Pundits evaluating the late President Ronald Reagan’s economic accomplishments should heed the perspective of Chou En Lai, Mao Tse Tung’s longtime aide. When a question arose on the effects of the French Revolution on world history, Chou suggested, “Perhaps it is too early to tell yet.”
The idea that 180 years are insufficient to reveal the effects of an event is foreign to us. Study of U.S. history suggests that Chou may be right. Popular consensus at the deaths of most presidents seldom agrees with the judgments of later historians.
Americans often assign disproportionate weight to presidential actions as determinants of the state of the economy. In retrospect, it often is clear that Congress and the Federal Reserve were more important. Moreover, economic actions that seem of critical importance during any president’s mandate frequently turn out to be less important than initiatives thought minor at the time.
In many ways, Reagan at this death holds a position in U.S. public opinion similar to that of Franklin Delano Roosevelt when he died in 1945. A large majority of the population thought positively of each. Smaller groups adulated these leaders as among the greatest presidents of all time. One the other hand, other groups wondered what all the fuss was about, viewing the deceased leader’s accomplishments as minor or even harmful to our society.
Roosevelt’s New Deal popularly was credited with pulling the U.S. economy out of the Great Depression. Seventy years on, historians are much less impressed with FDR’s economic achievements. Some New Deal programs, especially the National Recovery Administration and Agricultural Adjustment Act, probably made things worse. A premature attempt to balance the budget in 1938 actually extended the slump.
Yet, Roosevelt’s ability to inspire the public with speeches and his World War II leadership continue to be admired.
Many among the public credit Reagan with ending the inflation experienced in the 1970s. Economists generally would assign credit to Paul Volcker, a Jimmy Carter appointee.
The enormous federal deficits during the Reagan years were not his doing alone. All tax and spending bills during his presidency were passed by a Congress in which Democrats usually controlled both houses.
The juxtaposition of large federal borrowing with the Fed’s tight monetary policy led to exchange rate gyrations that pummeled farmers and the steel and auto sectors. Economic historians will sort out the longer-term effects for years. Where the scale eventually balances is anyone’s guess.
Looking back at the 1800s, there were bitter battles over import tariffs and boosting the money supply by silver purchases. Different presidents took different positions. Neither tariffs nor silver mattered to the long-run growth of the nation as much as the Morrill Act, which established land-grant agricultural and mechanical universities that bolstered U.S. productivity.
Our grandchildren may look back and wonder why we strove so bitterly over minor issues while ignoring more important historical developments already under way.
© 2004 Edward Lotterman
Chanarambie Consulting, Inc.