In 1980, while attending a Young Presidents’ Organization (YPO) university meeting at a hotel in Scottsdale, Ariz., I had an interesting experience. The lunch speaker was former California Gov. Ronald Reagan, who was campaigning in the primaries for U.S. president, although very few people at the time paid too much attention to his possibilities because of his age. He was already 69.

Reagan gave a very nice speech, very optimistic, very positive, about how he would deal with the country’s faltering economy. It was the fourth year of Jimmy Carter’s term as president. In four years, Carter—who was derogatorily referred to as the «peanut farmer»—had brought the economy to a very deep recession. The prime rate, believe it or not, was at 21.5%. With 20 million people unemployed, the unemployment rate was 10%. Inflation was rampant. Though not as long as the ones seen during the Great Depression, there were bread lines at many churches in cities across the country. There were 52 U.S. military and diplomatic personnel being held hostage at the U.S. embassy in Iran. All in all, it was a very bad time for the country.

Reagan wasn’t being taken seriously at the time he gave his speech in Scottsdale, mainly because of his age. Yet, he would go on to win the Republican Party candidacy and the presidential election by a landslide 489 electoral votes and 50.7% of the popular vote against President Carter’s 49 electoral votes and 41% of the popular vote. Reagan became the 40th U.S. president a few days short of his 70th birthday.

What happened that day in the Scottsdale hotel when Reagan was running in the primaries was very exciting for me and two other YPOers. The speech had ended and many left the banquet hall. But Reagan was held up for a while by people asking for his autograph and chatting with him. Two other YPOers and I left the banquet room right after his speech and went out to the lobby. We saw a little corner where we could sit and have a drink. We were sitting there and talking when Gov. Reagan came out with Secret Service around him and he happened to pass right near us and gave us a very friendly smile as he passed by and sort of looked like he was alone. One of our YPOers, who was a lot more daring than I, jumped up and went over to him and said, «Mr. governor, would you like to join us for a drink?» We were all very surprised but he was very glad to come over and sat with us for about half an hour, the four of us alone, talking, in the corner. Most people didn’t even notice us and the Secret Service kept their distance.

What did we talk about? Well, after the introductions and social talk, we got down to his candidacy for president. The first thing he told us was that he wasn’t interested in being president for two terms. He felt the country was in very bad shape economically and he had the experience as former California governor (in the most populous state in the country) to turn it around. He had been governor for eight years. Prior to that, of course, he had been president of the Screen Actors Guild in Hollywood and had had many other experiences in his life. Many people didn’t know it, but his college degree was in economics. People thought he was an actor only. The age issue was also a deterrent for many.

Reagan emphasized his interest was in being president for four years because he knew many things that had to be done to change the direction of the country would be very unpopular, changing things that Congress had legislated, things the States had done and legislated and certain things unions had done that had gone too far, including pushing too many labor laws and other matters. Reagan also spoke about the fact that internationally we weren’t being respected. He felt, because he wasn’t interested in a second term, at his age, he would go in, do what had to be done, be firm and then leave. He wanted to fix the economy and bring back the respect internationally that was being lost. At his age, he just wanted one term to put the U.S. economy back where it should be and build hope for the people.

Once Reagan won the election, he made another very strong commitment. He threatened Iran, saying if by the day he was sworn in as president, those prisoners hadn’t been released, Iran would regret it, because he would take whatever measures were necessary to release those people and punish Iran for what it had done. Reagan spoke clearly and firmly, something Carter never did. Lo and behold, as Reagan was giving his inaugural address, 52 U.S. hostages, held by Iran for 444 days, were set free.

President Reagan also took some politically unpopular actions at home. For instance, the air traffic controllers— the people who control air traffic at airport towers all over the country—had gone on strike and thought they had him over a barrel; they were going to interfere with the airlines and disrupt air travel to get their way in union bargaining.Reagan assigned the National Guard to go in and take over the airport tower positions and not just break the back of the strike; he fired all the controllers. New controllers were hired and trained. He solved it and that was the end for the striking controllers, who remained unemployed. Reagan had told them he would do just that and he did it. He already had been elected president and wasn’t worried about re-election, so he just did what had to be done.

In his second term, Reagan was threatened by the head of Libya, Muammar al-Gaddafi. For two years, this tiny country leader had been waving his fist at the U.S. and was behind an attack on U.S. soldiers in a West Berlin nightclub. Reagan sent in three U.S. bombers that flew over Arab states, without permission, and bombed al-Gaddafi where the military thought he was. Although al-Gaddafi survived the attack, nothing was ever heard from him anymore. Unfortunately, one of our planes was shot down and the pilot, a Puerto Rican, died. However, the fist-waving threats and terror attacks against the U.S. stopped.

Reagan dealt with the Soviet Union with a very strong hand. For every submarine they built, Reagan built two. For every battleship they built, he built two. For every nuclear missile they built, he would build many more. The fact is, he almost bankrupted the Soviet Union and, toward the end, he came out with his famous speech in Berlin where he said, «Mr. Gorbachev, tear down this wall.» And what happened? The wall that had split Berlin for many years— itself a symbol of the split between communist-controlled Eastern Europe and free and democratic Western Europe—was taken down.

Reagan was a very friendly person, but when he had to talk tough he did, and he was taken seriously. He was a very good communicator, a very nice person, but he was firm. He was a determined person who followed up on things and was respected for that. Overall, the Reagan years saw a restoration of prosperity, and an achievement of peace through strength.

But getting back to the economy, which is the purpose of this story. I bring up Reagan’s background just to remind people, especially young people who didn’t live in the Reagan era, of what kind of man he was, what kind of president he was and how he dealt with very difficult situations.

When it came to the economy, Reagan spoke from the day he was sworn in, in a very positive and very optimistic manner, that he was going to turn the economy around. No matter how bad it was, he was going to turn it around. He was firm and convincing and instilled optimism across the country. The fact is, within six months of his being sworn in as president, the economy had started to substantially improve. He had talked up the economy with a roar of confidence and optimism. It was the optimistic talk, the very positive talk from President Reagan, that lifted the morale of consumers and businesspeople. Consumers started to spend, businesspeople started to invest and, within six months, the economy had turned in a positive direction and was followed by seven of the most prosperous years the U.S. economy had seen since the Great Depression. The whole success of it was built on the optimism he instilled in everybody that it could be done and he was going to do it. His optimistic and positive discourse lifted everybody’s morale and the economy started to grow. Reagan also restored the proud feeling of being a U.S. American and restored the respect of the U.S. around the world.

Reagan became so popular as a result of everything he did in the first couple of years, including stepping on the toes of those he had to in order to turn the economy around, that the Republican Party wouldn’t let him go after four years. They did everything but twist his arm to convince him to run again, which he did, winning re-election by a landslide. Why? Because he had turned the economy around and everybody was happy. He did the things he had to do right from the beginning. He took care of the majority and not the special-interest groups or small groups that tried to get their way and impose it on the overall population. He wouldn’t allow anything that would hurt the economy to stand in his way. On top of it all, he brought back the feeling of hope and being proud to be a U.S. American.

The moral of the story is that positive talk with a lot of optimism and an efficient government will turn things around even before a lot of legislation is enacted or too much money is spent. If consumers become optimistic and, consequently, the businesspeople become optimistic, money will start to flow, the government’s income from taxes will increase, new jobs will bring in more taxes and the government will have the resources to increase social programs and invest in infrastructure, and growth and prosperity will continue.