Explaining Reaganomics in terms of conservatism

The Politicus
May 23, 2021 10:03 AM 0 Answers
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Conservatism is commonly defined as an ideology that tries to maintain the status quo. In this answer, it is defined as being anti-utopian, and thus, any government change should be slow and measured.

So, per these kinds of definitions of conservatism, the aim of conservatism should be to slow any change to the government. That is, rolling back or slowing down the implementation of recently passed laws.

How does this explain Ronald Reagans tax cuts of 1981? The top marginal tax rate had been above 60 percent for five decades at this point and above 70 for over four of them. He lowered the taxes from 70% to 50%, and phased this in over only three years. Macroeconomic effects can take decades to fully reveal themselves. Of course, since the US has presidential elections every four years, it's not feasible to wait even a decade to see what effects the tax cuts would have, but twenty percentage points is a big change that doesn't quite mesh with the definition of conservatism above.

From an economic point of view, this is the result of Reagan being a proponent of neoclassical economics. How do you justify, if you believe in the definition of conservatism above, to completely change to new economic policy?

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  • May 23, 2021