But I liked the 80s!

Paul Krugman doesn't like Obama saying that Reagan created a "sense of dynamism and entrepreneurship." Reagan, Krugman claims, presided over an era in which big corporations ruled, not "gazillionaires who started in garages." To back up this claim, Krugman whips out a graph that shows that total productivity (the amount of economic output per worker) grew a lot in the late 90s, and not much in the 80s. Thus, concludes Krugman, the 80s saw no flowering of entrepreneurship.

But is total productivity really a good measure of entrepreneurship? Total productivity is driven by a lot of things - technological improvements, how many hours people work, etc. It's not clear that entrepreneurship goes up when productivity goes up - in fact, I've never heard any economist make that connection before.

Do new companies increase productivity? It's pretty clear hat a lot of the productivity increase we've experienced in recent years has come from the computer revolution. That revolution was made possible by companies like IBM, Microsoft, Intel, Apple, Netscape, etc. And when did those companies get their start?

IBM - 1911 (invented PC in 1981)
Microsoft - 1975 (invented Windows in 1985)
Intel - 1968 (invented Pentium in 1990)
Apple - 1977 (released Macintosh in 1984)
Netscape - 1994

These examples indicate that entrepreneurship, as measured by the rate of start-up of new companies, has been pretty constant over time. And, lo and behold, it has. So no, Reagan didn't suddenly produce a burst of entrepreneurship. And neither did he usher in an era where big corporations stifled newcomers.

But, what Reagan quite possibly did do was give American technology a big boost. Federal funding for basic research increased dramatically in the 80s (and declined in the 90s). And Reagan was the first to allow university-business partnerships, which contributed a great deal to the IT revolution and arguably kept American universities far ahead of their European and Asian rivals. I don't think Reagan was a great president, but I like to give credit were credit is due, and I think Reagan played an important part in creating the technological society we live in now. As did Bill Clinton and the "neoliberals" in the 1990s. That's a tradition that Bush has broken, and that hopefully Obama or Hillary Clinton will restore.


PS - Krugman mentions Lee Iacocca as the quintessential 80s corporate CEO. For some reason that name sounds both familiar and distasteful to me...I seem to vaguely recall my parents saying bad things about him when I was a kid. But when I looked him up, I found that he's a huge detractor of the Bush Administration, and recently called Republican leaders a "gang of clueless bozos steering our ship of state right over a cliff." Sounds about right to me!