The essential character of today's federal government was crafted more by Franklin Roosevelt and Ronald Reagan than any other individuals of the twentieth century.

Roosevelt and his administration answered the question: Can the government and the economic system of the United States of America be saved for capitalism?

The answer was a resounding YES - because that's exactly what the New Deal did: it rescued capitalism from the Great Depression.

Reagan and his administration answered two questions:

The first is an economic question: Can inflation be vanquished and the market economy adapted to the business cycle so that the whole thing has credibility?

The second is a more basic question of life or death for the world: Can the threat of a nuclear holocaust be essentially eliminated in our lifetime?

The answers to both questions, after some interesting side shows involving the fall of Communism and the end of the Cold War, turned out to be YES, and this will be the lasting legacy of Ronald Reagan.

Reagan's whole economic philosophy was based on the efficient use of capital, a principle that became manifest in 1981 and 1982 as he and Federal Reserve Chairman Paul Voelker applied the bitter medicine of high interest rates to wring endemic inflation out of the system.

The rampant inflation that was produced by the destructive economic policies of Lyndon Johnson and accelerated by Nixon-inspired price controls and the energy crisis of the 1970's that was made even worse by the absurd micro-management of the peanut farmer from Plains who apparently thought he was still running the peanut farm.

Reagan and Voelker thought it was self evident that no progress could take place in an environment of galloping inflation that was sucking the remaining vitality out of the economy every day.

So they precipitated the 1982 recession by applying the powerful medicine that was needed to take the excesses out of the system.

It needs to be remembered that this was extraordinarily unpopular at the time because the quick fixes of Johnson, Nixon and Carter were  the medicine-of-choice even though they made things worse every time.

If there was anything that set Reagan apart from the social engineers in both parties, it was his willingness to prescribe painful medicine to cure an economy that was out of control.

Interest rates were at twenty percent at one time. They aren't any more, and haven't been since because of Reagan. No pain, no gain.

And we got  twenty years of prosperity - and, as Reagan was fond of saying, "You ain't seen nothing yet," despite the efforts of a couple of his successors to turn the clock back or misunderstand the circumstances or the economic realities.

Reagan was proudest of the creation of 19 million new jobs after the recession ended in 1982: He liked putting people back to work, just like Franklin Roosevelt did., and of the consequent improvement in our national morale, which had improved exponentially on his "watch."

The economy surged back after the tight money succeeded in chocking off the runaway inflation.

And then the recession was over. Reagan did what needed to be done.

Policy decisions have to be based on something real in order to BE real. And you need to understand the consequences of the things you do and the actions you take or fail to take.

Reagan's Treasury Secretary Nicholas Brady said the idea that something had to be complicated in order to be good was something that was rejected by Reagan: None of what he did was complicated; most of what he did was right for the economy.

New York Stock Exchange traders remembered Reagan's visit to the New York Stock Exchange back in the 1980's with Mikhail Gorbachev in the citadel of capitalism.

© Copyright 2003-2007 Ocean County Politics .com. All Rights Reserved.
Questions & Comments: gvgeditor@aol.com