Condensed Version of The Politically Incorrect Guide to American History by Thomas E. Woods, Jr. Regnery Publishing, Inc. 270 p.
Compiled and Edited by
Dr. Jimmy T. (Gunny) LaBaume
Chapter 17: The Decade of Greed?
How was Regan different?
Ronald Regan was different. He supported privatization, entrepreneurial sprit and the moral superiority of the free market. Such things had been despised during the 1960s and 70s. Regan made them intellectually respectable again.
Critics called it the “decade of greed.” Joe Sobran defined it for them: “Today, wanting someone else’s money is called ‘need,’ wanting to keep your own money is called ‘greed,’ and ‘compassion’ is when politicians arrange the transfer.”
Charitable giving during the “Decade of Greed”
Charitable giving, the opposite of greed, increased during the 1980s at a much faster rate than in previous decades. This was in both individual and corporate giving. In fact, the increase was vastly greater than the increase in expenditures on goods and services normally thought of as being extravagant—jewelry, alcoholic beverages, restaurant meals, etc.
The truth about Michael Milken, the man the media loved to hate
Michael Milken was not guilty of any crime yet he received a prison term and a $600 million fine for performing a useful social function. It had previously been difficult for new firms to gain access to capital. Milken’s realization that new firms often outperform established ones gave impetus to the high yield or “junk bond” market. These instruments gave many smaller businesses access to capital and therefore, there is no question but what they were socially beneficial.
In fact, Milken was present at the creation of the cable and cellular industries. He made it possible for MCI to compete with AT&T and backed companies like Turner Broadcasting and McCaw Cellular.
It was this same type of financing that was used in corporate takeovers. Outside financial interest bid for stockholder support against entrenched, unresponsive mangers. This provided a check against managerial arbitrariness. The use of high yield bonds to finance cooperate takeovers made it easier for entrepreneurs to acquire firms and toss out unresponsive and inefficient managers. Socially beneficial? Yes indeed!
But, Milken made enemies. First, the big banks were not pleased since he bypassed them altogether. Second, his bonds competed against those of other firms. The envy-driven media had a field day with Milken’s extremely high income. Surely he must have been a crook.
Milken was brought up on 98 charges but was convicted on only 6 petty technicalities that had never before carried jail time. Yet, he received a 10 year sentence. This shows that the 1980s were more the decade of envy than the decade of greed.
The myth of budget cuts
Critics claim that the 1980s “budget cuts” were symptoms of “greed.” But, the fact is that there were very few cuts. The numbers tell a different story.
Although the rate of increase in government spending slowed, it nevertheless continued upward. Federal spending increased dramatically during the 1980s. In the aggregate, there were neither tax nor budget cuts in the Regan era. Regan directed massive increases in social welfare and national defense. Agriculture spending skyrocketed. Although some individual programs were cut slightly, welfare spending increased overall.
The tax bite
Regan brought about income tax rate reductions across the board, reducing the top marginal rate from 70 to 28%. However, taxes actually increased on net. The federal tax bite averaged 18.9% of GNP during the 80s vs. 18.3% for the 70s and 18.2% for the 60s.
The real problem was not “greed” or tax cuts or budgets. The real problem was not that Regan had done so much. It was that he was unable to do more.
But, there is one thing that history cannot deny him. He defeated Communism without firing a shot.
The Essence of Liberty Volume I: Liberty and History chronicles the rise and fall of the noble experiment with constitutionally limited government. It features the ideas and opinions of some of the world’s foremost contemporary constitutional scholars. This is history that you were not taught at the mandatory government propaganda camps otherwise known as “public schools.” You will gain a clear understanding of how America’s decline and decay is really nothing new and how it began almost immediately with the constitution. Available in both paperback and Kindle versions.
You might be interested in the other two volumes of this three volume set The Essence of Liberty Volume II: The Economics of Liberty and The Essence of Liberty Volume III: Liberty: A Universal Political Ethic.