Skip to content

The Broken Promises of Reaganomics: How Trickle-Down Economics Favored the Wealthy Few and Left the Rest Behind

Trickle-down economics, also known as Reaganomics, refers to the economic policies implemented by President Ronald Reagan in the 1980s. This theory posits that by cutting taxes and reducing government regulation, businesses will have more money to invest in the economy, which will create jobs and stimulate economic growth. The philosophy underlying this approach was that the only responsibility that corporations owed was fiduciary responsibility to their shareholders, and that government should get out of the way.

Proponents of Reaganomics argued that by reducing taxes, businesses would have more money to invest in the economy, which would create jobs and stimulate economic growth. They believed that if corporations had more money to invest, they would hire more workers, and those workers would then spend more money, which would create a cycle of economic growth.

However, the reality of Reaganomics was far from what was promised. The policies implemented in the 1980s resulted in a massive transfer of wealth from the working and middle classes to the wealthy, with the gap between the rich and poor widening significantly. While the stock market boomed and corporations saw record profits, average workers saw their wages stagnate, and many lost their jobs due to outsourcing and automation.

One of the key components of Reaganomics was the belief that reducing taxes on the wealthy and corporations would stimulate economic growth. However, the evidence suggests that this approach did not work. In fact, a study by the Congressional Research Service found that there is no evidence to support the idea that tax cuts for the wealthy lead to economic growth.

Another component of Reaganomics was the belief that reducing government regulation would stimulate economic growth. However, the reality is that government regulation is often necessary to protect workers and consumers from the harmful actions of corporations. Without government oversight, corporations are free to exploit workers, pollute the environment, and engage in other harmful practices that can have devastating effects on communities.

The result of Reaganomics was that corporations became more powerful than ever before, with the only responsibility being to their shareholders. This meant that corporations were free to pursue profits at any cost, even if it meant laying off workers, outsourcing jobs, or engaging in other harmful practices. The result was a system that favored the wealthy and powerful, while leaving the rest of the population behind.

Perhaps one of the most striking examples of the failure of Reaganomics was the Savings and Loan crisis of the 1980s. This crisis was caused by the deregulation of the banking industry, which allowed banks to make risky loans that ultimately resulted in massive losses. The cost of bailing out the banks was estimated to be around $160 billion, which was a significant amount of money at the time.

Another example of the failure of Reaganomics was the decline of the American manufacturing industry. As corporations were given more freedom to outsource jobs to other countries in search of lower labor costs, American workers saw their jobs disappear. This trend has continued to this day, with many American workers struggling to find secure, well-paying jobs.

The impact of Reaganomics can also be seen in the growing wealth gap between the rich and poor. According to a report by the Economic Policy Institute, the top 1% of Americans saw their income grow by 275% between 1979 and 2007, while the bottom 90% saw their income grow by just 16%. This has led to a situation where the wealthiest Americans have more wealth than the rest of the country combined.

In conclusion, Reaganomics was a failed experiment that resulted in the transfer of wealth from the working and middle classes to the wealthy, the decline of American manufacturing, and the growing wealth gap between the rich and poor. The idea that the only responsibility of corporations is to their shareholders has resulted in a system that favors the powerful at the expense of everyone else. As we move forward, it is important to learn from the failures of Reaganomics and consider alternative economic policies that prioritize the needs of all members of society, rather than just the wealthy few.

One alternative approach is to prioritize investments in education, infrastructure, and other areas that can create jobs and stimulate economic growth. This approach recognizes that economic growth is not just about cutting taxes and reducing regulation, but also about investing in the future of the country and its people.

Another alternative is to implement policies that address income inequality and support the needs of workers and families. This could include raising the minimum wage, providing affordable healthcare and childcare, and expanding access to education and job training programs.

Ultimately, the lessons of Reaganomics are clear: the idea that corporations only owe fiduciary responsibility to their shareholders is a flawed and dangerous one. We must recognize that corporations have a responsibility to their workers, the environment, and the communities in which they operate. By prioritizing the needs of all members of society, we can build an economy that works for everyone, not just the wealthy few.

  1. Stiglitz, Joseph E. “The Myth of America’s Golden Age.” Foreign Affairs, vol. 92, no. 1, 2013, pp. 71-85.
  2. Krugman, Paul. “The Conscience of a Liberal.” The New York Times, 2007.
  3. Saez, Emmanuel and Gabriel Zucman. “The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay.” W.W. Norton & Company, 2019.
  4. Hacker, Jacob S. and Paul Pierson. “Winner-Take-All Politics: How Washington Made the Rich Richer–and Turned Its Back on the Middle Class.” Simon & Schuster, 2010.
  5. Collins, Chuck. “99 to 1: How Wealth Inequality is Wrecking the World and What We Can Do About It.” Berrett-Koehler Publishers, 2012.
  6. Reich, Robert. “The System: Who Rigged It, How We Fix It.” Alfred A. Knopf, 2020.
  7. Greenberg, David. “Nixon and the Birth of Supply-Side Economics.” Politico Magazine, 2015.
  8. Ornstein, Norman J. “Reaganomics: A Look Back at the Economic Policies of the 1980s.” Congressional Research Service, 2017.
  9. Congressional Budget Office. “Trends in the Distribution of Household Income Between 1979 and 2007.” U.S. Government Printing Office, 2011.

Copyright 2023 – Chief Anu Khnem Ra Ka El

error: Content is protected !!