The United States benefits every day from the policy victories won by President Reagan’s administration. Enough time has passed since his tenure in the White House that many fair-minded observers, regardless of their political orientation, recognize that many of the changes he implemented were victories for America at least as much as they were victories for the conservative cause.
On the domestic policy front, perhaps the most lasting benefit grew from his support of Federal Reserve chairman Paul Volcker, who was willing to make the hard decisions required to break the back of seemingly unstoppable inflation coupled with chronically high unemployment. President Reagan scored another win for America through the incredible economic growth spurred by his historic tax cuts. And we still benefit today from the appointment of the Greenspan committee and the subsequent extension of Social Security’s solvency by nearly half a century.
Less appreciated among the broader population is how drastic an impact the Reagan era had on prevailing economic orthodoxy, particularly the reduction (but not outright replacement, unfortunately) of the dominant tax and spend Keynesian narrative needlessly restricting Washington’s policy tools at the time. Instead, a new recognition emerged of the important “supply side” factors that drive real and sustained economic growth. As a result of the tax and regulatory reforms motivated by this new economic focus, undertaken in a bipartisan embrace by administrations over the last four decades, America has enjoyed strong growth in the face of multiple setbacks.
Unfortunately, recent developments in our nation’s political landscape have brought to the fore socialist policies considered unthinkable only two decades ago, even to the mainstream of the Democratic Party then and to many of its adherents today. To combat this, the Republican party has embraced, at least at the national level, their own brand of pseudo-populism, with supply-side economics still playing a dominant role in the actual practice of governance (e.g. see the recent tax reform and its emphasis on lowering rates and increasing productivity).
I believe that supply side economics is still a powerful tool for stimulating business investment and growth, but I have increasingly come to fear that this economic message may not translate to success in the new American political landscape. Instead, I believe that the Republican Party, and the conservative movement more broadly, should embrace an economic message rooted in the skill and importance of each American worker. Our message must focus on the role of the individual in driving success, on the fact that the sustained growth of our nation’s economy is only possible when the great bulk of our population finds individual success.
I intend to use this column to expand upon my belief in exactly what should compose this new “skill-based” economics, both as an economic doctrine as well as a political strategy. This approach to a new kind of conservative economic platform will include, but should not be limited to, a renewed emphasis on the importance of human capital and skill development, in addition to the relationship between education and economic growth in the U.S. and around the world. I will also explore the recent evidence on and importance of innovation and small business development in job creation and economic dynamism. Finally, I will bring a free market perspective to the causes of, and solutions to, the recent slowdown in economic and social mobility in our country. As defenders and promoters of free markets, we must not abandon what we know has worked to drive economic success for the last two centuries, including the rule of law, free enterprise, and free trade. However, we must not be blind to the future challenges and opportunities we face, and we must ensure that our message matches our reality.
Damon Dunn writes the regular “Free Markets 101” column for “Right by the Bay”. He is a successful real estate developer, investor and businessman, former collegiate and pro football player, and was a Hoover Institution fellow from 2011-13.