Question

‘Inconsistent and ineffective.’ How valid is this comment about Reaganomics?

‘Inconsistent and ineffective.’ How valid is this comment about Reaganomics?

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Answer #1

Reaganomics is based on four pillars named, as lower spending, lower tax rate, lower regulations (deregulations) and strict money supply so that economy grows with a controlled inflation rate. When Reaganomics was applied, then that time the US economy was facing stagflation and there was a need to take some important measures. So, even if Reaganomics was considered as supply side policy, but it helped the economy grow, productivity increase and unemployment decreased. Though, it led to the increase in debt level during the period of president Reagan. So, his policy was successful in certain aspects, but could not be considered as complete and accurate policy prescription.

So, Reaganomics can be considered as somewhat effective during that time, but not in today's scenario where the demand side policy is considered more important and effective. So, considering Reaganomics  as inconsistent is valid, but saying it to be ineffective is not correct. It should be considered as moderately effective.

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