Reagasm!

This week a statue of Ronald Reagan was unveiled near the US Embassy in London on American Independence Day, it was built to commemorate the man who supposedly "won" the Cold War without firing a shot (at least not at Russians). Apparently the Iron Curtain fell because Reagan stood up and asked Gorbachev to "tear down this wall", it had nothing to do with the internal situation of the Soviet Union. Though we know that the Berlin Wall fell because of people power, it had nothing to do with American foreign policy, the Soviet Union was a house of cards and it collapsed from within. The statue will stand beside Franklin D Roosevelt and Dwight Eisenhower, who look left-wing compared with the wasp-ish ferocity of Reaganomics. Supposedly the 10ft Reagan will remind us of the "power of freedom", which the Reaganites loved so much they supported Apartheid and Nikolae Ceaușescu right up until the bitter end. The irony being we have a statue of Nelson Mandela in Parliament Square, Mandela was condemned as a "terrorist" by Ronald Reagan and Margaret Thatcher.

I have written about the deification of Ronald Reagan in the past and now the time has come to remind people about the reality of Reaganism as the media fawn over him once more. We can read at Sky News about how Thatcher shared his "idealism and conviction". In the comments you'll notice references to a "golden era" heralded by the Reaganites, for which there is no substance. You have to notice that the praise of Margaret Thatcher and Ronald Reagan is always particularly shallow and characterised by vague language, preferably with the Union Jack and the Old Glory in the background to symbolise trans-Atlantic unity. Back in February, President Obama praised Reagan for the way he "restored" a sense of optimism in America and "transcended" politics. It seems as though people are a bit lost as to why there should be a statue to this man in London. The reasons range from a centenary (in which case it's only 5 months late) to Reagan accomplished "Peace through Strength" by killing thousands of Latin-Americans and propping vile despots all over the world.

Thatcher's words were read out by William Hague "'Ronald Reagan was a great president and a great man - a true leader for our times. He held clear principles and acted upon them with purpose. Through his strength and his conviction he brought millions of people to freedom as the Iron Curtain finally came down." The Reagan years were marked out by a slaughter of thousands of people in Latin America and the Middle East, whilst dictators oppressed millions more on his watch. The Iron Lady finished with this "It was a pleasure to be his colleague and his friend and I hope this statue will be a reminder to future generations of the debt we owe him." The only debt incurred by the Reagan era was in the form of a $3 trillion debt which turned the US from the biggest creditor to the largest debtor in the world. All of it was used to pay for enormous tax-cuts for the rich, unprecedented protectionist barriers to foreign competition and a bloated military budget. The fawning British press is a disgrace.

It is appropriate that this man joins other overrated and misguidedly praised politicians as John F Kennedy and Jan Smuts as immortalised statues. Though it is most unfortunate that we build statues of such people in juxtaposition to statues of great men like Abraham Lincoln and Winston Churchill. It is more of a testament to the warped age in which we live, I suppose in twenty-odd years we'll be building statues of George Bush and hearing about how he fought so valiantly for freedom and democracy against Islamo-fascism. We find ourselves in Britain worried to death about the fucking Eurocrats in Brussels whilst Trident is a part of the US nuclear command system and we have been led into six "humanitarian interventions" in the last 20 years. Have we even made an independent foreign policy decision since Harold Wilson refused to send British troops to die in Vietnam? We are America's Trojan Mule in Europe, the British elite are aware that without the "special relationship" we have no role in world affairs.

Reaganomics Review.

 Voodoo Economics.

On January 20th 1981, following the disappointment of Carter's administration, the Reaganites were rushed to power on a platform that attacked "big government" as the source of America's problems. It was an easy answer to grievances of ordinary Americans going back to the early 70s. As President, Ronald Reagan implemented an economic policy that would go on to be known as "Reaganomics" which could be said to consist of four pillars: reduction in government spending, reduction in the income rates and capital gains tax, reduce government regulation of the economy and control the money supply to reduce inflation. "Reaganomics" was presented as a return to the glory days of free-market capitalism before the Great Depression and the New Deal reforms. Supposedly, President Reagan was working in accordance with the economic principles of Milton Friedman and Friedrich Hayek.

The economic policies of the Reagan administration are often described in ecstatic terms, as if such policies were the edicts of a free-market papacy, but what should be noted is that capitalism in its laissez-faire variant does not exist in the US. The Reaganites did not act to bring back the mythical halcyon days of the free-market and were a radically statist administration. For instance under Reagan protectionist measures doubled and at one point were three times higher than most other industrial countries. During these years state-expenditure increased significantly - breaking post-war records - in response to calls for "re-industrialisation" and the means to accomplish this was mostly Pentagon spending. By increasing the defence budget and cutting taxes the Reaganites effectively increased subsidies to the markets, specifically to lower the costs of firms - socialising costs and privatising profits.

A pillar of "Reaganomics" was the trickle-down theory which stipulated that cuts to the top rate of income tax and corporation tax, the state can encourage investment and expansion by entrepreneurs which leads to greater job creation and keep unemployment low. In fact, the opposite happened and the cuts lead to higher unemployment, lower wages and greater inequality. The wealth was hoarded as productivity has increased by around 45% while wages for working-people stagnated. The amount of debt per household doubled from 1982 to 2008 as workers substituted the cuts to their wages with credit cards, loans and mortgages - which later led to the $8 trillion housing bubble that caused the financial crisis of 2008. The number of illegal firings increased by a factor of six, as the state failed to enforce the laws that protected workers and unions from abuse. As a result, there are on average 65,000 deaths due to work-related injuries and illnesses in the US today.
 

At the same time, corporate profits surged from the early 80s to the late 90s and by 2007 the ratio of financial assets to GDP had doubled. By 2000 the richest 1% of Americans owned 40% of stock, while the bottom 80% owned less than 10%, this is indicative of the massive increase in the gap between the rich and the poor which resulted from "Reaganomics". There is a correlation between inequality and social deprivation, in more unequal societies there is typically greater signs of social deprivation such as illiteracy, obesity, teenage pregnancies, violent crime, drug addiction, alcoholism, mental illness and depression. During the Reagan years, there was an increase in mental illness and depression among workers which later led to the anti-depressant boom of the 1990s. The rate of incarceration has increased and today over 2 million Americans are in the prison system, mostly for drug-related offences whilst drugs became stronger and cheaper than ever before.

Starve the Beast.

The richest 1% of the American population, who were paying an income tax rate of 70% had that rate chopped down to 50% and then to 28% under the Reagan administration. The Democrats were complicit in these massive tax-cuts and the increase of tax-breaks for the ultra-rich. Between 1978 and 1990 the government lost $840 billion in tax revenue whilst 1% of Americans accumulated $1 trillion. When Reagan first entered the White House the national debt was at around $700 billion, by the time he left the debt had exceeded $3 trillion. The US had become the world's leading debtor, as opposed to the world's leading creditor as it had been prior to the Reagan years. The massive tax-cuts for the wealthy enacted by Reagan to necessitate cuts in public spending at a later date, a strategy known as "starving the beast", left the state borrowing to make up for the losses in the meantime. Incidentally the projected interest burden of the debt is equal, as a proportion of GDP, to the interest of the debt incurred by Obama's "fiscal irresponsibility".

The debt was a result of "Reaganomics" specifically the "too big to fail" bailout of Continental Illinois, the doubling of protectionist barriers, the deregulation of industry which led to mass-redundancies for short-term profits and the massive increase in military spending - which is a way of discretely pouring money into high-tech industry and enriching the likes of Bill Gates. It is likely that the collapse of tax revenue, which the Reaganites were responsible for, contributed greatly to the budget deficit as the economy descended into recession. This later led to the first Bush administration to raise taxes in a pragmatic move to secure the recovery, but as a result George HW Bush lost the election to Bill Clinton - who immediately followed up the tax-rises with massive spending cuts. Of course, the savage cuts furthered the ongoing decline of the  New Deal reforms, while spending in areas such as defence increased because only social programmes that are beneficial to the poor should be slashed.

One result of the enormous deficit accrued by "starving the beast" under Reagan were the pragmatic actions undertaken by Bush I and Clinton, namely the tax hikes that helped elect Clinton and the spending cuts that followed under him. The economic policies of Bush I, Clinton and Bush II sustained and furthered the changes made by Reagan, which all together amounted to the financialisation of the economy. In short the impact of budget deficits on politics has been to stifle radical change in favour of the kind of "pragmatism" we saw under Clinton, massive public spending cuts to shrink the deficit. The same is being seen under Obama, the enormous deficit accumulated by the second Bush administration functions to constrain any progressive tendencies left in the Democratic Party. Now that Obama has renewed the Bush tax-cuts which could cost $4 trillion and no doubt continue to "starve the beast" thereby justifying even greater cuts under whoever wins in 2012. 


The impact of "Reaganomics" is a shift to neoliberalism and supply-side economics, which are inclusive of all forms of driving economic growth by pumping money into 'Big Business' but don't see the need to fund welfare provisions or public education. All the theory behind this is reliant on the assumption that markets are innately efficient and will always clear without government intervention. A consummate nonsense, as supply and demand are in nearly constant flux which means that there is always disequilibrium - e.g. unemployment. Nonetheless, you'll find this ideological sewer running beneath theories of "trickle-down" and "starve the beast" in which tax-cuts pay for themselves and cash runs downhill for some reason. This sophistry meant that conservatives no longer had to worry about cutting spending before cutting taxes, it provided an intellectual gloss to slashing taxes for the highest earners whilst cutting spending on welfare.

The Myth of Ronald Reagan.

Fact and Fiction.

February 6th 1911, exactly 100 years ago today, Ronald Reagan was born in an apartment in Tampico, Illinois into a devout Christian working-class family. Ronald Reagan, or "Dutch" to his friends, went on to become the 40th President of the United States and is considered by some as one of the greatest Presidents. Since he took power in 1981, Reagan has been a subject of adulation by Republicans and is widely revered on the American Right. Reagan is now being held up by the Tea Party as a figure of immense integrity and ideological purity. The Tea Parties emphasise small government and fiscal responsibility, family values and a strong defence. For the Tea Party, Reagan belongs to the most noble of political traditions going right back to the American Revolution. This is the first of a series of articles that are aimed to dispel the myth of Ronald Reagan through a critique of the impact of Reagan's policy in foreign, economic and social spheres.

For the GOP Ronald Reagan is an icon of American conservatism and have succeeded in crafting a folkloric Reagan, to an extent which would impress Kim Jong-il. Take the story in which Reagan invites a black family to his home for the night, having dinner and breakfast with them, because they were refused rooms in the local inn. This is a story for anyone eager to glorify Reagan as a man ahead of his time. In reality Ronald Reagan opposed the Civil Rights act, tried to veto the Civil Rights Restoration act, on the grounds that the acts imposed too much regulation on small business and churches. He also opposed the Martin Luther King holiday but reluctantly voted for it given the level of popular support. Reagan later added Nelson Mandela to a list of terrorists in 1988 as he propped up Apartheid. These facts mean much more than the story of the anonymous black family and the friendly white man, which would have us believe he was everything we'd want from a President.

Reagan is often described in glowing terms as a man of humble origins who earned his privileged position in society through sheer hard-work. Of course, the fact that Reagan was a star of the B-movies who became the biggest corporate spokesman of the 1950s is downplayed. As a politician Reagan began his career as a Democrat and was a proponent for the social democratic policies of Roosevelt's New Deal. But in the 50s he made the transition to the right-wing of the Democratic Party, endorsing Eisenhower and Nixon along the way, before completing the transition and defecting to the Republican Party in 1962. Reagan began to espouse the core principles of American conservatism: small government, free-markets, anti-communism, family values and individual freedom. Reagan's success as a politician was down to his ability to present policies favoured by "Corporate America" as good for all sectors of society.

Ronald Reagan is still revered as an apostle of the free-market, small government and fiscal responsibility. There is a clear difference between the Reagan dreamed up by the public relations industry and Reagan the man. Even though under Reagan the size of the federal government increased relative to GDP, enormous protectionist barriers were hoisted up against foreign competition, whilst corporations were allowed to close plans all over North America and spending on the military increased rapidly under his administration. The systematic deregulation of the financial sector led to the Savings and Loans crisis, to which the Reaganites responded with bailouts for companies that were "too big to fail". In foreign policy the Reagan administration led a brutal crusade of violence and terrorism in the name of promoting democracy, which thousands in Latin America and the Middle East slaughtered.

The last 30 years have been heavily influenced by the events that took place in the Reagan era. The discourse was redefined in the 1980s by the likes of Lee Atwater and Roger Ailes, who created the GOP playbook of mudslinging and outrageous lies, we have them to thank for right-wing media - e.g. Fox News and Rush Limbaugh - that has crudified debate. Millions of Americans don't even vote because the elections look meaningless, as the candidates smear one another as "Nazis" and "anti-Americans". The culture wars are still raging in America, wedge issues like abortion and immigration remain a rallying call against liberals on the Right. At the same time "Reaganomics" has led to an enormous gulf between the rich and the poor, with the most basic aspects of the welfare state being torn up for the sake of "small government" and the "free-market".

Con-Dem-Cuts!

We're all in this together.

The budget deficit racked up by the last years of 'New Labour' as Brown was trying to bring Britain out of recession "Keynesian-style", for which he was attacked by the press on the grounds of "fiscal irresponsibility". If Brown had stood back and done nothing, as Cameron claims he would have, Brown would have been attacked by the press anyway. The recession is over and we are now living under a coalition government. The media has shut up about the recession and the recovery, but is loyally spouting the party-line of "Cuts! Cuts! Cuts!" Though there are good reasons to be concerned about the budget deficit, as it is approaching to £170 billion. Cameron's argument is that the deficit is an unjust form of taxation on our children and their children, so we must cut now and take the consequences of our actions as a responsible adult should. However, there is a fallacy at work here which the media are not acknowledging, in fact they are actively ignoring it, for the sake of the nomenklatura.

As cutting public spending will inevitably involve mass job-cuts, most of which will have little productive effect as firing an employee that costs £25,000 a year would only save the state £2,000 over the same period of time. £23,000 would still be lost in tax-revenue and benefits payments to the "redundant worker". In order to pay for a deficit of £170 billion through such cuts, the government would have to cut the jobs of 85 million people which is an absurd proposition. So it would seem that there will have to be some tax increases at some point, though the proposed spending cuts could increase unemployment. The cuts also have the potential to further the decline of tax-revenue in this country, which has been a major contributor to the budget deficit. The media prefers to focus on reckless public spending as the cause of the deficit, which supports the argument that we must slash spending to save future generations from the burden of £170 billion.

It would appear that there are ideological reasons for the cuts in public spending. As seen in the US, recessions and the subsequent budget deficits provide a pretext to cutting public spending and dismantling the changes made by the New Deal reforms. These actions have made the financial sector a central part of the economy, the banks have become particularly influential in government. This is why the US Treasury Department is referred to by regulators as "Government Goldman" due to prevalence of former bankers, specifically those who used to work in Goldman Sachs, in the Department. This is a long-term consequence of Reaganomics in the US, the British equivalent being Thatcherism that has led to the financialisation of the UK economy. The cuts which George Osborne is proposing belong to this same current of dismantling the welfare state that was constructed in the years of social democratic reforms back in the 1940s.


The current, which I am referring to, is that of Thatcherism which has become the political orthodoxy in Britain, as it has dominated policy since 1979 and may do for years to come. Thatcher led the way in mass-privatisation and deregulation, which destroyed entire communities centred around manufacturing and mining. These policies were combined with a crippling attack on trade unions which led to the decline of workers' share of GDP (received in wages), this culminated in the early 90s with some of the biggest wage cuts in the world. The financial sector became increasingly important as it flourished under the Thatcherites, especially after the "Big Bang" of 1986. The rise of 'New Labour' slowed the increase of inequality but failed to reverse the massive increase that happened between 1979 and 1997. And after 13 years of Labour wages for working-people increased by 45% while wages for the upper-classes increased by around 300%. We as a society are now more unequal than we were 40 years ago. This is the ignoble current that Cameron and Osborne belong to.


The 80% cuts and 20% taxes approach of the Con-Dem Coalition is likely to harm working-people the most, whilst protecting the upper-classes from their responsibilities to wider society. The words of George Osborne "We're all in this together" only applies to the rich-white-men in government and their primary constituency in Canary Wharf, who have contributed £16 million to the Conservative Party since 2006. 18 out of the 23 Cabinet ministers are millionaires, 19 are male and 22 are white. Though this may have changed slightly since David Laws left the Cabinet following the revelations about his expenses and sexuality. But there are definitely still 19 men and 22 whites because we live in a "meritocracy". Because we live in a "meritocracy" Stuart Rose - the Chief of M & S and a supporter of the Conservatives in the face of a Labour "job tax" - has his salary and bonus increased by 140% while you can expect to see public services slashed for the  "good" of the country.


Fortunately for the Conservative Party, David Cameron and his artful oik can rely on a large chunk of the mass-media to back them all the way as he has "wooed" the media tycoon Rupert Murdoch, who stamps out dissent wherever he hangs his hat. Murdoch controls around 40% of the media in Britain and had backed Cameron in the PM campaigns. Thankfully, the kind of commentary Murdoch spews in the US is not tolerated in Britain at the moment. Even The Sun is moderate when compared to the "fair and balanced" reporting at Fox News. Nevertheless, the criticism that will inevitably land on the government will be marginalised and "diluted" by Murdoch's influence. The most read attacks will come from the reactionary populists like Richard Littlejohn and Melanie Phillips, which will likely consist of accusations that the government is "too left-wing". For them the only explanation for the failures of state-capitalism is that there is an elite of liberals and socialists who are keeping utopia.


In the end the proposed set of spending cuts and the increase of regressive taxes will probably be pushed through. When it is possible to cut the budget deficit by increasing some taxes, while cracking down on tax evasion and closing loopholes that cost this country £100 billion every year in tax revenue. But the Conservatives, despite claiming to be pragmatic, are not acting out of practicality and have a deep-rooted dedication to slashing public services that will benefit the majority of the population. A dedication to taxation would require a genuine dedication to progressive aims, while the Con-Dem Coalition has only reactionary goals. The Red Tory rhetoric is shallow and the labelling of this coalition as "progressive" is deeply deceptive. As this government appears to be dedicated to the same cause as the Blairites and the Thatcherites. Thus, Osborne's statement "We're all in this together" should be replaced with something more befitting like "From each according to his gullibility, to each according to his greed."

Related Links:

Osborne's Bombshell

Osborne to ask public which services should be cut 

M & S Chief Stuart Rose's Pay Hike

The Great Tax Parachute

Boardroom pay, chief executives just don't get it