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Jewish World Review Feb. 7, 2001 / 15 Shevat, 5761

Thomas Sowell

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Wise versus smart

http://www.jewishworldreview.com -- THE 90th birthday of Ronald Reagan may be an appropriate time to reassess the role of his presidency in the history of the 20th century. Some presidents simply happen to be in office when historic events occur, but other presidents make history themselves -- like Ronald Reagan. He turned things around, at home and abroad.

It may be hard for some today to imagine the world in which Ronald Reagan became the 40th President of the United States, two decades ago. That is because the world of today is so radically different, in great part because of the way it was changed during the two Reagan administrations.

The world President Reagan inherited from the 1970s was one in which the American economy had experienced double-digit inflation and double-digit interest rates. An oil crisis had Americans waiting in long lines in their cars at gas stations, sometimes for hours. Moreover, there was no solution in sight, according to all the smart people. Jimmy Carter said that "a dwindling supply of energy sources" meant that "prices are going to rise in the future no matter who is president" and "no matter what we do."

Internationally, the same smart people saw the growing strength of the Soviet Union and the Communist bloc in general to be a fact of life that we would just have to live with, making our peace with it and negotiating our own long-run decline on whatever terms we could manage.

The unprecedented length of the era of prosperity that we are still enjoying today began in the Reagan administration. Sustained high growth rates, full employment and low inflation rates were considered to be as unattainable simultaneously, according to the prevailing Keynesian economic theories, as the simultaneous stagnation and inflation that had marked the Carter years.

One of Ronald Reagan's first acts as president was to get rid of price controls on oil that had been in place through the three preceding administrations. There were outcries from Congress, the media and "experts" that ending oil price controls would lead to runaway escalation of the price of gasoline to at least two dollars a gallon. Within four months, the price of gasoline had fallen to less than one dollar per gallon. And, contrary to Jimmy Carter's prediction, the world's known reserves of oil were 41 percent higher at the end of the decade of the 1980s than at the beginning.

In the international arena, it was dogma that arms reductions were the only way to pursue peace and that a military buildup on our part would "de-stabilize" the world and invite nuclear war. Moreover, an "arms race" was futile, according to the smart people, because each side would just match what the other side did. In this, as in many other things, President Reagan ignored the smart people and launched a military buildup that was beyond the capacity of the Soviet economy to match.

The economic strain of the effort to keep up with the United States militarily brought the Soviets to the bargaining table and led to a de-escalation of their international military adventures. That strain no doubt also contributed to internal changes in the USSR which ultimately brought down the Communist regime -- another impossibility, according to prevailing dogma, so that Reagan was ridiculed for saying that the last days of Communism were at hand. The Reagan military buildup during the 1980s also paid off in an unexpected and very welcome way during the Gulf War in 1991. American casualties were only a fraction of what most military experts had predicted, due to the high-tech military hardware that was a legacy of the Reagan years. Many Americans came back alive from that war because of the much-lamented military spending of the 1980s.

It was social dogma at home that expanding social welfare programs were the way to contain the urban riots that had been erupting during many a "long hot summer" in the preceding four administrations. President Reagan rejected that dogma -- and major urban riots became virtually non-existent during the eight years when he was in the White House.

There was a time when we followed the ancient admonition, "By their fruits ye shall know them." Today, it is by their rhetoric and by their adherence to fashionable theories that we judge. By that standard, Ronald Reagan was not smart. But, fortunately for this country, he was wise.

JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author of several books, including his latest, Basic Economics: A Citizen's Guide to the Economy.

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