There have not been many times when a British prime minister has been prime minister through two consecutive terms of office of the same president of the United States. Indeed there have been only three such cases so far. One was Pitt the Younger, who was in Number 10 Downing Street while George Washington was president. Another was Lord Liverpool, who held the prime ministership through the whole period in office of Pres. James Monroe. And I am the third. It gives me a vantage point which, if not unique, is nonetheless historically privileged from which to survey the remarkable presidency of Ronald Reagan.
I cannot pretend, however, to be an entirely unbiased observer. I still remember vividly the feelings with which I learned of the president’s election in 1980. We had met and discussed our political views some years before, when he was still governor of California, and I knew that we believed in so many of the same things. I felt then that together we could tackle the formidable tasks before us: to get our countries on their feet, to restore their pride and their values, and to help create a safer and a better world.
On entering office, the President faced high interest rates, high inflation, sluggish growth, and a growing demand for self-destructive protectionism. These problems had created — and in turn were reinforced by — a feeling that not much could be done about them, that America faced inevitable decline in a new era of limits to growth, that the American dream was over. We in Britain had been in the grip of a similar pessimism during the Seventies, when political debate revolved around the concept of the “British disease.” Indeed, during this entire period, the Western world seemed to be taking its temperature with every set of economic indices.
President Reagan saw instinctively that pessimism itself was the disease and that the cure for pessimism is optimism. He set about restoring faith in the prospects of the American dream — a dream of boundless opportunity built on enterprise, individual effort, and personal generosity. He infused his own belief in America’s economic future in the American people. That was farsighted. It carried America through the difficult early days of the 1981–82 recession, because people are prepared to put up with sacrifices if they know that those sacrifices are the foundations of future prosperity.
Having restored the faith of the American people in themselves, the president set about liberating their energies and enterprise. He reduced the excessive burden of regulation, halted inflation, and first cut and, later, radically reformed taxation. When barriers to enterprise are removed and taxes cut to sensible levels (as we have found in Britain in recent years), people have the incentive to work harder and earn more. They thereby benefit themselves, their families, and the whole community. Hence the buoyant economy of the Reagan years. It has expanded by a full 25 percent over 72 months of continuous economic growth — the longest period of peacetime economic growth in U.S. history; it has spread prosperity widely; and it has cut unemployment to the lowest level in over a decade.
The international impact of these successes has been enormous. At a succession of Western economic summits, the president’s leadership encouraged the West to cooperate on policies of low inflation, steady growth, and open markets. These policies have kept protectionism in check and the world economy growing. They are policies which offer not just an economic message, but a political one: Freedom works. It brings growth, opportunity, and prosperity in its train. Other countries, seeing its success in the United States and Britain, have rushed to adopt the policies of freedom.