America spent much of the week remembering Ronald Reagan and debating the meaning of his legacy.
Although it is hard to remember now, Reagan entered the White House at a time when the U.S. economy was at its lowest point in nearly half a century. Inflation was in double digits, productivity growth was anemic, the stock market was at the end of an extended funk and U.S. industry was virtually written off as globally uncompetitive. Reagan's prescriptions for what to do about it were controversial then, as they are still today -- lower tax rates, cut back on government regulation, curb the power of labor unions and back the Fed in its fight against inflation. But most of all, he challenged Americans to reject the inevitability of American economic decline, not only by standing up to Japan and Europe on trade policy, but by picking themselves up, dusting themselves off and getting back in the saddle again.
It was a bold program for a desperate time, and while some of it proved to be misguided and foolhardy, Reagan -- like his hero, FDR -- was practical enough as a politician to reverse course when necessary.
While his retreat on environmental regulation was thwarted in the courts of law and public opinion, his Justice Department pushed ahead with the breakup of the telephone monopoly and the deregulation of trucking, railroads and airlines begun during the Carter administration.
His lavish defense buildup included a flood of new funds for scientific research that helped spawn a high-tech revolution that continues to this day. And even a sometimes mean-spirited attack on welfare recipients eventually forced the country to confront a culture of dependency that had helped create a seemingly permanent underclass.
Most significant, while soaring budget deficits forced Reagan to roll back some of his tax cuts, marginal rates would never again approach the 70 percent levels that really had discouraged savings and investment.
In time, Americans would become somewhat uncomfortable with the greed and inequality that were the byproducts of the Reagan era. But a week's reflection leaves little doubt that, in the end, this smiling and wily actor-turned-politician forever altered the economic debate and shifted economic policy several notches to the right -- not just in Washington, but in London, Berlin, Moscow and even Beijing as well.