The Right in the United States sought to wage economic revolution during the 1980s, capitalizing on its twelve-year run during the Reagan and Bush administrations. By the end of its reign, right-wing economics had apparently failed – with the attendant economic malaise helping Bill Clinton defeat George Bush in the presidential election of 1992. This chapter traces the anatomy of that policy failure.

This task is not entirely straightforward, since different observers obviously have different views about the effects of right-wing economics. The wealthy loved it, for example, while many suffered serious deprivation. Whether between winners and losers or between economists of differing political stripes, however, the debate is often marked by a myopia which we will seek here to avoid. The record of right-wing economics cannot be evaluated by looking at a single year or even a couple of years, such as the sharp recession at the beginning of the 1990s – the right-wing era saw its share of both good and bad years.

In order to try to avoid misleading comparisons, we will consider changes between years that are similar in their position within the business cycle. Preferring to evaluate business cycles from one peak to the next, we begin our analysis with the cyclical peak year 1979, when Paul Volcker took control of the Fed and steered economic policy to the right.