Friday, August 31, 2012

Dem vs. GOP (graphic on FB)

A friend posted this on one of my FB threads-- and I've seen it previously as well-- a comparison (of sorts) of some economic outcomes (DJIA, GDP, income growth, and job creation) between Democratic and Republican administrations over the "last 50 years" (presumably 1961-2011).

This seems like the sort of thing that only sees the light of day if it underlines one's worldview or desire to continue one's pursuits as a partisan hack. But perhaps it's an honest, non-partisan effort. In any case, it's probably not well-done-- and certainly not well-explained (which makes one worry a lot more about the motives and the results). 

Some of the problems:
-Why leave out Ike (and Truman)? (Truman is a more difficult decision since the macro data immediately following WWII is noisier.) It's common to look at the post-WWII period and I can see the attraction of 50 as a nice round number, but not to the point of sacrificing at least Ike.
-Aggregate (vs. per-capita) measures overlook macro/demographic changes, such as the baby-boomers and the notable increase in the proportion of people (women) working over time.
-We're not told which of the many measures of "income" is being used-- and it's not clear why we're looking at GDP and "income" (when the national income is largely the flip side of the former's coin).
-From the numbers I calculated (more below), it looks like this person accounted for inflation with GDP (good) but not the DJIA.
-This sort of simplistic analysis obscures/ignores all sorts of key (somewhat or fully exogenous) events and their impact on the outcomes being measured: Reagan is penalized (without being given any credit) for dealing with the previous 15 years of growing inflation; Clinton benefits from the Cold War; Clinton and the GOP Congress enact big welfare reform with its work reqs, leading to a lot of "job growth" and economic growth (more broadly, the analysis implies that Congress-- and which who "controls" it-- is irrelevant); Bush gets pounded for 9/11 and the Financial Crisis (granted, he compounded it with bad policy)-- both of which could have happened as easily in a Gore or Kerry presidency.
-Along the same lines, other forms of important analysis are relevant and ignored: 1.) For example, with President Obama's record, it's also important to compare his recovery to previous recoveries. 2.) This conflates party with ideology. Nixon was far more like LBJ than Reagan. Clinton and JFK were much more like Reagan than Nixon or Bush II. And so on. At the end of the day, the comparison is not between parties, but policies.
-The specific data sources and methodology are not provided. This undermines its credibility, including the difficulty of trying to replicate even a good-faith effort.

I tried to do similar calculations using the following from the St. Louis Fed for DJIA, BEA data for GDP, and BLS data for employment. I used the beginning of each year's DJIA and the average of GDP and employment data for each year, starting with Ike. I would not bet my ranch on this-- both because it's easier said than done and I may have made mistakes. But the results I found are similar to what I've seen elsewhere-- that there's not much difference between presidential admins by party on these sorts of outcomes.

I found that Dem admins beat GOP admins on DJIA (4.7% vs. 3.9% annual growth), real GDP (3.6 vs. 2.7%), but a slight (insignificant?) loss on job growth (1.28M vs. 1.23M/year).

The other (far more) interesting thing is that Ike, JFK/LBJ, Reagan and Clinton are much more similar-- in terms of economic ideology and even these simplistic results-- than Carter, Obama, Nixon/Ford, and Bush II. The former beats the latter handily on DJIA (7.1% vs. -0.2% annual growth) and job growth (1.48M vs. 1.15M/year), with a similar Dem/GOP margin in GDP growth. At the end of the day-- except for partisan hacks-- this isn't about party but about policy.


At September 4, 2012 at 1:16 PM , Blogger Eric Schansberg said...

The link to the FB photo no longer works. Try this one instead:


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