Looking at the actual paper makes every reaction out there seem a bit naffed, including Mark’s
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Actually, the overriding of regulations (instituted by both R and D) was a significant cause of the problem.
Back when the Republican party was conservative, regulations were understood to be a necessary evil because of human nature. Now, every chance to get rid of them is considered “good”. Except our economy (and environment, and public health) suffers whenever that happens.
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Interestingly, the abstract lacks the word ‘luck’:
The U.S. economy has performed better when the President of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance. For many measures, including real GDP growth (on which we concentrate), the performance gap is both large and statistically significant, despite the fact that postwar history includes only 16 presidential terms. This paper asks why. We find that the answer is not found in technical time series matters (such as differential trends or mean reversion), nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, and more optimistic consumer expectations about the near-term future.
By “Democratic edge stems mainly”, they mean about half depending on the time period examined. Their standard error is huge.
Not to mention that they cannot rule out that any of these factors are influenced by who is in power.
This is pretty weak.
I agree it helped lead to the problem, but when one trys to assign “blame” do you label Clinton who signed the bill, or Bush, when the bubble burst? “OH look at how bad the economy is! Bush is such a bad president!” While that statement may still be true, the reason for the economy being bad I don’t think you can directly assign to him. And while others may be prone to then assign blame on Clinton, and perhaps he shares some responsibility for signing the laws, it was Congress that enacted and passed the laws.
But back to my original point though, even though in some cases Congress and the President can get some of the blame (or praise) because of a law passed, I think the economy largely functions with out their direct influence, and whether it is doing well or not is not usually because of their actions.
Worth noting that this is NOT a peer-reviewed paper? I guess it’s some kind of white paper? Doesn’t necessarily mean it’s no good…
Ha ha, poor indeed. On page 15:
And in this case, the verdict is clear: It is highly unlikely that the D-R growth gap was just luck […]
Again, where are the paired studies?
Actually, it’s in Section 6, beginning on page 29. “Does a partisan
growth gap show up in other countries?” They look at Canada, the UK,
France, and Germany.
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If one set of data show a correlation, and another does not, maybe they’re measuring different things? In this case, if the correlation is strong for the office of President and weak for the Congress, then perhaps the President has a stronger effect on the economy.
One obvious way this might happen is because the executive branch executes the law - or doesn’t. The President has a great deal of power to choose the way in which the laws are enforced. For example, in the Bush years, regulatory agencies of every stripe were defunded and staffed with political appointees with no inclination to regulate. Not surprisingly, this had a significant impact.
Likewise, the IRS was instructed to lay off those taxpayers who owed large amounts, and focus on Earned Income Credit fraud. Not surprisingly, compliance fell like a stone.
Finally, the President has tremendous impact on which laws the Congress passes. Why do you think the ACA is called Obamacare, instead of Pelosicare? The President also writes the budget, which the Congress might actually enact.
Perhaps policy has economic impact. Have Republicans given up so completely that they want us to think it just doesn’t matter?
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I’m only about a third of the way through the report, but the only way I can think of that you would state that the authors are biased, is simply that you don’t agree with their results. It’s rather difficult, at this point, to think of more questions they could have asked of the data, and they seem to go to great lengths examining every question from multiple angles to ensure their results are fair and balanced (in the traditional sense of the term).
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It’s the same luck that makes blue states wealthier than red states. If you want a robust economy, all you have to do is pass anti-business laws and luck will make you richer.
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Point taken.
However, I’d like to point out that both major parties in Canada (all three actually) are left of both parties in the 'States - so it wouldn’t really be a paired study.
Yes, the Dems are just lucky that the Laffer Curve and “Trickle On Down” economics are a joke.
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Because correlation does imply causation. What it doesn’t do is prove it.
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The question they ask is “Why does the economy do better when a democrat is president?” That question assumes a baseline for the economy (nothing special happened) occurs when republicans held the presidency. Yet they provide no evidence their assumption is correct. That they assumed the deviation was towards democrats indicates a strong bias.
They should have asked “Why does the economy do worse when a republican is president?” (They actually should have asked both questions.) Or provided proof their assumption is fact.
Re: Laffer curve:
There isn’t really any argument whether tax revenue has an inverted U-shape. That it does has been, in some form or another, an idea in economics since the mid-19th century. Laffer’s name is attached to it because that’s who helped it reach the general populace’s attention.
Which isn’t to say that there isn’t a problem with Laffer’s original, and the continuing Republican, championing of lowering tax rates. Namely, their argument is that the US (and other countries) are to the right of the peak, and therefore any movement to reduce taxes will push revenues upwards. This, however, is not supported by the literature, which has generally found that the majority (all?) countries are currently on the left of the curve. See, for instance, Piketty & Saez or Diamond & Saez. (Or, if you want to skip reading that, there’s also Krugman’s summary of/commentary on the Diamond & Saez paper.)
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Great. The Democratic party is luckier.
That either means they’re more beloved by supernatural powers, or they have some ability to manipulate probability.
Either way, it’s still provably true with statistics that the GOP should be kept as far from power as possible.
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I charted my income and retirement and noted who was president and frankly it made no difference. It was the choices I made to work or go to school or just goof off that made the difference. Politicians have never done anything for me or against me. Well except for Reagan who as governor slashed my state scholership from over $2000 to $400. So I went to comuntity college instead of the university.
People tend to simplify economics as though it can be looked at without looking at surrounding issues. It doesn’t work that way. Take a look at this:
This image shows debt (and recessions) since 1940. Our last big recession was from 1973-1979, and was a part of the oil crisis. It also was the end of the boom that followed WWII (we got lucky because we suffered little physical land damage while other parts of the world desperately needed our still-functioning infrastructure. At the same time we were serving people, other countries that hadn’t been so developed stepped in and started to become fiscal competition.
Then there are these two charts - they show why you should know what happened pre-1940.
This image shows Defense spending 1940 to 2014.
THIS image shows Defense spending from 1800-2014
Ever since 1940, we’ve never returned to pre-WWII spending habits. We’re still spending in a bloated fashion, but it seems reduced based on what has become a long trend.
Anyway, the politics of economics probably have something to do with the fact that social changes do tie in to economic changes - what kind of POTUS is needed post-war or for international discussions vs. acting as the head of the armed forces and closing us off to outside influences. At least that’s my take on it.
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The only reason to ask why it’s better under a Democrat, is because that makes it a study of positive effects rather than negative ones. Which is how a report should always be done, unless you’re specifically attempting to prove the negative effect.
Whether the Dems got lucky or not, one thing that this data does make clear is that voting for the Republican candidate is NOT likely to improve the economy, at least in the short term.
This is highly relevant because most presidential candidates say “Vote for me, because I’m gonna fix that economy right up!” In the case of the Democratic candidates, prior data suggests that might be the case. In the case of Republican candidates, prior data suggests that is almost certainly not the case.
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