Ronald Reagan's Legacy

Ronald Reagan was a man who fought for what he believed in, and he changed the world more than probably any American in the twentieth century. He changed not only the conservative movement, the Republican party, his country and the world -- but also his opponents, known as liberals. As a result of his achievements, the typical liberal Member of Congress today sits to the right of Richard Nixon on a number of economic issues, including tax policy.

The Great Communicator, as he was called, was capable of charming millions of Americans with his soothing, grandfatherly demeanor. In 1984 there were polls indicating that most of those who voted to re-elect him disagreed with him on the issues. In short, the "Reagan revolution" would probably never have happened without his unrivalled leadership skills.

His death has unleashed a torrent of commentary on the significance of this revolution, and so it is important to set the record straight. His economic policies were mostly a failure. Partly this was because he had promised something arithmetically impossible: to increase military spending, cut taxes, and balance the budget. He kept the first two promises, delivering the largest peacetime military build-up in American history, and cutting taxes massively, mostly for upper-income households.

But budget deficits soared to record heights. The national debt doubled, as a percentage of the economy, before Mr. Reagan's successors were able to bring it under control. This "military Keynesianism" did pull the economy out of the 1982 recession, but the 1980s still chalked up the slowest growth of any decade in the post-World War II era. And income was redistributed to the wealthy as never before: during the 1980s, most of the country's income gains went to the top 1 or 2 percent of households.

Mr. Reagan also helped redistribute American income and wealth with a bold assault on American labor. In 1981 he summarily fired 12,000 air traffic controllers who went on strike for better working conditions. This ushered in a new and dark era of labor relations, with employers now free to "permanently replace" striking workers. The median real wage failed to grow during the decade of the 1980s.

The Reagan revolution caused even more economic damage internationally, for example by changing policy at the International Monetary Fund and World Bank. Thus began the era of "structural adjustment" -- a set of economic policies that has become so discredited worldwide that the IMF and World Bank no longer use the term. The 1980s became "the lost decade" for Latin America, the region most affected by Washington's foreign economic policy. Income per person actually shrank for the decade, a rare historical event, and the region has yet to come close to its pre-1980s growth rates.

Mr. Reagan is often credited with having caused the collapse of the Soviet Union, but this is doubtful. He did use the Cold War as a pretext for other interventions, including funding and support for horrific violence against the civilian population of Central America. In 1999 the United Nations determined that the massacres of tens of thousands of Guatemalans, mostly indigenous people, constituted "genocide." These massacres -- often involving grotesque torture -- reached their peak under the rule of Mr. Reagan's ally, the Guatemalan General Rios Montt. Tens of thousands of Salvadorans were also murdered during Mr. Reagan's presidency by death squads affiliated with the U.S.-funded Salvadoran military.

But it was Mr. Reagan's efforts to overthrow the government -- democratically elected in 1984 -- of poor, underdeveloped Nicaragua that almost brought down his presidency. Congress cut off aid to Mr. Reagan's proxy army, the Contras, as a result of pressure from Americans -- led by religious groups -- who were disgusted by the Contras' tactics of murdering unarmed teachers and health care workers.

The Reagan administration continued to run the war from the basement of the White House, and paid for part of it with the proceeds of illegal arms sales to Iran. Hence the Iran-Contra scandal, in which Mr. Reagan escaped prosecution because his subordinates claimed that he had no knowledge of their crimes.

The Reagan revolution continues today: the "war on terror" has replaced the Cold War as pretext for intervention abroad, including the disastrous war in Iraq. Tax cuts for the rich and huge increases in military spending have revived the era of giant budget deficits. As the Great Communicator used to say, "There they go again."