Reagan, G-8, and the Economy
As the world pays its respects to Ronald Reagan, a fitting tribute can be found at this week's G-8 summit.
Not only has Russia joined this capitalist club since the end of the cold war that Mr. Reagan helped hasten, but the summit's agenda shows how much Reagan positively reshaped the way governments of rich nations guide the world economy - which is to say, very little.
As the apostle of free markets in the 1980s, Reagan would probably have been very proud of the fact that economic policies are very much downplayed at this summit in favor of political issues such as the Middle East.
That's quite a change from 1975, when the first summit of major industrialized democracies (then known as G-7) met solely to coordinate actions for a then-ailing, post- oil-shock world economy.
At his eighth and last G-7 summit in 1988, Reagan made his final pitch that free-market strategies, such as lower taxes and government deregulation, can sustain world growth and rescue economies from recession.
At his first summit in 1981, those views were much derided. Now much of Europe has adopted them, and the global economy has grown so large that G-8 summits can only deal with improving it on the margins.
Reagan was instrumental in the negotiations that led to a free-trade pact that created the World Trade Organization.
"Our goal must be universal free trade among free peoples and free countries," Reagan said in 1988. "That's the shape of the future." The resulting growth from freer trade is an unheralded tribute to Reagan's economic legacy.
One irony of that legacy is that of all the G-8 nations, Russia's economy is growing the fastest - 7.2 percent last year, due to both its oil wealth and its embrace of open markets.
While world leaders have cause to worry about the effects of a recent spike in oil prices, it's a worry based less and less on market-defying OPEC than on the market economy of China. The 9-10 percent growth in China is slurping up oil like noodle soup.
The economies of the world's 30 wealthiest countries grew by 0.9 percent in the first quarter of this year, according to the Paris-based Organization for Economic Cooperation and Development. That's a big improvement from a year ago, and indicates that all the major economies - the US, the European Union, Japan, China, and Russia - are growing at the same time.
The stronger ones have helped pull the weaker ones along, a tribute to the more open markets that Reagan helped leave behind.