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The fuel crisis rippled through the United States and other Western economies, further crippling the already fragile system of economic interchange. Congress and several states passed bills protecting the environment that made building anything much more expensive and time consuming. Oil refineries, for example, were simply not constructed after the passage of the restrictive environmental measures (even in 2010, no oil refineries have been constructed in the US since the 1970’s). The price of everything was increasing while wages were flat which, in essence, shrank the economic power of the common person.

Reagan: Ultimate Cold Warrior

1980 to 1988

Figure 75

President Ronald Reagan

(We win, they lose!)

In 1980, Ronald Reagan was elected president of the United States. His first thought was to strengthen the US economy. Reagan cut taxes and decreased government regulation over many aspects of the economy. This was the magic bullet that no one else thought would work. Reagan decided the government was the problem with the US economy; thus, as he removed government restrictions and lowered taxes, the economy responded and began to grow rapidly. Inflation was tamed, wages began to increase as the economy expanded, and even tax revenues increased as the economy grew. Reagan proved the commentators wrong when they said the best days were behind the United States and the West. Reagan proved the best days were still ahead as long as the government gave the people the room to invent and the money (power) to do so. The US economy recovered from years of stagflation (a combination of inflation and stagnated growth) and began a more than decade’s long expansion. Many future politicians would reap the benefits of Reagan’s low tax and low regulation policies—without mentioning him of course.

Reagan armed the “freedom fighters” in Afghanistan (actually Muslim fundamentalists) and tried to arm Latin American guerrillas to fight communism. The efforts in Afghanistan tied down thousands of Soviet troops and allowed the United States to hurt the Soviets as they had hurt the United States in Vietnam. None of this was essential because everything was a sideshow compared to what Reagan was really planning, an all-out assault on the Soviet system itself.

After taking office Reagan told his staff he had a new idea for dealing with communism: “We win, they lose,” he said. This was a complete reversal of thirty-five years of US policy aimed at coexistence with the Soviets. Reagan wanted to destroy them, not live with them. To that end, he put his staff to work looking at what was weak in the Soviet system. The key flaw soon surfaced, their economy was on thin ice. To hurt the USSR’s economy, Reagan began an arms race where American technology would outperform the Soviets and cause them to spend millions they could not afford in order to keep up. The plan worked. The Soviets were paranoid about keeping up with the United States in arms and arms production. As their spending for military and technological hardware increased it collapsed their economy. The Soviet Union began to do things no one ever thought they would witness. They allowed the reunification of Germany; Poland’s independence; left Afghanistan, and they released their hold over Eastern Europe. By 1989 it was over, and ecstatic Germans, uniting their country after years of separation, tore down the Berlin Wall.

Eastern Europe was free, and many non-Russian areas of the Soviet Union declared independence. Belarus, the Ukraine, Moldova, Latvia, Lithuania, Estonia, Kazakhstan, and others fled the Soviet empire. The speed with which these formally subjugated regions left the Soviet Union was amazing. In spite of the fact the Russians controlled them for many decades, the moment a chance for freedom appeared they took it. The Communist Party no longer controlled Russia. This victory came suddenly and could hardly be fathomed until it was complete. Reagan left office in 1988 after two successful terms as president. He was a visionary who convinced the people of the United States