How did the Reagan presidency affect economic inequality?


I know economic inequality was on a rise before his presidency but there was a notable spike during it, does anyone know why this happened?

In: 6

Implementation of tax cuts for the rich on belief of “trickle down” and “supply side” economics. The idea was if rich keep more of their money, they’ll spend it and/or invest it and that will create more jobs. But upgrading from a 3-series BMW to a 5-series, dumping more money into one’s Fidelity stock portfolio didn’t generate all that much in the way of American jobs for the working class.

Also, businesses began to focus more on “increasing shareholder value” at their primary end goal vs. taking care of employees, providing the best products and customer services, etc. And consolidation/ economies of scale gave rise to large brands, big box retailers that decimated mom & pop businesses that had created many middle class lifestyles. Gone was Al’s Appliances providing an upper middle class income for Al and middle class salaries for his otehr workers, killed off by Best Buy and it’s minimum wage jobs.

It all started with Johnson and the Vietnam War.

LBJ underestimated how much the war would cost. The US was flying bombing missions day and night, and all those bombs were made of steel. US factories were working hard to keep up. This meant that Japan and Germany couldn’t buy US steel, and started making their own steel.

Nixon kept doing the same thing LBJ had done; bombing day and night. In fact, Nixon increased the bombing.

When the Arab Oil boycott hit, America was triply screwed. We couldn’t just leave the War, we had to pay increased prices for everything made with oil, and our industrial base was no longer the most powerful in the world. This is when you started hearing the phrase ‘Rust Belt.’

The Iran Hostage Crisis deserves it’s own book, so I’ll just say that Jimmy Carter lost in 1980 and Reagan rolled in.

What Reagan realized was that if the richest folks kept spending, you could make the economy look strong, even if it was falling apart. By cutting taxes for the top earners, he created a bubble economy. It didn’t matter that homelessness was increasing; the rich could afford bigger cars and nicer houses.

Here’s one program Reagan torpedoed. CETA Comprehensive Education and Training Act provided jobs and training for low income folks. You’d get a pay check and learn a skill. That was out.

The homeless thing deserves a mention; Reagan, as California Governor, cut spending on the state’s mental hospitals. That caused a big spike in homelessness there. He knew about it, and decided the whole country should share in the fun.

tl, dr= In 1968 when Republican Nixon became President, ‘middle class’ was one Union job paying to support a family of four. By the time Bush Sr. left office in 1992, ‘middle class’ was two college grads stuggling to keep the house going. There was one Dem President in all that time.

The trendline for the Gini Coefficient has been linear since before Reagan took office, so I’m not sure where you got the notion of a ‘spike’.

If you look at the underlying numbers, the issue of economic inequality is primarily related to the bottom of the curve rather than the top. This problem is often referred to as ‘generational poverty’, where certain groups are mired in seemingly inescapable poverty.

The causes of this can be debated, but it’s likely due to diminished opportunities for the working class and various forms of social dysfunction.

Inequality for All, the documentary by Robert Reich explains this period well in easy to follow terms. The second part of the doc is political but the first part is historical explaining history.