Krugman’s blog, 4/25/16

There were two posts yesterday.  The first was “Tweeness of Life:”

Just a notice: I’ve run into several people recently who didn’t know that I am now doing some direct postings to my Twitter account, in addition to the automatic posting of links to this blog. Some of the tweets are even substantive. So if you are a blog follower, you might want to check that account too — no need to join Twitter yourself!

The second post yesterday was “What Reagan Didn’t Do:”

I suppose I shouldn’t add to the woes of the reformocons, the people who wanted to move the GOP forward with new ideas — but have learned that they have no constituency. (Marco Rubio betrayed their hopes even before he imploded.) Still, one thing I have been seeing lately is statements along the lines of “When Reagan cut taxes and regulation, it created a rising tide that raised all boats — but times have changed, and now we need policies that address the needs of working families.”

Well, I like the second half of that — but the first half is a myth. Lopsided growth that delivers huge gains to a small elite while bypassing a majority of Americans didn’t start a few years ago. It started, in fact, during the Reagan years.

This reality is obscured in some tellings of the tale by the business cycle: America had a severe double-dip recession, triggered in part by surging oil prices, from 1979 to 1982, then a V-shaped recovery after the Fed drastically cut interest rates (and oil prices fell back, adding to the gains.) So if you start from the depths of the recession, yes, there was growth that benefited everyone. But that had nothing to do with Reaganomics, which promised long-term growth.

If, instead, you look from business cycle peak to business cycle peak, you see this:


Census, Piketty and Saez

Median household income was barely higher at the end of the Reagan years than it had been in the late 1970s; the rising tide was already lifting mainly the yachts.

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