The 1980s Business and the Economy: Overview

When the 1980s began, many Americans hoped it would be decade of peace and prosperity, quite unlike the decade that had just ended. The 1970s had been filled with tumultuous events, such as oil shortages, the Watergate affair, and the Iran hostage crisis. American businesses also suffered during that decade. The near collapse of the Chrysler Corporation, one of the three large American automobile makers, sent shock waves through an already troubled American economy. A recession, a short decline in economic trade and prosperity, began in 1979 and lasted until 1982.

President Ronald Reagan, elected in 1980, tried to assure the nation that the best course of action to bring about economic recovery was to have the federal government take no decisive action. Instead, Reagan proposed reducing the size of the federal government, reducing taxes, and letting forces in the business world correct economic problems. He tried to restore public confidence in the economy by emphasizing the virtues of American business and the need to take the federal government out of the world of American business.

Reagan and his followers believed in the power of capitalism and the free market, and they worked to remove the federal government from people's lives. This effort took many forms, from deregulation (the lifting of federal regulations on the activities of businesses) to tax cuts for businesses and individuals to lower social spending. Ironically, while the Reagan administration tried to reduce the size of the federal government by cutting social programs, it increased spending for the military dramatically. When Reagan left office in 1989, the national debt (total amount of money owed by the federal government as a result of borrowing) was more than double what it had been when he assumed the presidency eight years earlier.

The "business-first" attitude of the Reagan administration perhaps led to some of the economic excesses and crises of the 1980s. Deregulation of the financial world (and the lack of enforcement of remaining federal regulations) led to disastrous results on Wall Street. The nation was rocked by a series of scandals marked by insider trading, where financiers use illegally obtained information to gain an unfair advantage over their competitors. In some instances, stockbrokers and investment bankers were breaking into the offices of coworkers and rivals to gain information. When the 1980s came to a close, some of the most successful businesspeople of the decade were proven to be criminals.

Deregulation also allowed owners of savings and loan associations to engage in extremely insecure business dealings. Many of those dealings were simply illegal. While the owners made millions of dollars from such activities, people who invested their money in those associations lost everything. The resulting scandal cost the American taxpayers billions of dollars.

Another economic crisis that marked the decade was the one faced by American farmers. Falling land prices and the overproduction of agricultural products had devastating consequences for thousands of small, family-owned farms. Only after the federal government decided to step in did relief come, but for many it was too little and too late.

The one bright spot area on the dreary American economy in the 1980s was the continued rise of the computer industry. Developments in the personal computer, in its hardware and software, opened the computer market to the average American and made fortunes for those behind those developments. It was an industry that would continue to grow and evolve, changing the way Americans conducted business and their personal lives in the decades to come.