It is said by today's leaders, political, religious, and intellectual, that economic inequality is "the challenge of our age".  This is only for those who have no memory. Only six years ago that notion was irrelevant. From Forbes.com columnist Peter Ferrara:

"In The End of Prosperity, supply side advocate Art Laffer and Wall Street Journal chief financial writer Steve Moore point out that the Reagan recovery grew into a 25-year boom, with just slight interruptions by shallow, short recessions in 1990 and 2001.  They wrote:

We call this period, 1982-2007, the twenty-five year boom–the greatest period of wealth creation in the history of the planet.  In 1980, the net worth–assets minus liabilities–of all U.S. households and business … was $25 trillion in today’s dollars.  By 2007, … net worth was just shy of $57 trillion.  Adjusting for inflation, more wealth was created in America in the twenty-five year boom than in the previous two hundred years."

This period surpassed the wealth creation of the Industrial Revolution -- previously the greatest growth period in history. Yet, many who lived through this period deny its existence. Obama calls it "the failed policies of the past". Liberals in general call it the “disastrous policy of trickledown economics". And many libertarians and gold bugs call it the illusion of prosperity created by the Federal Reserve's monetary policy and of US Government's deficit spending. Yet no economic era in history has ever surpassed it.

Arthur Laffer and Steve Moore had it right. It was the longest boom in history with only 4 quarters of negative growth the entire period. The cause wasn't the Fed or US deficits and debt; it wasn’t a trick or a con -- it was Reaganomics. It is conveniently ignored by today's pundits on the left, and on the right.

Reagan and Congress cut the tax rate to 28% from over 70% previously. Reagan opened up markets to free trade. He appointed a man to the Fed that was for the gold standard and practiced what he preached, keeping the dollar as good as gold, and better, for 18 years. And he deregulated business. Many forget that one of Reagan's first acts as President was to make it legal to run a business out of your home. Prior to that you were considered a criminal for such actions.

During the Reagan years interest rates fell from the highest in history to among the lowest in history. Inflation which robbed citizens of their money for two decades was reduced to where it was immaterial; and productivity, innovation, and prosperity, flourished like never before. Bill Clinton continued the Reagan Revolution, only tweaking a few things here and there. But it was basically Reagonomics that drove the nation through the 90's and after.

Barak Obama, in his infinite wisdom convinced the nation that we needed change; that we needed to transform America into a European style Nanny State, and that Government was the solution to our problems, not the cause of them as Ronald Reagan claimed. Two different visions of government: one that provided freedom and independence for its people, the other that claimed to provide security and fairness.

Today we continue to endure the longest period of economic mediocrity this country has known since the Great Depression and the era of stagflation of the 1970's. It is a malaise made worse by government intrusion into the economy. Where Reganomics reduced unemployment from over 10% to less than 5%, Obamanomics has celebrated a 6.5% unemployment rate as "progress" -- after 6 years of the worst growth rate coming out of a recession on record. And we have gone from high unemployment to structural unemployment where large segments of the population have left the work force permanently.

Where Reaganomics lifted the standard of living for all people of all income brackets, Obamanomics has served the wealthy and the well connected. Government employees, unions, and those business friends of government have done very well during this miserable period of stagnant growth, while the hard working small business man and their employees have struggled without much gain at all.

I remember prior to Obama's presidency, I wrote an article called, "What Happened to the Poor?" In that article I noted that then, 2007, the term wasn't used any longer. "Poor people", were virtually non-existent at the time. If you remember, during Obama's campaign, it was always the middle class that Obama talked about helping -- never the poor. The poor were not an issue.

Yet today we hear nothing but talk about the new poor and "income inequality". That is a new concern.  We never had that concern under Reaganomics. That's because Reagan's policies were policies that helped everyone. A new class of "new rich" was created, where innovators like Steve Jobs, and Bill Gates went from the garage to the board room of the greatest corporations ever imagined. Not today.

Economic inequality is the "new challenge of our age".  But I submit its cause is government intervention into the economy and its cure is to get government out of the economy.  That is what we learned under Reagan.  Government IS the problem. The temptation will be to level the playing field through theft. All the Government needs to do to create a "fairer" economic system is to take from the rich and give to the poor, according to our present leaders from the President to the Pope. If we take that road we will become France, or worse, Greece. And still there will be economic inequality as there is today in those nations that have tax rates as high as 75% and have achieved nothing but the flight of capital and great minds.

No, the best course of action is to do what we did in that last 25 year boom: let people be free. Let them produce and keep the results of their labor. That means lowering taxes and deregulating. We need a tax code that is fair and fixed so people can plan. We need laws that we can count on that are objective, understandable, and permanent, again, so we can plan. We need to end this era of uncertainty. And to do this we need to return to a much simpler government, set of laws, and tax system.

We need to get rid of the two-thousand page laws, the tens of thousands of rules and regulations, and ridiculous volumes of the tax code. One or two tax rates with no write-offs and no subsidies are all we need. And we need to replace the thousands of laws with a few common sense rules that cover all action, such as the rule that individuals cannot use force or fraud to accomplish goals. You don't need a thousand page "Volker Rule" to accomplish this. You simply need laws that protect individual and property rights.

The United States was officially born 238 years ago. There was no income tax. In fact there were hardly any taxes at all. Our founding fathers escaped taxation and the intrusive government that attempted to regulate every aspect of their lives. We opted for a new government. Our system was based on freedom and individual responsibility. Government was simply a referee to prevent the violation of rights, not our boss. George Washington was a soldier and his main job was to be Commander-In-Chief of our armed forces to protect the country against aggressors.

Today, 238 years later the President of the United States of America is the official “Insurance-Agent-in-charge”. The President has reduced himself to the "pitchman-in-chief" rather than commander-in-chief. The sight of him and his wife sitting in the Oval Office talking to a bunch of housewives on the virtues of buying his insurance plan is a little more than I can take.

We have veered WAY off course in just 6 years. We have gone from decades of growth, innovation, and upward mobility for all, to stagnation, malaise, and confusion for most. It's time to find our way back to the USA of old.

For further ideas on this subject and some practical suggestions of how to achieve such a revival see the many commentaries at paulnathan.biz.

Click here: The Reagan Revolution - PaulNathan.biz

Click here: The Gauntlet - PaulNathan.biz

Click here: The Nanny State - PaulNathan.biz

Click here: Let Freedom Ring - PaulNathan.biz

Click here: "The Failed Policies of the Past" - PaulNathan.biz

Click here: My One Point Plan For Prosperity - PaulNathan.biz

Paul Nathan
Paulnathan.biz