Friday, September 28, 2012

A Culture of Delusion

Paul Craig Roberts
Institute For Political Economy
September27, 2012

A writer’s greatest disappointments are readers who have knee-jerk responses. Not all readers, of course. Some readers are thoughtful and supportive. Others express thanks for opening their eyes. But the majority are happy when a writer tells them what they want to hear and are unhappy when he writes what they don’t want to hear.

For the left-wing, Ronald Reagan is the great bogeyman. Those on the left don’t understand supply-side economics as a macroeconomic innovation that cured stagflation by utilizing the impact of fiscal policy on aggregate supply. Instead, they see “trickle-down economics” and tax cuts for the rich.

Leftists don’t understand that the Reagan administration intervened in Grenada and Nicaragua in order to signal to the Soviets that there would be no more Soviet expansion or client states and that it was time to negotiate the end of the cold war. Instead, leftists see in Reagan the origin of rule by the one percent and the neoconservatives’ wars for US hegemony.

In 1981 curtailing inflation meant collapsing nominal GNP and tax revenues. The result would be budget deficits–anathema to Republicans– during the period of readjustment. Ending the cold war meant curtailing the military/security complex and raised the specter in conservative circles of “the anti-Christ” Gorbachev deceiving Reagan and taking over the world.

In pursuing his two main goals, Reagan was up against his own constituency and relied on rhetoric to keep his constituency on board with his agenda. The left wing heard the rhetoric but failed to comprehend the agenda.

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