Ronald Reaganomics Definition Of A Free Economy

As stated in Dictionary.com, the definition of free market is “an economic system in which prices and wages are determined by unrestricted competition between businesses, without government regulation or fear of monopolies.”1 The main idea behind a free market is to have an economy without the interference of government rules and regulations. The driving factor behind no governmental regulations in an economy is that the consumers voice must be heard in order to successfully run an organization. A free market ideology promotes competition and a system of supply and demand between consumers and suppliers. Although the ideologies behind free market are well known, there are rarely instances in which it is truly applied to an economy. There is
The United States is considered to have somewhat a free market. While the United States economy promotes free market ideologies such as supply and demand, its economy is still regulated by the government.
When Ronald Reagan was elected president in early 1980’s, the United States was going through a tough time financially, as was a large portion of the world. There was a large global recession that had a tight hold on many developed countries in the late 1970’s though the mid 1980’s. During his campaign, Reagan developed a plan to bring the United States out of the recession which the media called “Reaganomics”. Reaganomics had four main major beliefs when it came to managing the economy of the United States. The first of these beliefs was that the United States should cut back government spending. The second belief was to tighten the money supply in order to control the rate of inflation. The third belief was to reduce the federal income tax and the fourth and most crucial of the four beliefs was the the government should be more limited when it comes to regulating the economy in order to provide the United States with a free market economy. According www.ushistory.org, “Reagan claimed an undue
Some of the ideas that Reagan had are summed up well on www.commonwealmagazine.org. “Reduce welfare, lower minimum wages, and cut unemployment benefits so that the poor would have greater incentives to work; lower taxes and remove regulations on business so that the resulting higher profits would be an incentive for corporations and wealthy individuals to save and invest. Do all that, and productivity would increase and the GDP grow.”4 Being a strong believer in the trickle down effect, Reagan was under the impression that a lot of problems in the United States could be solved just by increase the GDP. While his theories made sense on paper, they led to millions of people losing out on money that would've been theirs. When Reagan relied on the trickle down effect it had a hard toll on the middle and lower class. The number of Americans living below the official poverty line increased from 26.1 million in 1979 to 32.5 million in 1987, moving from 11.7 percent to 13.5 percent of the population.5 These statistics show that even though Reagan’s free market policies were able to increase the GDP, the quality of life for Americans did not. Wealthy Americans were able to