Reagan changed the country in multiple ways and is regarded to this day by conservatives and Republicans as the best president America ever had. Reagan’s legacy is easy to admire given his eloquent and charming ability to present and convince the public that smaller government is better. However his policies have created some confusion among politicos and has left many people preaching and pushing for Reagan style policies while failing to understand the underlying economic principles. I will try to present to you that Reagan’s policies were eclipsed by a much larger and powerful force and unfortunately according to the data, Reagan’s legacy consists mostly of rhetoric and little substance. While the Reagan revolution inspired many to appreciate the free market and love small government it also inspired a legion of economically ignorant individuals.
Let us begin with the positive impact Reagan had on human activity. Through several tax reforms beginning in 1981 the overall tax rates dramatically decreased across all brackets. In 1981, top tax rate dropped from 70% to 50% and in 1986 dropped from 50% to 28%. Most people regard these powerful moves as the panacea that finally restored employment and many fondly remember the economic boom during most of Reagan’s tenure. This kind of impact positively benefits human action as it inspires personal consumption and allocation of private funds into the economy which is always better than allocation of public funds. It is extremely difficult to determine just how much positive impact an economy experiences when people spend money the way they see fit as opposed to a government agency. However what is easy to determine is that Reagan’s tax cuts were NOT the driving force behind the economic boom of the 1980s, let me show you why.