To what extent was big government reduced?

• Federalism produced less federal interference in state and local affairs
• Sounded positive- nation suspicious of government intervention
• Less funding for local government
• Less regulation of business expansionism and greed

Reagan claims:

• Cut federal regulations in half
• Reduced cost of heating and petrol
• Federal strike force to combat fraud
• Replaced federal agencies with private sector ones

What was the reality?

1. Rising deficit- failure to control debt

2. Media- used everyday images when discussing change

3. Small scale savings more realisitc to public

4. Carter had previously begun deregulation (finance, railway, working conditions)

Conglomerate= an organisation that controls several businesses of different types

• Big companies expanded, smaller ones struggled
• Rise in conglomerates- businesses set own saftey standards, lower than government regulators
• Deregulation brought lower prices through competition- fixed price structure
• Cut services provided

S&L Institution= building society

Reagan used Carter's banking deregulation to S&L instutions meaning they could offer high interest rates on savings

What were the benefits?

Good for savers but not for struggling businesses (couldn't switch to lower interest loans)

What happened?

• Banks and S&L competed for customs- run by people who made safe investments 
• Risky investments- lend at lower rates, offer high rates for savers
• Competitve Equality in Banking Act- provided money to cover money lost by closed S&L's

What was the impact?

• 1988- lost $10b
• Bush signed FIRREA, bailing out failed organisations and setting up federal regulators

• Balance of world trade shifted against USA
• Dollar weakened
• Textile industry damaged
• Cheap foreign imports damaged economy
• USA became borrowing nation

Counter argument

• Increasing imports was good as it gave more choice 
• Made the USA more attractive

What: Japanese companies increased their sales of cars in the USA

Why?

• The fuel crisis made people want cars that used as little fuel as possible
• Japan's advanced technology, ship car to USA and still make profit for less than a US-manufactuered car

How did the Japanese establish themselves?

1. Buy US firms

2. Invest in US firm- dependent on Japanese stockholder

3. Run company jointly with American owner

What did Japan do to ensure sucess?

• Chose parts of the country where government and business weren't investing- Ohio
• Wasn't much job creation

Wasn't reduced as much as Reagan hoped

Reasons

• Congress deregulated oil prices but blocked plans to remove regulations on enviromental issues
• State government unwilling to take over areas of government under federal control- didn't want to pay for something that would be federally funded

Why was Reagan different to Carter?

• Didn't introduce many new regulations
• He was persuaded to pass Food Security Act- gave federal help to farmers who struggled with falling prices

What was the impact of Reagans attitudes on future presidency's?

• People not keen on deregulation and federal withdrawal
• Negative effects of deregulation now known- businesses were interested in personal not public benefits

Before 1989- deregultion planes flew all over US often half full

Now- big companies corrected inital price fall from comp, prices were high so planes flew to fewer places less often (tightly), federal withdrawal meant collapse of programmes, poor rural areas at the back of the queue for services