Ted Kennedy Wants Your Pickles

2. If Republicans are such good stewards of the economy, why is it that among the 11 presidents our country has had since comprehensive quarterly GDP first became available in 1946, Democratic presidents rank 1, 2, 3, 4, and 6 in GDP growth during their terms while the Republicans rank 5, 7, 8, 9, 10, and 11?

President GDP growth Rank
Truman 4.65% 3
Eisenhower 2.44% 9
Kennedy 5.33% 1
Johnson 4.88% 2
Nixon 3.09% 7
Ford 2.06% 11
Carter 3.20% 6
Reagan 3.47% 5
Bush I 2.12% 10
Clinton 3.56% 4
Bush II 2.48% 8

Democrats 4.33%
Republicans 2.65%


The first problem with this question is the confused notion of stewardship it embodies. We hear the political rhetoric of whether the president has the economy "on the right track", as if an economy of 250 million dynamic hard-working and highly educated people is dependent upon the actions of one man. The impression is given that, in your lifetime, the most important economic decisions you will make will amount to punching a chad once every four years (or not fully punching one, if you live in Florida), and all the time in between you merely need to cross your fingers. It also suggests that, in the history of the United States, which has been marked by an overall growth trend disrupted occasionally by a recession and in one case by a severe depression, what saved us from the economic abyss that, say, the Soviet Union fell into, was our great wisdom as voters. Somehow we always know to elect the guy that is going to bail us out. One problem with that theory: in the early stages of the Great Depression, we elected FDR, whose policies contributed to the length and severity of the Depression.

The rhetoric reflects the grandiose self-importance of Democratic politicians. See how important they are? Rather than saying, during my tenure, over 100 million new jobs were created, they say that "I created over 100 million new jobs." The only way a president creates a new job is to expand an already bloated bureaucracy, and no one (excepting of course bureaucrats and Democrats) wants more bureaucrats.

That said, facts is facts, and the rankings tell a story. But if it is the story that my friend implicitly suggests, why doesn't he pursue the notion that correlation implies causation in this case, and publish a nice article in a respectable economics journal? The referee comments on that would make this blog look downright civil.

The best that can be said about the rankings is that they prove no President can really screw us up for long, or even at all in some cases, despite their best efforts to do so. And party affiliation, unfortunately, is not necessarily a great predictor of the economic policy inclinations of the President. Kennedy passed huge cuts in personal income taxes, whereas Nixon instituted price controls. Is it fair to suggest that this should make us identify efforts to cut taxes with Democrats, and efforts to heavily regulate markets with Republicans? LBJ scores very high on the list, but the growth during that period occurred simultaneous with the abysmal failure of his War on Poverty; poverty won a resounding victory, and drew new adherents to its side in droves while taxpayers watched the money go down the drain. Carter is barely beneath Reagan, but of course Reagan had to take the hard and necessary step of wringing inflation out of the system that occurred under Carter's watch, which every economist knows causes a temporary recession (1981-82). There are a million other reasons why the suggested causation is not worthy of serious speculation.

The notion that Republicans are better stewards of the economy, if it is even generally held, has its source in the comparative attitudes of Democrats and Republicans to business, unions, the social safety net, regulation, and the role of government. Across the board, Republicans are generally correctly perceived as desiring policies that are better for the economy.

Social Safety Net: Look at countires that have instituted social policies that Democrats would adopt in a heart beat, like most of the countries in Western Europe, and you see stagnant economies with high unemployment. The problem is that these guys have made the social safety net so soft, that all of their citizens just want to bounce on it all day. The Democrats look to Cuba as a model for health care and education.

Unions: Hey, they served their purpose at one time, but now they serve merely to prop up a monopoly based on thuggery. Were again 'em, and Democrats are for 'em.

Business: Big Pharma, Big Oil, Wal Mart, Halliburton, etc. Were for 'em, Dems are again 'em. Wal-mart, a particular whipping boy of the Democrats, was estimated to have accounted for 25 percent of productivity growth in the late '90s. And you can't find a liberal these days who has anything nice to say about them. You can say: what about Enron? And I would answer, what about it? The guys are going to jail, and they were equal opportunity political contributors, giving lavishly to both parties. And Halliburton's no-bid contract to provide services in post-war Iraq? Turns out they got the same contract for Kosovo under the Clinton administration. Why? Because no one else can bid on it. The rhetoric that Big Corporations are out to screw you, and that government is there to protect you from that happening, doesn't ring true for most people. From Wal-Mart, I can get a five gallon bucket of pickles for $3; from the Federal government, $3 might buy the same, but Ted Kennedy would eat four of the five gallons before I ever got to chomp on a Vlassic.

Regulation: Excessive regulation may not have a large negative effect on GDP growth, but nevertheless its hard to claim that an increasing share of GDP owing to regulatory compliance efforts is a good thing. My employment is directly tied to the regulatory apparatus - but nothing that I do in my job contributes to consumer welfare. The same can be said of the entire Northwest section of Washington D.C., a very wealthy and highly educated populace that could be curing cancer if it weren't so much more easy to make a buck as a lawyer. And guess what? Though we are all employed ostensibly in the regulatory apparatus, there is some truth to the "capture theory of regulation", which suggests that the industry tends to capture the regulators, turning them into an ally that protects the industry rather than a watchdog. Why? Because those on the regulation side want to land in a nice soft job handling regulatory affairs for the industry that they regulate, and pissing people off does not serve that strategy.

Government: Two paraphrased quotes. Bill Clinton, on discussing what to do with the surplus: "We could give it back to you, but if you don't spend it right..." (see Ted Kennedy and the pickles). Ronald Reagan: "Government is not the solution to the problem; government is the problem."