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Reflections on Reagan’s “Myth of the Great Society” Speech

October 19, 2020

A good friend recently sent me a link to Reagan’s famous “Myth of the Great Society” (link). Watching it, I was mesmerized as I remembered what a true statesman sounded like. It’s been a long time since we’ve heard a voice like Reagan’s in American politics. What follows are my reflections about where all the “great” economic and political ideas of the past have gotten us.

The ideas Reagan enunciates in the speech are definitely powerful. No surprise, as they echo the ideas of the founding fathers. Forty years after “morning in America,” however, Reagan’s vision appears as impossibly utopian to me as the ideas of the liberals and their Great Society. Both sound great in principle. But then career politicians are charged with implementing them, and these beautiful ideas get perverted away from their noble intentions.

Reagan wanted to shrink government — the image of the Pentagon paying $500 for toilet seats was extraordinarily effective. Cutting taxes seemed like a rational way to “starve the beast” of big government. The idea made perfect sense in principle. I voted for it, enthusiastically. I was only 22 years old and I already felt besieged by taxation. But Reagan & Co. got conned into cutting taxes based on Laffer’s terribly inaccurate “analysis” (more of a groundless assertion) that tax cuts would generate even more tax revenue and “pay for themselves.” This never happened — but conservatives now chant it as if it’s an established truth. Government spending needed to be cut dollar for dollar with the decline in tax revenues — but that was not politically expedient. I think the Gipper would be mortified to learn that, like it or not, he is the founding father of Modern Monetary Theory. A little research confirms that the national deficit exploded higher in percentage terms under Reagan — more than any other president before or after. He accused the Democrats of being “tax and spend” liberals. So we traded “tax and spend” liberalism for “borrow and spend” conservatism. Are we better off? Our country would be technically bankrupt if the Fed and Treasury Dept didn’t collude to monetize most of the new debt. Modern Republicans are convinced that borrowing to spend on social programs is the work of the devil. But they never saw a war that wasn’t worth going into debt for.

Deregulation is another conservative canard. The airlines are the poster child for failed deregulation. The financial services industry, too. Now we shrug when Jamie Dimon admits JP Morgan was “spoofing” gold and silver prices. It’s not cheating. Let’s substitute a gentle word like spoofing; it’s just a funny capitalist joke. JP pays a $1 billion fine and Dimon is still eating takeout from the Ritz in his mansion in the Hamptons. Who pays that fine, ultimately? The bank’s customers and all the “free to choose” day-traders (like me). Wells Fargo regularly cheats its customers, pays fines, apologizes; rinse and repeat. Boeing execs knew their modified aircraft designs would fail — but it would be too expensive to fix. And they punished insiders who tried to blow the whistle. What’s a few plane crashes here and there? Disgusting. But these are the values that have gradually taken hold in our way of life.

Let’s say a few words about our system of for-profit health care. Americans pay the most and obtain some of the worst health outcomes in the world. And that doesn’t include dozens of hours a year spent sifting through paperwork on deductibles and copays. No citizen in any other “first-world” nation has to go through this. If free markets fix problems, why hasn’t the free market lowered costs and improved outcomes in health care? And don’t tell me about the abysmal Canadian health care system. My mother has lived in Canada for the past 21 years. She complains about everything, yet she loves her health care there. It’s the only thing she doesn’t complain about, frankly.

The U.S. has suffered through cycles of deregulation in financial services that have led to costly financial panics, followed by cycles of re-regulation. Both types of cycles have been too extreme. The business costs of these unpredictable de- and re-regulation cycles are profound. Banks now spend billions just figuring out what the endlessly-changing regulations allow. I believe it was Ed Kane who first noted that banks now employ armies of lawyers to engage in “loophole mining,” essentially figuring out how to cheat on any regulation. To me, this is the ultimate cynicism — entities allowed to compete in our gloriously free and prosperous free market without a shred of an intention to abide by any rules whatsoever.

If we’re freer under radically free markets, devoid of regulation and supervision, then one of those freedoms is the freedom to be cheated blind by our largest corporations.

And I’m not saying that semi-socialist nations like France are any better or worse than the U.S. — they are just different. There’s conservative corruption and liberal corruption. Those have now become our choices in the voting booth.

My view is that decades of economic and political philosophy — both conservative and liberal — has done little to improve citizens’ lives. If all these lofty ideas were worth the time and expense it took to develop and promote them, the average citizen would have more optimistic, patriotic feelings about our country than is currently the case.

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