When Ronald Reagan took the oath of office just over 30 years ago, there were two world conditions that every analyst had come to believe had become permanent. Those were economic stagflation and the Cold War.
The Misery Index for 1981, a phrase used by Reagan in the 1980 campaign, was the unemployment rate added to the inflation rate. It was a staggering 17.92 percent. The year before, the last of President Jimmy Carter, it was even higher: 20.76. Most economists believed that the United States was in for a more or less permanent period of anemic economic growth, high unemployment, and robust inflation.
By 1984, though, despite a severe recession that took place in 1982 and the first part in 1983, the so-called misery index had plunged to 11.81 and would achieve a low in 1986 of 8.91. While the Fed led by Paul Volker had wrung inflation out of the American economy by raising interest rates, Reagan’s across-the-board tax cuts had set the stage for renewed economic growth. While there would be recessions, after Reagan, 1970s style stagflation would never return.
The Cold War was thought to be a permanent condition of humankind, with the United States and the Soviet Union locked in a balance of terror that could be broken at any moment by the some accident or miscalculation that would bring the end of human civilization and perhaps the end of humankind itself. Such had been the lot of the world since the 1950s. Very few thought that anything could be done to change this state of affairs.
Reagan, on the other hand, believed that wars, even Cold ones, had eventually winners and losers. Peter Schweizer, in his book “Victory”, described the multifaceted strategy that Reagan employed to collapse the Soviet Empire.
These included support, both overt and covert, for freedom movements with the Soviet Bloc, such as the Solidarity labor movement in Poland, as well as Contra rebel in Nicaragua and Mujahidin in Soviet occupied Afghanistan. Reagan also fostered an unprecedented military buildup in peace time, which included the Strategic Defense Initiative to research ways to build a defense against nuclear weapons. There was even an economic component, part of which consisted of pressuring the oil sheiks to keep the price of oil low, which had the double effect of boosting the American economy and tamping down on Soviet hard currency earnings.
The pressure Reagan exerted persuaded Soviet leader Mikhail Gorbachev that the Soviet economic system needed reforming and that at the same time some kind of accommodation needed to be had with the West. But one cannot reform a system that is inherently dysfunctional, sustained as it was solely by terror and force.
With a year of Reagan leaving office, the Berlin Wall fell. The captive nations of Eastern Europe became free one by one in a strange but wonderful reverse domino effect. Eventually the hammer and sickle was lowered for the last time and the Soviet Union itself broke apart into separate countries.
In the meantime arms control treaties forced by Reagan not only limited, but greatly reduced the number of nuclear weapons possessed by each side. Also, little known by most, the missiles were retargeted away from cities and military installations on both sides. The world was no longer on a hair trigger to oblivion.
We are thus living in the world Reagan made. It can certainly be undone, through the unwise policies of a President who believes in socialism at home and appeasement abroad. But forever after, Ronald Reagan showed us how it is done. Small government at home. Loyalty to ones friends and resolution toward out enemies abroad. Any American President who forgets those principles does so as his and his country’s peril.
Happy birthday, Mr. President. Our debt to you is beyond calculation.