One point of clarification. Both President Carter and President Reagan had unilateral authority to abolish oil price and allocation regulations with a stroke of a pen. In the latter half of his administration, Carter was publically urged to take this very step by Hazel Rollins, who was head of the regulatory arm of the Department of Energy, called the Economic Regulatory Administration. This was a particularly gutsy position for Rollins to advocate openly, as she was criticizing the policy of her President.
When President Reagan assumed office in January 1981, one of his first official acts was to exercise his authroity to abolish oil price controls and allocation regulations. He also abolished the Economic Regulatory Administration. If Cyril can cite any evidence supporting his contention that President Carter wanted to decontrol oil prices and allocation, I would appreciate learning about it and, perhaps, some rationale why Carter chose not to act on that desire. FYI, later, Hazel Rollins married and assumed the name Hazel O'Leary. She became Secretary of Energy under President Clinton. Walt Warnick -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] Sent: Saturday, June 12, 2004 7:07 PM To: [EMAIL PROTECTED] Subject: Reagan's legacy over stated First is a letter I wrote to the Wall Street Journal followed by a letter I wrote to my local paper. I like de-regulation, tax cuts and small government, but I think Reagan's legacy is over stated. Cyril Morong I was surprised to see Milton Friedman give so much credit to Ronald Reagan ("Freedom's Friend," page A8, June 11, 2004). Maybe a recession was necessary to get rid of inflation, but three years after the recession was over in 1986 the unemployment rate was 7.0%, still above the 6.65% average from 1978-81 (I use that four year period on the assumption that Carter's policies did not take effect until one year after he came to office). And Carter was the one who appointed Volcker. If Reagan's policies took time to take effect as well, the results are not impressive. The average unemployment rate from 1984-1989 was 6.45%. The average from 1965 (when the Great Society programs began) to 1981 was 5.65%. From 1982-89 the average unemployment rate was 7.25%. From 1974-1981, the previous eight years, it was 6.94%. Things are similar for the average real GDP growth rate. In the 1960's it was about 4.1%. From 1983-89, it was 3.66%. So Reagan's economy was not unusual by historical sta! ndards. The 1970's averaged 2.93%, not too far below what Reagan had yet the economy struggled under high oil prices then. Now Reagan eliminated oil price regulation, which certainly helped, but Jimmy Carter wanted to do so as well. The real GDP also grew about 4% a year from 1976-79 before the second oil crisis hit (and 3.55% a year from 1970-73 before the first crisis). Carter instituted other deregulation as well. It is true that non-defense spending was slowed by Reagan. But defense spending is still government spending and this spending may have been what ended the recession (or at least helped along with tax cuts). Federal non-defense spending was about 2.4% of the GDP in 1975. It was the same in 1980. So that trend was in place before Reagan. We can even see this in Friedman's graph. It seems that many people, including Milton Friedman, are over stating Reagan's impact and the uniqueness of his policies. ************** Don't over estimate Reagan's impact. What happened while he was president? The Soviet Union collapsed and the economy improved. Does he get all the credit? The Soviet Union's decline may have been due to its poorly run, centrally planned economy. Economists Ludwig von Mises and F.A. Hayek (a Nobel Prize winner) had already pointed out the pitfalls of that system. The inefficiency of the Soviet System is why Gorbachev started Perestroika or restructuring. The economy improved partly due to getting inflation under control. The credit for that may go to Paul Volcker, chair of the Federal Reserve Board who was appointed by Jimmy Carter. The increase in government spending (mainly defense) that Reagan brought in may have helped. But increasing government spending was not an original idea with Reagan. Yes, he cut taxes and instituted some de-regulation, which probably helped. But president Kennedy cut taxes and a tax cut sentiment was around before Reagan got elected, with Proposi! tion 13 in California (to cut property taxes) being an example. Jimmy Carter was president when airline de-regulation began. So Reagan's policies were not unique. Now some want to put Reagan's picture on the ten-dollar bill. Will we forget the legacy of Alexander Hamilton, our first secretary of the treasury then? Hamilton rose from humble beginnings, studied finance and economics intensely, served directly under Washington during the revolutionary war and was a powerful influence on the early U. S. economy. Does Reagan's legacy really match that? It would be tragic if we had to forget Hamilton so we can remember Reagan. To do so would show an inability to think both critically and historically. I think the great historian Sidney Hook would consider Reagan an eventful man not an event making man. It is more the case that Reagan was in the right place at the right time than it was that he made things right.
