Reaganomics: Apply Directly to the Forehead

via NYT

Floyd Norris on comparing President’s Economies:

“The economic record of President George W. Bush was largely a disappointing one. During his administration, the country grew at the slowest overall pace of any recent president, whether measured in gross domestic product or employment. The last president to preside while the stock market did worse was Herbert Hoover.

Economic performance was actually good for much of the middle years of Mr. Bush’s eight-year term, but it began and ended with recessions. Some of the disappointment with Mr. Bush may stem from the fact that he took office at the end of a huge boom, in both the economy and the stock market . . .

President Bush’s administration was marked by a recession that began two months after he took office and another downturn in his final year of office. In the end, the economy during his term added enough jobs to employ only 14 percent of the added number of working-age Americans, the lowest proportion of any postwar administration. Employment grew at a compound annual rate of only 0.3 percent, half the 0.6 percent rate that his father had recorded in what had previously been the worst post-World War II performance.”

The main problem I see in Bush’s economic approach was an odd form of Reagan worship. Despite wildly disparate economies, Bush adopted Reagan’s approach. That the market had just collapsed, rather than was in year 14 of a secular bear market, rates were low and going lower, and the biggest Tech boom known to man were all but ignored.

Imagine a doctor who was once successful prescribing Penicillin to a patient with an infection. The next sick person comes in with diabetes — and he prescribes Penicillin again. The Penicillin supply-side school of medicine is genuinely shocked when the patient dies.

I wrote about this back in 2002-03: The epitome of the Bush approach to the economy was to vigorously apply Reagonomics directly to the forehead, despite a very different set of fiscal and economic conditions.

Surprise! The patient died!


Economic Setbacks That Define the Bush Years
NYT, January 23, 2009

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