More on Larry Bartels’s analysis of Democrats, Republicans, and the economy

After seeing Larry Bartels present his findings on how the economy has done better, for the poor and middle class, under Democratic presidents than Republican presidents, I was puzzled. Not that it couldn’t be true, but it seemed a little mysterious, given the general sense that presidents don’t have much control over the econony–business cycles just seem to happen sometime.

Attitudes about what presidents can do for the economy

But the general perceptions about Presidents and the economy have changed over time.

I might be wrong here, not having lived through the entire postwar period, but my perception is that, during most of this time, “competence” was not an issue; rather, there was a general belief that the president could do some things, most notably help labor (for the Democrats) or business (for the Republicans).

The exception here was the 1976-1996 period, during which there was a real sense of economic incompetence or powerlessness of some presidents (Ford with his Whip Inflation Now, Carter with stagflation, the residual view of Democrats being incompetent for the economy, George H.W. Bush with the deficit and the regression, perhaps extending to Dole in 1996). Then, since 2000, we’ve returned to the general attitude that both parties have essential competence but have different goals. (Not that everyone agrees on the “competence” issue, but it seems to me that the battle is more being fought on priorities than competence–in contrast to 1992, for example.)

Back to Larry’s paper

So, the conventional wisdom based on the 1976-1996 period is that presidents can’t do much, they’re at the mercy of the business cycle, etc., which makes Bartels’s results seem like some sort of fluke, or a perhaps meaningless juxtaposition of one-off results. But taking the 1948-1972 and 2000-2004 perspectives, Bartels’s graph makes a lot of sense. From this perspective, the Democrats did their thing, and the Republicans did theirs, and you’d expect to see a big difference at the low end of the income scale. (Again, this is inherently short-term reasoning, not long-term, but as Larry pointed out in his talk, the evidence is that voters are susceptible to short-term inferences.)

In summary: we’re used to thinking of presidents as fairly powerless surfers on the global economy, able to tinker with tax rates but not much more–but thinking about the entire postwar period, there’s certainly been at least the perception that presidents can deliver the economic goods to their constituencies. So from that perspective, Larry’s curves should not be much of a surprise–at least in that the slope for Democrats goes down (i.e., poor people do better under Democratic presidents) and the slope for Republicans goes up (i.e., rich people do better under Republican presidents). The relative positions of the lines is another story, which perhaps corrresponds to random alignments of the business cycle.

8 thoughts on “More on Larry Bartels’s analysis of Democrats, Republicans, and the economy

  1. Except for the current presidency, hasn't it been the trend that during a Respublican presidency, there has been a Democratic congress (and vice versa). And since congress controls spending, it would seem the opposite conclusions should be made.

  2. Gk,

    There's been some divided government but I don't think that tells the story. I'd have to look at the data but I don't think you see such a clear pattern when looking at party control of Congress. One issue is that the Presidency has switched back and forth more consistently than Congress has, so there really aren't as many independent data points.

    I agree that the confounding of President and Congress is important but I'm not quite sure how to study it effectively here.

  3. Individuals consume wealth, and produce wealth, and these are fairly independent, since we can save, or go into debt.
    The government transfers wealth, and consumes wealth. The government can also influence the production and consumption of wealth by individuals.
    From what I have seen (not just in the U.S.), the normal effect of most government action is to reduce the aggragate production of wealth by individuals.
    So when Carter transfered wealth to members of what would become the edcation bureaucracy by setting up a Department of Education, this was probably a net detriment. On the other hand, when he deregulated trucking, inspiring many individuals to produce more wealth, this was probably a net benefit.
    I wonder if the data available today really answer the question (for example) "Was Carter's presidency a net benefit for the United states?".

  4. If Democrats continue their irrational and discriminatory attacks on Walmart the assertion will not hold. A UBS Warburg study showed Walmart saved working families over $2,300 per household and grocery savings of up to 20% versus other supermarkets.

  5. Jim, you're assuming rather libertarian assumptions. Once you do that, you are limiting yourself in what you can learn from the data.

  6. I wonder how Bartel's result square with some recent work by Mukherjee and Leblang on stock market returns (AJPS Oct 05), where they find that stock market returns are higher but more volatile under Republican administrations than Democratic ones.

  7. Jim,

    you are thinking like an ideologue, not like a researcher.

    You make ideological assumptions about relations between variables and draw ideological conlusions.

    Real scientists take the data, assume a model and estimate the parameters of the relation and test the model.

    Bartels has a model in which the governing party is a variable that has an impact on the macroeconomic variable. He does not assume what the direction and the strenght of the relation is (the parameter of the model). That parameter is estimated based on the data.

    What Barry wants to tell you is that you have already made up your mind that there is a positive correlation between libertarian policies and welfare. We don't do that here. We take the data and calculate the correlation. And then we test it for significance. And only than do we make conclusions.

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