Today in History: Reagan’s Economic Recovery Tax Act (1981)

John Robson of TheRebel.Media reports that on August 13 1981, over a third of a century ago now, Ronald Reagan signed the Economic Recovery Tax Act into law and began the supply side revolution. It’s hard to recall now just how astounding it was, after a half-century of ever more aggressive interventionism, much of it driven by Keynesian alchemy, to argue that the private economy was the main driver of growth, to win an election in the face of elite ridicule, and to act on it. But he did.

Ultimately the ERTA and another 1986 law cut the top marginal tax rate in the United States from 70 to 30 percent, unleashing a long boom including the personal computer revolution. And other countries followed suit, finally convinced that Keynesianism delivered not endless steady growth but stagflation and frustration.

So what happened? Why did governments from Washington to London to Ottawa lunge for their rusty Keynesian tools in the face of the 2008 economic crisis? How did we get back to asking government to manage the economy, and on what theoretical basis?

It’s time to get back to Reaganism and prosperity.

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