Inner Workings of Reaganomics

My first impression of Reaganomics was "this is absurd". I believe that many of my classmates had the same impression of Reagan's economic policy. It sounds logical to say supporting the rich financially, who would then spend that money, would benefit the economy. However, it is illogical to even assume the consumer behavior of the rich. On which basis did Reagan believe that his economic plan would resolve stagflation? Or is there another reason, unrelated to the problems of stagflation, which motivated Reagan to support this policy?

Reagan, as expected, was not the most studious student in college. When he majored in economics and sociology in Eureka College, he graduated with a C grade. In terms of the logistics of government and economics, therefore, he was incompetent. Nonetheless, he took on a leadership role at a very young age. He performed 77 rescues when he got his first job as a lifeguard at the Rocket River in Lowell Park. He was the student body president and led a student revolt against the college president that tried to reduce the faculty. His performance as an actor also contributed to his leadership appeal. Therefore, he could be considered a political figurehead, except with his own unformulated, elusive ideals and real authority to implement them.

In spite of the elusiveness of his Reaganomics ideas, the plan was not without access. Spending during his presidency averaged 21.6%, which almost tied with President Obama for the highest among any recent President. Nonetheless, consumerism was never the only solution to growing recession. Public debt rose from 26% GDP in 1980 to 41% GDP by 1988 - a roughly three-fold increase in dollars. Consumer spending did, however, help decrease unemployment to 5% and inflation to 4% in 1988. This increase in national debt which followed individual financial improvements can be argued as an integral cause of modern industrialism and entrepreneurship. The advent of entrepreneurship was indicated by a 3.5% growth in real GDP, an increase in non-agricultural employment by 16.1 million, and a decline of manufacturing labor by 582,000.

Ronald Reagan could definitely be considered as one of the less economic-savvy politicians. He was unable to see the whole picture of the results of his economic plan, which was not well-formulated in the first place. As a member of the controversial movie industry, part of his plan might have been inspired by a desire to appeal to the upper class. Nonetheless, intentionally or unintentionally, Reagan established the foundations for modern American economics. The mounting national debt, the rapidly growing startup companies, and the huge financial disparity are all a party of his lasting economic legacy. His arbitrary economic reformation, perhaps by sheer luck, set us up to become one of the most rapidly-growing nations that is compatible with the modern global economy.