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Macrowritten5 - Essay Example

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This was an era dominated by cold war between US and USSR and amid such political tension and conflict, Ronald Reagan attempted to provide an alternative to the…
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Macrowritten5

Download file to see previous pages... Based on these four fundamentals, Reagonomics attempted to make a policy shift from the previous regimes in US which mostly focused on alternative economic policies. It has been argued that Reagonomics delivered on most counts due to the fact that it brought wider scale changes into the tax code of the country and brought changes in the way business taxes were levied in the country. Further, this was also considered as the most serious attempt in US to make a shift into economic policies of the country as it was declared that only through controlling the growth of the government, can a country grow and prosper.
Reagonomics worked in the sense that it reduced the government spending and rationalized the tax rates which offered relatively more space to the businesses to work and invest into their research and development thus preparing themselves for meeting future challenges of the market economy and other competitive challenges.
It is also argued that the unemployment during this era substantially reduced from 7% during 1980 to 5.4% in 1988. (Niskanen, 1988). It is also important to note that during that era, tax collections improved and as a result of this, the overall government outlay increased despite the fact that Reagan attempted to reduce the government spending.
The criticism of Reagonimics is however, based upon the notion that US economy, before the Reagan era was facing economic depression therefore the room for the improvement was relatively large. As such, according to Paul Krugman, Reaganomics basically attempted to exploit that available gap to show better performance during that era. (KRUGMAN, 2008). Accordingly, this was an era where rich got richer whereas most of the average Americans suffered and their standard of living further declined and reached to a level which caused immediate recession when Reagan and Bush Senior left the stage. This argument by Krugman therefore is based upon the notion that the ...Download file to see next pagesRead More
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