the fact that advanced economies actually grew faster in the era before modern finance took hold. There have been assertions that it was all about rebuilding from the war, or that the picture looks very different if you look at per capita real GDP, with some flat assertions that if you look at the numbers right growth has been better since 1980s.
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Um, no.
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Take the United States, which wasn’t damaged in the war. Take per capita real GDP. Give hostages by taking data from 1950 to 1980, which means including the 1980 recession, but stopping at 2007, so that the current slump isn’t included.
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Then here’s what you get:
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Growth in per capita real GDP from 1950 to 1980: 2.2 percent per year
Growth in per capita real GDP from 1980 to 2007: 2.0 percent per year
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Oh, and if we look at real median family income instead, we get:
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Growth from 1950 to 1980: 2.3 percent per year
Growth from 1980 to 2007: 0.7 percent per year
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Sorry: there’s no measure I can think of by which the U.S. economy has done better since 1980 than it did over an equivalent time span before 1980. It may be something you’ve heard, it may be something you’d like to believe, but it just didn’t happen.


LINK: http://krugman.blogs.nytimes.com/2009/11/07/reagan-reagan-reagan
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