Just as I was starting to link Reagan to the great monetary boom of the 80's, a book is coming out with Reagan as the culprit and Eve Smith quotes
Boom-and-bust cycles, obscene CEO salaries, blackouts, drug-company scandals, collapsing bridges, plummeting wages for working people, the flight of U.S. manufacturing abroad—these are all products of Reagan's free-market zealotry and his gutting of the public sector. Reagan pioneered the use of wedge issues like race and the war on drugs to distract America while his administration empowered corporations to lay waste to our traditional ways of life.
That's right, blame the Cowboy on that one, everyone says.
1/ It is true that deregulation set the stage. The financial markets were not to be meddled with. After years of scorn and disdain, it had become dogma that public intervention or regulation in free functioning markets would always lead to an inferior solution. What a naive view in retrospect. It seems regulation and free markets go hand in hand and dogmatic views do not make for happy endings. The opening of the monetary valves proved such a powerful political aphrodisiac. It was in fact Clinton that repealed Glass-Steagal. Remember if you tried to close monetary valves, you would die the horrible Carter political death. Yuck.
2/ But really it wasn't just Reagan. Reagan didn't manufacture and market securitization, bankers and physicists did. Reagan, was ultimately not responsible, and very probably un-aware, of the very wave of innovation that was taking place under his and Clinton watch due to the advance of IT, financial engineering and deregulation. Let's not forget that if the FED was setting the monetary agenda since the Carter days, it, itself, is susceptible to the influence of the private sector.
When a complex system shows signs of break downs, such as our credit economy, it is hard to single out one agent as the root cause. So credit is to blame, but who it made 'easy credit' so. It was the politicians, the bankers, you and me, it was our nervous system that rewards us every time we push the morphine pedal. We collectively blew this credit bubble up. The system is inter-twined, by definition of a living system. The narrative we make of the breakdown will quickly identify culprits and it will latch onto them. It is interesting that the culprit is usually the point of entry of the narrative (the politicians, or the bankers, or the people) and the other constituents can be cast as consequences or innocent bystanders.
Reagan it is! He deserves it too, the cowboy f*cked it up!