I often hear that Democrats don’t understand the economy. That they are idealists whose ideals harm the economy in practice. It almost seems to be “common knowledge.”
And yet, reality strongly disagrees with this “common knowledge.”
History shows that the economy flourishes with Democratic presidents, and flounders with Republican presidents.
Income inequality increases with Republican presidents, but not with Democratic presidents.
Even the richest Americans do better with Democrats in office. The reason inequality increases with Republicans is that everyone does worse, but the poor are hit the hardest.
I argue that not only do Republicans not understand the economy, they don’t want to understand it.
Republicans are just as much idealists as Democrats. The difference is that Republican ideals are the ones that actually hurt the economy in practice. For example, “lower taxes for the richest” is an ideal for Republicans, in the same sense that “everyone should have health care” is an ideal for Democrats. Neither ideal was adopted because it helps the economy.
Now, I am not saying Republican ideals are bad or valueless. My point is that they need to be recognized for what they are: ideals that harm the economy in practice.
It may well be that those ideals are valuable enough that the economy tanking is a small price to pay. But at least come out and say this, instead of ignoring historical fact.
And for anyone who prefers economic growth and prosperity over lofty ideals, the realistic and intelligent choice is to vote for a Democrat.
In light of this, I have often wondered why the richest Amercians are mostly Republicans, if they are more prosperous under Democrats. The only conclusion I can come to is that they will settle for a little less money if it means they can get it with a lot less work; i.e., tax cuts, cronyism, subsidies and other forms of corporate welfare. The increase in wealth of the richest Americans under Democrats comes from increased productivity, which means the wealthy have to work their tails off to make money. Under the Republicans, they can increase their wealth with far less work on their part, because it comes from tax cuts which shift the burden of productivity to pay for them to their children, and corporate welfare which is just plain greed.
I don’t know if this is true for the new, really rich. Gates, Jobs, the Google guys, etc. are all liberals. 5o years ago Democrats were the “rabble”, now it seems to have shifted.
While I think that many of the economic ideas Republican endorse are less effective than those proposed by Democrats, I think the President’s effect on the economy is vastly overstated. The president can only facilitate economic trends, or mitigate the damage during economic downturns. They still have to work with congress, and deal with the reality of the economic picture. A president can make things a lot worse, but I don’t they can’t really rescue a bad economy single-handedly. It seems to me that the conclusions that book seems to draw are unfair. I haven’t read it yet, but I plan to to see if my reservations are addressed.
That being said it seems obvious that the GOP doesn’t deserve it’s reputation as better stewards of the economy.
I’ve been posting about the evidence regarding the economy performing better under Democrats for years here. Thanks for bringing this to the table.
Oddly, when they are running for president or supporting a candidate for president, they are all about the effect of the president on the economy. When you point out the data on the subject, they start singing about the president having no effect on the economy.
As a result, I propose the following: If Republicans think that the president has no effect on the economy, and Democrats do, and if the data shows that the economy does better under Democrats than Republicans, the answer is simple. Put a Democrat in the White House. Either he’ll have no effect or he’ll make things better.
At a guess, I would say that the rich favor Republicans because Republicans will put more money directly into the rich’s hands than Democrats (or at least not taking as much as Democrats would), without really understanding that by putting the money directly into everyone’s hands, they indirectly benefit more. Trickle-down doesn’t really work in practice.
Hell, go look at Warren Buffett. I don’t know that anyone could reasonably discount his opinion on economics, and even he’s got a liberal bent on it.
The entire premise is, how do we say it, flawed. The Presidency has virtually no ability to affect the economy at all. Congress has considerably more, but is still limited. The economy is not a political animal.
If anyone finds this data surprising (or even if they don’t), here’s something even more bizarre: the trend is exactly the opposite in election years, when Republicans produce strong economic growth but Democrats produce fairly weak growth. What is going on there?
Significant things that are left unstated by this data: how much of the variability in growth is predicted by these two variables? How is motion between quintiles affected?
If the OP is a Democrat then I’d say that at least one Democrat doesn’t understand the economy at all. If his/her views are representative of other Democrats then it would be difficult to see how Republicans could do a worse job understanding economics.
To be fair, it seems that most people don’t understand even basic economics. The idea that the President controls the economy is completely ludicrous, for one, but the public generally has a pretty poor understanding of the benefits of trade, why gasoline prices rise and fall, and a variety of other things. Economist Bryan Caplan talks about the phenomenon in The Myth of the Rational Voter.
The idea, though, that one can look at the party in power, look at how the economy performs, and conclude anything about a certain party’s economic knowledge is utterly simplistic.
Sadly, no. Many free-marketers who vote GOP think they understand the economy, but they have a very superficial take on it. And neither party really nominates economists to office, preferring lawyers or, in the GOP’s case, screen personalities.
Is this an admission that when a president pushes through tax cuts for the wealthy, the likelyhood of job creation and economic growth is coincidental at best?
The president appoints all the cabinet heads. He selects those who agree with him. He oversees them. He changes and corrects the course. He establishes the agenda and sells it to the people through speeches and the use of TV programs. Sometimes he replaces the department heads if he feels they are not going the way he thinks they should. Yep Pres sure has nothing to do with the economy.
Gonzo, and apparently others, would be advised to learn the meaning of the scientific term “relaxation time.”
Moreover, the OP is looking at the the economy as if it resets with each president.
After the 50s, anyone would do well. We were booming and flush from rebuilding Europe.
Clinton benefited from the dot.com boom, which would have occurred under any President.
Carter got the windfall of China opening up.
Ever hear that the current economic downturn was in part caused by NAFTA?
One could claim that it’s Republicans Presidents that set all these things up, and where does your thesis lie?
Thing is, what I just posted isn’t even close to a complete picture, either.
Here’s a point to remember: No-one fully understands “the economy.” People can have a good grasp of the economy, and a thorough understanding of various principles- but theories regarding the economy are still being proposed, debated, and rejected. The economy is a horribly complex worldwide system with an unpredictable relaxation time that reacts quasi-randomly to new technologies whose development is not always predictable.
The issue, from when I looked at was less one of economics, and more military spending. Republicans cut taxes, which should be good, but then run up huge military expenses and borrow money from at home and elsewhere to pay for it.
Most things that people or the government do increase wealth. Except, military ventures, quite literally, take money and blow it up. The money that doesn’t get blown up gets transported to various military bases around the world and spent there on food, supplies, and hookers.
Paying interest on loans also doesn’t really add anything to the American economy, either.
To increase the economy, you have to improve industry or technology. So ultimately the question is that if I give X dollars to the government for (non-military) use, or the same X dollars to a venture capitalist, who’s more likely to invest it in something that will increase the wealth of the nation/world. Personally I’d vote on the venture capitalist, but I’ll admit that the Republican party has failed to show this, for the reasons stated above.
I’ve been thinking about this today, and I’ve come up with a couple more points that everyone may want to take into account:
[ul]
[li]Near as I can tell, this data has not been peer reviewed. The original study comes from here (pdf).[/li][li]In the data in the Times and Washington Monthly articles the difference in averages between Democratic and Republican presidents are well withing one standard deviation of each other (see Table 1 in the original study).[/li][li]To BrainFireBob and Algher: some of the data in the study was taken with a one year lag time.[/li][li]I managed to replicate similar average results using the US Census Historical Income Tables (here), but haven’t done any statistical tests on it. Also, I can only find data going back to 1966, rather than 1948. The average growth results that I have are a bit smaller for both parties than those given by Bartel.[/li][li]If this represents some real phenomenon, a newly elected President Obama might be well advised to do nothing his first year in office in the hopes that the economy will still be doing well come the 2012 elections.[/li][/ul]
Not really, since tax cuts are a way to stimulate the economy, not control it. But I will readily admit that “tax cuts=economic growth” that seems to be the mantra of many GOP politicians is not something economists will support. Even supply side economists don’t believe this. The supply side theory is that certain tax cuts (marginal tax rate reductions and reductions or elimination of taxes on wealth creation activities, such as investing or savings) will, everything else being equal, produce economic growth (and quite possibly produce more revenue for the Treasury, depending on the rates being cut). But not all tax cuts are created equal from an economic growth perspective.
Do you have any idea what the cabinet actually does? Please point out which cabinet official sets wages or prices or controls imports or exports. Cabinet heads control how federal money is spent. They also help set certain economic policy, although much more power resides with Congress. But the Secretary of Labor fiddling with how they calculate the prevailing wage standards or the Secretary of Agriculture messing around with CRP payments has little overall effect on the economy. Yes, the President (and his cabinet) have some effect on the economy, but it is small. They certainly don’t control it. The person with the most control over the economy (and even that isn’t a huge amount) is the Chairman of the Federal Reserve, and he is quite independent of the President.
The issue of statistical analyses would matter if we were attempting to make inferences about the relative difference between two samples. In the case of the data at hand, we are talking about the actual population, at least for the range of time the data are available. As such, the difference between the means is the actual difference between the means.
As to the cause of that difference, that is certainly up for debate. But the difference is the difference, and in every measure, the Democrats do better.