The 1970’s was a dark decade in the United States of America, due primarily to the end of the Vietnam War and the golden age, and the arrival of new problems such as energy shortages (worldwide oil shortage), a high inflation rate, and a high unemployment rate. Inflation is caused by an increase in demand for something (for houses, cars…) and a decrease of its supply. The increase in the unemployment rate was due to the addition of women to the workforce as well as soldiers returning home after the Vietnam War. In 1981, the newly elected U.S. president, Ronald Reagan, inherited all of these problems. In order to turn around the economic situation, six months after his election he announced a plan to fix or limit the economical scandal in the
Finally, it will inspect its impact on today’s society. Ronald Reagan won his election using the slogan: “are you better off than you were four years ago?” and it is a “new morning in America”, which refer to an economic reform that is aimed at decreasing taxes. In addition, he believed that “only by reducing the growth of government can we increase the growth of the economy” (Reaganomics, William A. Niskanen). Knowing that it was a period of high stagflation, which is a rare situation where the country’s economy faces simultaneously a low (or no) economic growth and a high increase in prices (inflation), Mr. Reagan came up with a program to try to recover from this economic horror. This program which was called Reaganomics consisted of four different goals; they were: “reduce the growth of government spending, reduce the marginal tax rates
Indeed, the top 1% saw their wages increase by a high ratio unlike the other 90% (Long-Run Changes in the Wage Structure: Narrowing, Widening, Polarizing; Claudia Goldin & Lawrence F. Katz). The trickle-down effect did not occur. After eight years of Reaganomics, according to the committee chairman Representative Lee Hamilton, D-Ind.: “Upper income Americans were the main direct beneficiaries of tax cuts in the early 1980s… There is no evidence in these data that those benefits have trickled down to lower-income Americans”. Instead of creating new companies, or investing in others, the wealthiest Americans in the country used this tax “free” to spend their money on luxury goods such as: golden bracelets, fancy new cars, jewelry, fur and services such as extravagant restaurants and worldwide travelling. Furthermore, ordinary market shops lost an important amount of business because their clients where now shopping in higher end stores such as Neiman Marcus. The gap between high net income class and standard net income class had grown bigger. By the end of 1989, the gap was the biggest that it had ever been since 1947 (UPI; December 30, 1989). Many people compared this era of failure to the story of the sheriff of Nottingham, where the rich get richer and the poor get