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10-03-2012, 07:11 PM   #1
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Forbes's myth of the Reagan boom

Forbes's myth of the Reagan boom : CJR

This is just false. Real GDP grew an average 3.3 percent a year in the 25 years from 1982 to 2007. But guess what? It grew 3.4 percent a year in the previous 25 year period, from 1956 to 1981. Real GDP per capita grew 2.2 percent a year from 1982 to 2007, and it also grew 2.2 percent a year from 1956 to 1981.

And real GDP per capita grew 2.4 percent from 1947 to 1972. It’s just not true that Ferrara’s 1982-2007 time frame was the “greatest economic boom in world history.”

But that’s not all. Ferrara’s “Reagan boom” was goosed on a flood of debt, both from the financialization of the private sector and from deficit spending you might call Keynesian, even.

10-04-2012, 06:20 AM   #2
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Yes! I was a Forbes reader back then. I remember, when interest rates were high and bonds were an after-thought (though equities sucked too): Forbes came out with a prediction that the 90s would bring a bond boom. Sure enough. And the bond boom created all sorts of economic issues by of course going too far.

Around the same time, I was astounded by the balls on Tempelton, who boldly predicted a DOW of over 10,000 - at a time where it was stuck in the 700's. Here again, while a good part of the stock market gain was due to a) making and selling better stuff (the old fashioned way) and b) a return to norm in the market, a big factor in the market was and is debt: so much financial engineering, companies turned into products themselves, and leveraged buyouts... all that drove markets higher, and gradually put more risk into the system.

I don't know about you all, but for me quite a bit of the Reagan/Bush years, and again Bush Jr, felt like 'growth' and 'boom' didn't quite reach us all. It felt hollow. During Clinton the economy didn't feel as hollow - it seemed we all got some gains.
10-07-2012, 02:51 PM   #3
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QuoteOriginally posted by Nesster Quote
During Clinton the economy didn't feel as hollow - it seemed we all got some gains.
Was it because of the internet? The internet was a very disruptive technology that I think fueled a lot of economic activity and globalization. The closest technology advancement we have had recently are smartphones and social media (which I do not believe are as disruptive as the invention and implementation of the internet).

This is why I always take economic numbers from a presidents reign fairly lightly. It seems like there is a lot to filter out to try and determine whether it was the presidents policies that caused the increased (or decreased) economic activity, or it it was external factors.

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