Some Truth About Our Economy

Ronald Reagan’s victory in 1980 was in part the result of Jimmy Carter’s failure to respond to high unemployment and inflation. Carter’s austerity program (in 1979, when millions of people were without work, Carter proposed a $25 billion cut in government spending) looked pale beside Republican promises to restore economic growth, stop inflation without recession, and make everyone better off.

By the early 1980s Republican ideas were a disaster. A tight-money policy resulting in high interest rates plunged the economy into recession. Factories closed, millions of workers lost their jobs, and thriving industrial communities became ghost towns. As Democrats regrouped, some sought an alternative to Republican supply-side economics in industrial policy—an economic program that entailed an expanded role for government in the economy, democratic planning, public investment, and managed trade.

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