Pinochet was soon getting a bad international reputation for rounding people up and shooting them in football stadiums – but still Friedman himself came down to help in 1975, meeting Pinochet, broadcasting lectures on national TV, asking for his usual formula of deregulation and ‘shock treatment’. He wrote in his diaries that Pinochet (although a mass murderer) was worried about the social consequences of rising unemployment. Friedman told him to cut government spending by another 25 per cent. That’s right. Where even Pinochet had qualms, Friedman had none. And so millions lost their jobs. The economy didn’t recover for almost a decade, when Pinochet at last changed course. Friedman later falsely claimed that Pinochet’s adaptation of free-market policies ameliorated his rule and led to the country’s transition to democratic government in 1990 … After almost twenty years of tyranny and the torture and murder of thousands. But hey! At least the invisible hand of the market determined which brand of cattle prod the police used to electrocute people.
Now you can get angry.
Pinochet is fading into bad memory. Chile is moving on. But many of Friedman’s other legacies remain with us. Closer to home, you can still blame Friedman for the privatised electricity companies and their huge bills. Blame him if you’ve heard a Republican politician talking with loathing of ‘big government’. If you’ve lamented paying so damn much to catch a privatised train service, Friedman’s at the heart of it.
On a broader level, his ideas provided ideological cover for massive capital accumulation for multinational corporations during the 1980s to 2000s and the belief that markets should be regulated as little as possible. On Friedman’s death in 2006, President George W. Bush said, ‘His work demonstrated that free markets are the great engines of economic development.’ Two years later those engines started grinding and chucking out black smoke. Friedman had missed the 2008 financial crash his ideas helped bring about – and which proved them so catastrophically wrong. Oh well.
Date of birth/death: 6 February 1911 – 5 June 2004
In a nutshell: Man who made it rain while convincing everyone the sun was shining
Connected to: Milton Friedman, Margaret Thatcher, George W. Bush, Donald Trump
Media pundits often talk about the ‘Overton Window’ when referring to the range of ideas that the public will accept. The theory is that for a political policy to float with the public, it has to fit within certain accepted parameters – also known as the ‘window of discourse’. The consensus is that in the UK and USA this window has gradually shifted to the right. Ideas that were once thought cruel and preposterous (such as those relating to charging students for higher education, or scrapping healthcare entitlements) are now thought mainstream. One of Ronald Reagan’s biggest legacies lies in the work he did to persuade the world to take this rightward shift. But, just as importantly, he also moved another set of parameters. A set, alas, that doesn’t yet have a fancy name. But a set that has also had huge impact. Ronald Reagan shifted the boundaries on the preposterous. We could probably call this phenomenon the ‘Trump lift’.
Before Reagan, the idea of a TV-star president seemed entirely laughable to the American public. The idea of Ronald Reagan himself seemed laughable, in fact. Here he was, a man who had first made his name as a second-rate B-movie actor and later as the genial host of brazenly partisan and commercial TV slots for the General Electric Company. He was known to have spent a lot of time testifying against his colleagues during the McCarthy era.* He had gained a certain notoriety for his enthusiastic support for the National Rifle Association and for sending the National Guard in to crush student protests. He did that at the University of California in Berkeley, when he was Governor of the state. A student was killed and Reagan commented: ‘If it takes a bloodbath, let’s get it over with.’ He was also known to take advice from an astrologer called Caroll Righter, known as the ‘gregarious Aquarius’.†
If he hadn’t won the 1980 presidential election, Reagan would just have been a handsome but strange and malicious historical footnote.
But win it he did – and the real absurdity came after he took over the reins. Astrology had nothing on the voodoo he used to steer the American economy. Reagan’s greatest superstition was ‘supply-side economics’. It was he who set us up for the fall in 2008 – and destroyed American jobs and industry in the process. Reagan believed in something called the Laffer curve. This was a theory devised by Arthur Laffer from Milton Friedman’s famous economics department at the University of Chicago.‡ It states counter-intuitively (and as it turned out, counter-factually) that government could increase revenue by decreasing taxes. The idea was that the rich would no longer have to spend their time thinking up tax-dodging ruses and so work more productively and contribute more – and so the lower rate would stimulate so much growth that revenues would just grow.
Reagan duly cut taxes on the rich. But there was no swelling of the public coffers. Instead, the deficit rose from about $900 billion to more than $3 trillion. Which is worth writing with all the digits, just so you can get an idea of the ridiculousness of the numbers involved: from 900,000,000,000 to 3,000,000,000,000. More than three times as much as the deficit Reagan spent his whole time complaining about when he was trying to get elected in the first place.
By 1982 he had also succeeded in raising unemployment to above 10 per cent for the first time since the 1930s. Oh, and by 1987 the average amount of ‘leisure time’ Americans enjoyed in a week fell to 16.6 hours. (In 1973, they’d enjoyed 26.2 hours.) His presidency also saw the first year since 1895 that America didn’t have a trade surplus. But don’t worry! Some people got richer. That’s right. The people who were already rich. Donald Trump, for instance, built the Trump Tower during Reagan’s reign. The rest of the top 2 per cent in the country did okay too and we entered the red braces and embossed business-card era of Wall Street growth – the one that would eventually lead to the subprime crisis and the hot fun of the Lehman Brothers collapse.
Lower down there were all-out assaults on unions, next to no growth in the median real wage, a drop in income per person, a huge increase in household debt and an economy that grew at a slower rate over the course of the decade than in any ten-year period in the twentieth century since World War II.
Reagan did at least get some things right. By the end of his presidency, once he had ditched many of his earlier economic ideas, he managed to cut inflation. His relentless military build-up also helped him bring about a thawing in the Cold War and led to the eventual collapse of the Soviet Union. For that, he earned the gratitude of millions around the world.
But if we’re going to credit Reagan for helping to end the Cold War, he should also take a good part of the blame for our current travails. Most notably, he helped arm, train and finance the radical Islamic Mujahideen fighters in Afghanistan who would go on to form both the Taliban and Al Qaeda, as well as the model for ISIS. He also ensured America remained unpopular around the world. During his presidency American forces were caught meddling unsuccessfully in the Lebanon. They bombed Libya. They shot down an Iranian passenger jet. They invaded Grenada. There was also a preposterous affair where the Americans covertly sold arms to Iranians in order to fund a group