Reaganomics

See: Bonzo.

Reaganomics: the conservative economics policy implemented by Reagan.

Reaganomics wasn’t out of the blue. It was done to combat the 1980 recession and the most dreaded thing of all: stagflation. Stagflation is when the recession is still continuing, along with inflation (rising prices), which is counterintuitive to what many economic theories say will happen (usually, we see inflation with economic expansion, not contraction).

Reaganomics, in short, was a supply-side economic policy, or trickle-down, i.e. making things easier on the higher-ups (wealthy people) and firms (run by the wealthy people) in an attempt to boost the economy. The thought was that, by cutting business regulations, income taxes, and capital gains taxes, wealthy people will spend (and invest) more. Spending, in theory, is what gets the economy back on track, into expansionary mode.

If wealthy people were spending and investing their dollars, instead of just letting it sit there, the idea was that it would create more jobs and more spending by the masses, which would lead to more economic growth. Money would “trickle down” from high-income earners to low-income earners.

Besides cutting business regulations, income taxes, and capital gains taxes, Reaganomics also cut the growth government spending and the expansion of the money supply. This is notable, since the mainstream macroeconomics running our government today, Keynesian economics, would want to do the opposite: increase government spending and the money supply. These two things would give the people more money to spend, in theory.

So...the million-dollar question: did it work? Well, that’s up for debate. Supporters point out waning stagflation and GDP growth. Critics point out the widening income gap, saying money trickled up, not down...as well as the national debt, which tripled in a mere eight years.