Specifically, the policies of deregulation, and significant deficits when NOT called for. These created the stagnant wages at a time the economic expansion SHOULD have been growing real wages. And a “follow the leader” mindset in the public that increasing debt was hunky-dory. And deregulation in a domino effect, ultimately led to the scenario in the financial industry, all of which created the crumbling foundation that gave way in 2007.

But, Clinton, along with a majority of Democrats in Congress, went along with the repeal of Glass-Steagall also contributed. A failure of personal responsibility also contributed. (“Just because your friends jump of the Empire State building, doesn’t mean you shoud too”)

But the most significant reason for that house built on sand with a crumbling foundation was those policies and practices. Empirically.

“What were the spe­cific Rea­gan, trickle down, poli­cies that made it worse?” 

No, that question HAS been answered, you simply choose not to hear it. Tax policy, deregulation that had provided fail-safes, deficit spending that created a historical increase in the national debt, 3X, unprecedented in a time of peace and prosperity. (Even sustaining the current deficits for 4 more years will not do that!!!)

I’ve said that, IMO, high consumer debt can help cause (not “cause”, but “be a factor in causing”) recession because consumers’ payments on that debt uses up disposable income that otherwise could go toward consumption, thus reducing demand — particularly in an era of slow wage growth and high interest rates. Do you agree or disagree with that assessment?

I pointed you toward a Wikipedia article in #219 that outlined the further damage Reagan did to financial regulation. Please don’t imply I haven’t.

Nor have I argued (though Max has) that “the public” saw Reagan’s immense federal deficits and therefore decided to run up debts of their own.

On what Reagan inherited and how he made it worse — there were (as you pointed out) moves pre-Reagan to weaken Glass-Steagall. Reagan made the situation worse by continuing the deregulation, as outlined in the Wiki article I previously linked.

Further, the huge federal debts he ran up had the short-term but unsustainable effect of artificially growing the economy, through was was basically a Keynesian stimulus — which he shouldn’t have been doing during boom times. He should have been paying down the debt, so there would have bee more wiggle room during later lean times. In this way, Reagan also made things worse.

As far as personal debt, beginning in the 1980’s, and due to Reagan’s fiscal and economic policies, wages began to stagnate. The growth we’d seen in previous decades almost entirely stopped, and has remained very low since. This is one of the driving factors behind consumer willingness to go increasingly into debt. Not content with late-1970’s-level consumption and consumer products, the only way to “get ahead” was to charge it. That’s what America did.

Reagan’s Fed chairman was convinced that unemployment should go no lower than 5%. He’s on record as saying that. He’s also on record as saying that the reason unemployment should never go below 5% is that workers would then be able to demand (and would get) higher wages and other benefits. Workers would be too secure; they’d know that if one employer wouldn’t meet their needs, the workers could go elsewhere and get what they wanted. In others words, Reagan, through his fiscal and economic and monetary policies, intentionally kept unemployment high enough to keep wages low. These low wages were the biggest incentive to increasing levels of consumer debt.

No, I didn’t offer much in the way of detail here (but please do read the Wiki article I linked in #219, and specifically the section I directed you to). But from the outlines in this comment, I hope you can see 1) my line of argument differs from Max’s, and 2) your description of my argument in your comment #224 is inaccurate.

Here’s a bit of a problem for that theory.  Today, in these United States, 80 percent of all the assets are held by fewer than 10 percent of the population (and it’s getting more lop-sided every year).  Now, you tell me how the 90 percent of the population can drive the economy using 20 percent of the assets.

Say the 90 percent of the population increase their savings by 10 percent.  That means that they’ll increase the saved assets in the country by 2 percent (10 percent of 20 percent).  That would make for a mighty small blip in the assets available for investment.

If you are looking at the people who work for a living and saying to them “you have to save more so the country can invest those savings” — you are looking in the wrong place.  I suggest you look for where the money is.

The concept that savings rates and personal borrowing caused the Great Recession is a truly bizarre one, to my mind.  Actually, what keeps us in the recession today is the very thrift you want people to practice, because it is reducing demand.

I’m sorry, but I’m not buying the theory.

I’m also not buying the theory that the current situation is Reagan’s fault.  This has been brewing since the 70’s, and is caused by the concentration of wealth.  Reagan did his part in that (his “SS Tax Reform”, and Star Wars policies for example) — but it’s been going on for a long time under both Democrats and Republicans.  We certainly didn’t see any “new new deal” under either Clinton (NAFTA!) or Obama.

DC,

That’s exactly what I’ve been say­ing. House­hold debt is bad and makes reces­sions worse.

Pretty cool, you and I seem to be agreed on that much.

The thing that we disagree on is what caused the outrageous levels of debt. You, Max, and what seems to be the rest of the progressive left want to blame Reagan and Bush for it.

Rea­gan inher­ited a bad sit­u­a­tion and made it worse.

How?  What were the specific Reagan, trickle down, policies that made it worse?  That’s what you’re having trouble answering.  The only thing you’ve yet to come up with is, “the American consumer increased their debt load because Regan increased federal debt”, with absolutely no evidence to back it up.

My first take on the Cato study is two-fold. 

First, in the Canadian example, the first step is to eliminate tax breaks AND then to reduce overall rates. And there is a discrepancy in the Canadian data, the table says 19% but the chart shows 26%. BIG difference.

Second, eliminating half of the data table, from third world countries, the actual average is MUCH closer to 25%, not 19%. Again, a discrepancy from the graph shown. And just looking at the industrialized countries, it a couple points higher than that.

House­hold debt is bad and makes reces­sions worse.

It depends on the kind of debt.

Yes, that was my point in comment #194. I’m afraid I didn’t study Grog’s linked report enough to be able to tell whether it also made that point.

I think this may be true about “savings” as well. There are some forms that help the economy recover from a recession, and some that don’t. A lot may depend on whether it is reinvested. That’s one of the reasons why who is doing the saving matters, because different segments of the populace tend to save in different ways. Offshore accounts, for instance, don’t help the economy much. Buying T-Bills probably helps quite a lot more (in most circumstances). Giving it to a bank that doesn’t lend it out doesn’t much much at all.

Believe it or not, Logarchism gets the interest of a lot of prominent people who don’t comment. I typically keep those to myself, because I figure if they want to be known, they’ll post in the comments.

That said, I recently received a link from someone at the Cato Institute (an organization that has undergone a rather unfortunate upheaval of late), covering effective corporate income taxes in 2012 in 90 countries. I haven’t had time to read it yet (this came in just before noon today), but I’d like for those of you who are interested to go over it with a critical eye.

http://www.cato.org/pubs/tbb/tbb_65.pdf

House­hold debt is bad and makes reces­sions worse.

It depends on the kind of debt. If one cannot differentiate between “good” debt and “bad” debt, then your statement is correct. But it’s that inability to differentiate that leads to sentiments like “taxes are bad” and “government spending is wasteful and harmful”. Binary is OK for computers, but it’s a terrible way to describe an analog world. Even in computing, it’s not really binary anymore, since we stack a bunch of bits together to more closely mimic the analog world…I could go on for hours about this, but I won’t.

Inter­est rates tum­bled.  The econ­omy improved.

It may be worth mention that the current Fed chairman is doing everything in power (including quantitative easing) to keep interest rates low. Republicans are condemning him for it. It worked before. Why not try it again?

DC is cor­rect
that the repeal of usury laws in 1978 played a part in the increase of
con­sumer debt - the prob­lem with his argu­ment is that he blamed
Rea­gan for it.

A great part of Glass-Stegall was repealed in 1978. A great deal more deregulation happened under Reagan. Take a look at the Glass-Steagall  entry at Wikipedia and search for the section headed “Reagan Administration developments”.  Reagan inherited a bad situation and made it worse.