138 of 172 people found the following review helpful:
5.0 out of 5 stars
Excellent Insights!, February 5, 2009
This review is from: The Man Who Sold the World: Ronald Reagan and the Betrayal of Main Street America (Hardcover)
Kleinknecht opens by telling us that the Reagan legacy has been devastating for America - especially ordinary Americans. Boom-and-bust cycles, obscene CEO salaries, emergence of "Lockdown America", drug-company scandals, collapsing bridges, huge government deficits, ethical absences, plummeting/stagnating wages for working people, the flight of U.S. manufacturing abroad are all products of Reagan's free-market zealotry and gutting the public sector. Reagan also pioneered the use of wedge issues like race ("welfare queens," "war on drugs").
Kleinknecht also says the book was borne of bewilderment over the myth that continues to surround the presidency of Ronald Reagan, who he characterizes as an empty suit who believed in flying saucers and allowed an astrologer to guide his presidential scheduling. We just finished a presidential campaign season marked by unseeming competition among Republican aspirants to wrap themselves in the Reagan mantle.
Some portions of "The Man Who Sold the World" are missing credible documentation; others blame Reagan for actions that only began during his leadership and were extended by Bush I and II, and Clinton. His 1987 appointment of Alan Greenspan (Mr. Bubbles) to head the Federal Reserve may have been Reagan's worst, given Greenspan's key role in the dot.com and housing bubbles, but we cannot forget he was reappointed again and again by other presidents until 2006. Deregulation of airlines and trucking are also attacked, though undertaken by Carter. And finally, Kleinknecht misses some important additional Reagan actions - eg. undermining Carter's fuel economy and alternative energy initiatives, and the whole Iran-Contra fiasco. Nonetheless, the book still is an important contribution.
Reagan was well known for stories not quite rooted in fact, and his statistics were similarly also sometimes loose. This included his war on regulation and Murray Weidenbaum's (became Reagan's Chairman of Economic Advisers) conclusion that federal regulations cost the economy $103 billion/year in 1978, including $666/car. The Bureau of Labor Statistics later repudiated some of Weidenbaum's methodology and a subsequent year-long Wall St. Journal sponsored study of the 48 largest firms vs. the six most active regulatory agencies found the regulatory impact only 1.1% ($2.6 billion). Worse yet, Weidenbaum's analysis omitted any benefits from these regulations, and Japanese firms spent more for compliance and still cost less. Unfortunately, Weidenbaum's study came first, got all the press, and inspired the administration's weakening of regulations through reducing enforcement funds and installing leaders who didn't believe in regulation and would interpret regulations in a more 'business-friendly' manner.
Between 1962 and 1983 the average household net worth of those in the bottom 40% rose from $800 to $4,700 in 1998 dollars. When Reagan left office in 1989 it was a negataive $4,100, reaching only $1,100 by 1998. Between 1983 and 1989 the net worth of the middle 20% increased from $55,500 to $58,800 (6%), vs. 27% for the top 1% and 9% for the top 2-10%. By 1983 federal tax receipts from corporate income taxes hit 6.1%, down from 32% in 1952 and 12.5% in 1980.
Regan, Sec. of Treasury, worked to eliminate all controls on the types of loans provided by banks and other institutions - leading to the S&L crisis. Restrictions binding them to a specific area were lifted, as well as interest rate ceilings on deposits; FSLIC insurance was increased from $40K to $100K and large institutional investors could then split funds into parcels fully insured around the nation. Changes in accounting practices were approved that let failing S&Ls (about 800) inflate their worth and stay in business; eliminated the requirement for 400 stockholders and allowed developers to own S&Ls and loan money to themselves with no money down. The scandal broke open in 1989, wasn't even mentioned in the 1988 campaign. He also initiated repeal of Glass-Steagall - work finished in 1999. While Congress deregulated more industries during Carter and Clinton years than Reagan-Bush years, Reagan achieved deregulation by odering the bureaucracy to stop enforcing existing regulations and reducing their funding. He also gave a potent political voice to the backlash against regulations.
The finance industry particularly benefited. By the beginning of the 1980s, an estimated two-thirds of the nation's thrifts were losing money, and thousands virtually insolvent. Regulatory relief including increasing FDIC coverage from $40,000 to $100,000, allowing developers to own thrifts and borrow from them, loosening accounting practices to boost net worth, and freeing them from investment restrictions. The result - the 1989 S&L debacle that required $150 billion in taxpayer bailouts.
Kleinknecht believes the rapid rise of M&A activity under Reagan's relaxed anti-trust enforcement became a prime cause of our manufacturing decline. CEOs lived in fear of 90%-leveraged LBOs using the firm's own assets as collateral, instead of focusing on customers and the Japanese. The M&A/LBO debts incurred ($33+ billion in 1981, plus at least another $70 billion tied up in merger-related loan commitments) hampered firms from investing in new equipment and made them more vulnerable to downturns. Between 1980-86, M&A went from 1,565 ($33 billion) to $4,323 ($204 billion).
Business tax cuts, instead of spurring new investment in equipment, were largely used for M&A as well. Kleinknecht cites the example of G.E. - paid no income tax the first three years of Reagan, received $283 million in rebates (despite pretax profits exceeding $6.5 billion), while shedding 50,000 jobs through layoffs, attrition, and selling subsidiaries. Meanwhile, it acquired RCA and NBC, among others.
A number of credible studies document long-term stock losses by the majority of merged companies. A Wall St. Journal study in 2002 found the stocks of the 50 biggest corporate acquirers fell 3X the DJIA.
Kleinknecht's data on "Lockdown America" is quite limited, consisting of data from New Jersey. In 1980 it had 76 prison inmates per 100,000 population, and 331 in 2002; meanwhile, violent crime increased.
Overall, "The Man Who Sold the World" is important reading.
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33 of 42 people found the following review helpful:
4.0 out of 5 stars
God bless social Darwinism, August 27, 2009
This review is from: The Man Who Sold the World: Ronald Reagan and the Betrayal of Main Street America (Hardcover)
This book was particularily painful to me, because I remember the President's announcement that we would have a one world economy and watched my home town slide from a bastion of business and industry to a place of poverty where Feed Our Children sends tractor trailers full of food. Yet the subject of Kleinknecht's no-holds barred expose is one of our two best loved modern presidents.
I have given this book 4 rather than 5 stars because it is currently being ignored and will soon be forgotten, even though it is a title that should be a part of all U.S. history collections.
Here follows a minor insight into the content of the title:
"The contagion of free-market purisim has infected almost every sector of American life (p xii)." He cites a rising inequality whith those on top reaping the benefits and claims the obvious that trickle economics is a fallacy. "With Reaganism has come an abandonment of all faith in reason and progress." There is the decline of heavy industry (p.7) and the factory farm policies which have all but destroyed family farms (p. 11). The destruction of unions was an obvious plus for the haves and a bitter pill to swallow for the nots.
But, to get back to the title of this essay: "...the ignomy of social Darwinism which had nourished a view of the lower classes as predestined by genetics and breeding to live in squalor (pp.24-25)." Perhaps the term anti-social Darwinism would have been more to the point.
Corporate income tax drops created a sea of red ink helping to justify the cutting of beneficial social programs (p. 29). As a pioneer of the use of soft money for campaigning this administration walked point for the election styles of the present (p.59).
The business of this presidency, said the author was business (p. 70). This included the evisceration of regulations a more sensible generation had put into place which led to financial disasters (p. 72) that taxpayers just just begun to fund. The destruction of the 1927 McFadden Act which restricted the ability of financial institutions to operate in more than one state was a disaster still not entirely realized and Proxmire's prediction of doom was laughed at (p.109). The author said that the move was to "Privatize the wealth and socialize the risk (p.119.)" The list goes on and on.
This book deserves to be read slowly and seriously.
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51 of 71 people found the following review helpful:
5.0 out of 5 stars
Rhyming and stealing, March 8, 2009
This review is from: The Man Who Sold the World: Ronald Reagan and the Betrayal of Main Street America (Hardcover)
While someone named an airport after Ronald Reagan, the only institution that should have ever born Reagan's name was the prison in which he belonged for his Iran-Contra scheme crimes, sharing a cell with Freeway Ricky Ross. Yet the damage the Reagan administration caused was so great that journalist William Kleinknecht's book THE MAN WHO SOLD THE WORLD: RONALD REAGAN AND THE BETRAYAL OF MAIN STREET AMERICA deals only with its domestic wrongdoing, such as the H.U.D. scandals, and easily fills 269 pages.
I remember episodes of television's ALL IN THE FAMILY where Archie Bunker mentioned wanting Ronald Reagan to be president. This was after Reagan's unsuccessful 1976 attempt to win the Republican nomination, which went to incumbent Gerald Ford. I've wondered if the ALL IN THE FAMILY writers inserted those remarks as jokes, considering Reagan's laughing stock image at that time, or if they anticipated Reagan's moment coming, as it finally did in 1980. The dim-witted, blue-collar Archie Bunker personified the voter who put Reagan over the top, swayed by straw man arguments and red herrings, failing to see how the candidate's anti-working class policies would rob the poor and middle class blind to give still more to the affluent. THE MAN WHO SOLD THE WORLD quotes a 1980 Reagan campaign speech passage void of substance that appealed to the Bunker voters: "I've found a longing among our people for hope, a longing for a belief in ourselves and the vision that gave birth to this nation. For the values of family, work, neighborhood, peace, and freedom." As you stand to salute the flag, check your watch and wallet.
THE MAN WHO SOLD THE WORLD explains Ronald Reagan's appeal as a combination of divide-and-conquer campaigning and the rise of America's Orwellian society, where helping the poor means hurting them by cutting welfare and food stamps while giving tax breaks to the wealthy; protecting freedom means violating the Bill of Rights; and promoting peace means preparing for war. While George Orwell may have named his book NINETEEN EIGHTY-FOUR by transposing the last two numbers of 1948, the year he published it, having someone such as Reagan in the White House in the year 1984 seems more than a coincidence.
William Kleinknecht says he wrote THE MAN WHO SOLD THE WORLD to remind us of the facts that contradict the fiction the moneyed interests in charge of the corporate media would have us believe about Ronald Reagan. Citing the 2008 failure of John McCain and Sarah Palin to win the White House despite using the same sales pitches as Reagan, he implies the public is finally seeing the rain outside its door despite the claims of sunshine by the power brokers and their flacks. I won't be happy until they remove Reagan's name from that airport, but if the author is correct, than the rejection of McCain and Palin is a start.
Read THE MAN WHO SOLD THE WORLD.
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