In January 1981 on this page, we were cautiously optimistic about the possibilities for freedom under the incoming Reagan administration. Midway through Reagan's term, however, it's become apparent that while our reservations were justified, our hopes were greatly exaggerated.
I write these words with sadness. Eight years ago Ronald Reagan told us of having derived many of his ideas from free-market thinkers like Ludwig von Mises and F.A. Hayek. I have no doubt he was telling the truth—and that he still believes in those ideas. Indeed, as I sat down to write this editorial, a letter of congratulations on REASON's 15th anniversary arrived—from Ronald Reagan himself.
The grim reality, however, is that Ronald Reagan has been unable or unwilling to translate most of his free-market, individual-rights ideas into action. To be sure, there are a few bright spots for advocates of liberty. Ronald Reagan did push through Congress a major reduction in personal income tax rates—and seems determined to fight to preserve those gains. He accelerated the decontrol of oil prices and appointed a solid deregulator to head the Federal Communications Commission. And what other administration would have scuttled the collectivist Law of the Sea treaty? Weighed against these and a few other modest achievements, however, is a vast array of failures, missed opportunities, and outrages.
The most dramatic is the administration's utter failure to control—let alone cut—federal spending. Despite the warnings of an "economic Dunkirk" by Jack Kemp and David Stockman, Reagan failed to seize the opportunity, during his initial honeymoon period, to level with Congress and the public that federal spending is dangerously out of control. Exempting so-called entitlement programs—including Social Security and Medicaid—from cutbacks while encouraging Congress to cut taxes led directly to today's $200-billion deficits.
Equally serious is the administration's failure to rethink national defense policy. In every major respect, other than rhetoric, it is simply carrying on the policies of Nixon, Ford, and Carter—continued reliance on the balance of nuclear terror (instead of building defenses against nuclear attack), heavy-handed attempts to shape the outcomes of other people's quarrels (in the Middle East and Central America), and continued massive subsidy of the defense of our wealthy allies (Europe and Japan). Ronald Reagan could have sought a new mandate from the American people: to rebuild our own defenses while weaning our allies from their accustomed subsidies. That kind of defense effort we could easily have afforded.
In addition, Ronald Reagan is the only president in recent memory who understands the dishonesty of fiat money and the real destructiveness of the inflation it produces. Yet he allowed the 1981 Gold Commission to be stacked with paper-money advocates and thus let another major opportunity go down the drain.
Despite his fine talk about getting government off our backs, Ronald Reagan has endorsed dramatic new assaults on personal freedoms. His capitulation on draft registration led to the departure of several libertarian staff members. His expanded "war on drugs" is pouring billions down a rathole while leaving the drug traffic virtually unchanged. And his attempt to have the federal government take sides on such intensely personal matters as abortion, school prayer, and sex education needlessly polarizes people on matters best left to individual choice and voluntary action.
Then there is the perversion of the idea of "free-market" solutions. Instead of real deregulation—which during the presidential campaign meant abolishing agencies like the Consumer Product Safety Commission, the ICC, and OSHA—the administration has proceeded with "regulatory reform." What this amounts to is heeding the pleas of business leaders to take the rough edges off the regulations while leaving the agencies and their legislative mandates intact.
Numerous studies, including some of our own, have demonstrated the ineffectiveness and counterproductiveness of centralized command-and-control regulation. Many of these studies suggest exciting, creative alternatives that rely on market pricing, liability laws, and insurance rather than bureaucratic directives. Yet the administration could not even propose a rethinking of the Clean Air Act, let alone a decentralized alternative to the EPA!
At the same time, disregarding David Stockman's warnings, the administration fought for cuts in welfare programs while leaving intact billions in subsidies for the well-off: a synfuels program still offering a $67-a-barrel price guarantee for shale oil, billions more in subsidies to farmers, increased funds for the Export-Import Bank, and mind-boggling bailouts of the major banks, saving them from the consequences of their short-sighted loans to Mexico and Poland. This from people wearing Adam Smith ties!
What happened to the man who read Mises and Hayek, Bastiat and Hazlitt? Why is the reality so different from the rhetoric? Some say that that's just the way politics is, compromise being the stuff of which it's made. Others see Reagan "captured" by the Eastern Republican Establishment, allowed out now and again to keep the grass roots in line, but essentially constrained to preserve big-government-as-usual.
Whatever the explanation, it's tragic to see so little real results from a man with such fine principles. It's tragic, first of all, because the libertarian ideas of Hayek and Mises offer far better solutions than big-government-as-usual. And it's also tragic because the media have simple-mindedly equated Ronald Reagan's programs with his rhetoric. Thus, whether they succeed or fail, Reagan's centralized, interventionist, big-government policies are being labeled as "laissez-faire" or "free-market" solutions. It is that misconception which advocates of liberty must do everything in their power to counteract—if there's to be any hope for trying real free-market ideas in some future administration.
This article originally appeared in print under the headline "Rhetoric Is Not Enough".