The failure of voodoo economics in pictures

by: Paul Rosenberg

Mon Jan 24, 2011 at 16:30

Rachel Maddow had to STAND UP on Real Time in order to get a word in edgewise to challenge one more repetition of the conservative myth that Reaganomics worked miracles with the American economy--that his tax cuts were "the greatest economic policy of the last 30 years". (Repeated here by the Wall Street Journal's Steve Moore.) She has to battle Moore's attempt to ignore what Reagan did to the deficit, and she has to refute the notion that Reagan produced a boom of economic growth for all, distinguishing between what happened for the top 1%, who really did experience happy times, and rest of the economy, for whom average wages barely budged.

Maddow later got an assist from Reagan budget director David Stockman, who, after all, was there. There was also a pretty cool discussion of gun control, with Stockman--tying into what Keynes said about gold--saying that guns were a barbarous relic and should be banned!

But I wanted to just underscore the enormous magnitude of Steve Moore's pathological big lies, so I put together a few charts, and resurrected an oldie. We simply can't let up on calling them on their endless lies. First the clip:

Now the charts. First, a chart showing that Rachel got it exactly right--the top 1% did great under Reagan, but average incomes went nowhere. Here I use Emmanuel Saez's compilations of IRS data, and a figure that differs ever-so-slightly from average incomes--the aggregate total of the bottom 99%--but that I find much more visceral and clarifying:

Here's the same data, translated into percent increase from 1980:

And since Moore also said something about "20 years", here's the 20-year picture:

Paul Rosenberg :: The failure of voodoo economics in pictures

Here are the underlying figures for the first graph:

And here's a direct comparison of how the top 1% and the bottom 99% did under Reagan vs. Clinton, just to make clear how badly the bottom 99% were screwed under Reagan:

This is not to say that Clinton's economy was as good as it gets. The rich still did far better than anyone else. By comparing Reagan with the JFK-LBJ record, we can see how dramatically different an economy that works for everyone can look, an economy in which the top 1% did only modestly better than everyone else, in terms of income gains:

Of course OL readers know that Rachel spoke the truth about deficits. Here's one of several different graphs I've used to show the debt explosion Reagan ushered in--and that Clinton dramatically reversed, before Bush II exploded it again:

Here's another such chart:

And, finally, here's a few charts--using Bureau of Labor Statistics (BLS) data--showing what's happened with employment since 1960. First, here's the big picture--aggregate employment data:

You'll note first how relatively smooth the slope is for most of the time. There are modest dips or plateaus and modest periods of more rapid growth. One of the less modest plateaus happened in the early 80s, taking some luster off of Reagan's record. But also note that one of the periods of more rapid growth was the late 1970s--a decade universally associated with economic chaos and stagnation. In fact, from 1975 to 1980, employment grew 3.3% per year, from 1980 to 1985, it grew just 1.3% per year, and from 1985 to 1990, it grew just 2.4% per year. The overall 1980s growth rate was 1.9%. If that's a "jobs miracle," I'll eat my hat.

Now here's labor force participation, a much less smooth curve, which is probably much more indicative of what it feels like to be in the labor market:

Of coure, this says nothing about the quality of such jobs--how dangerous, pleasant, fulfilling--or soul-killing--they are, not to mention how well or poorly they pay.

Which brings us, finally, to a very crucial subset of employment data--that in manufacturing:

Here we see clearly that Reagan's record is that of presiding over the beginning of the de-industrialization of America. It was nothing like the total collapse under Bush, but it helped pave the way for that eventuality. And it was also nothing like the substantial growth in manufacturing during the Kennedy-Johnson years. Which was, of course, a huge part of why the bottom 99% did so much better then than it has ever since.