If You Like Growth, do Data Show Democrat Presidents Deliver More?
|December 10, 2013||Posted by Staff under Politics|
Over the past 64 years and 16 presidential terms, the U.S. grew at an average rate of 4.35% when a Democrat was in the White House and at a 2.54% when a Republican was, a gap economists call “astoundingly large.”
The research was done by Alan Blinder, a macroeconomist who served in the Clinton White House and has advised several Democratic candidates, and Mark Watson, an econometrician who hasn’t dabbled in partisan policies.
Democrats would no doubt like to attribute the large Democrat-Republican growth gap to better macroeconomic policies.
The researchers reject the assertion that Democrats inherit stronger economies from Republican predecessors than vice versa. Instead, they assert it’s a matter of luck.
– Oil price shocks tend to occur when Republicans are in the White House: President Richard Nixon for the first OPEC oil shock, President Jimmy Carter for the second, but sGeorge H.W. Bush’s Gulf War and George W. Bush’s Iraq war were policy decisions that affected oil prices.
– Surges in productivity, or output per hour, account for about one-quarter of the gap.
– Swings in consumer confidence explain about a quarter of the Democrat-Republican gap between 1962 and 2013.
The difference between growth rates when Democrats control Congress and Republicans do is trivial. It’s the president’s party that matters.
There is a slight tendency for Fed-influenced interest rates to rise during Democratic presidencies and fall during Republican presidencies. This doesn’t suggest the Fed playing politics; it’s what the Fed does when the economy grows faster with rising inflation, which is what tends to happen when Democrats hold the White House.
A similar partisan growth gap is seen in Canada, but they found no statistically significant difference between economic growth records of left and right governments in the U.K., France or Germany.
Ed. Notes: While economists get lots of money and prestige for fiddling with numbers, numbers do not always tell the truth. As wits have been noting for over a century: “There are three types of lies: lies, damnable lies, and statistics.” Democrats were president during both the Great Depression and the Great Recession.
Further, there is the matter of lag time. Some policies don’t have an immediate impact; a subsidy to, say, dam builders would take years to bear fruit or wreak havoc. Plus, the first budget of a new administration they inherit as the last budget of the outgoing administration.
All in all, it’s a fun exercise if you like politics but essentially a distraction from the real issues that economist should measure: Why won’t the workweek shrink with so much techno-progress? And, how much damage do subsidies do? What’s their net gain or loss? And, how much more do people prosper when taxes get shifted off our efforts and onto never-produced land and resources and privileges? You could surely add to the list.