In the 1970s, the U.S. was plagued by an ever-growing array of problems, most of which were the result of excessive government intervention in the economy and the proliferation of welfare programs, belying the popular European image of the U.S. as a textbook example of a free-market economy unburdened by any welfare programs and institutions. Adjusted for inflation and population growth, per-capita federal spending on welfare programs almost doubled from $1,293 in 1970 to $2,555 in 1980.

Many U.S. citizens’ economic situation had deteriorated prior to Reagan’s arrival in the White House. In real terms, white American household incomes dropped by 2.2 percent between 1973 and 1981, while African Americans saw their household incomes shrink by 4.4 percent. Worst off were the poorest 25 percent of the overall population, whose incomes dropped by 5 percent. At the other end of the income spectrum, high earners were squeezed with tax rates of up to 70 percent.

Unemployment had risen to 7.6 percent by the time Reagan took office, while inflation had stood at over 10 percent for three consecutive years, climbing to 13.5 percent – the highest........

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