This chapter focuses on the recession of 1981–1982. The recession was a watershed in America’s social history. High interest rates and a strong U.S. dollar devastated the economy’s manufacturing sector. In 1982, the unemployment rate reached 10% for the first time since the Great Depression of the 1930s. The irony of the Reagan recession was profound. Reagan had castigated Jimmy Carter in 1980 for telling Americans they were living too well. Yet this was exactly what Reagan thought about many Americans. When he spoke of the purge that would have to follow the “binge” of high living and big spending that supposedly had occurred during the years of liberal ascendancy, he did not mean that everyone had lived too well or that all need suffer. Reagan subscribed to the classically conservative view that if the poor and the working class lived too well, inflation would run riot. Generous government spending on the poor worsened the problem. He also believed that what was good for creditors and investors in the short term would strengthen the economy in the long term and thus benefit all social classes.
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