Reconsidering the myth that Republicans are better stewards of the economy
Republicans have claimed for decades that they are better stewards of the economy. We’ve heard that so often that it’s become the conventional wisdom.
Recent research by two highly respected economists show that this claim is myth. But it’s one with real consequences. Americans make critical decisions based on such perceptions. So it’s time to look at the data.
Princeton economists Alan Blinder and Mark Watson recently published an academic paper in a journal of the American Economic Association. The paper’s somewhat dry title, “Presidents and the Economy: an Econometric Exploration,” doesn’t do justice to its blockbuster content.
Blinder and Watson write:
“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.”
Americans know by now that the economy has performed much better under President Obama than under his predecessor. Unemployment has been more than cut in half and real GDP has increased by about 15 percent. Data released by the Census Bureau last week finds that median income soared by more than $2,800 in 2015. This translates into a real difference in people’s lives.
But the research by Blinder and Watson provide even stronger reason to reconsider the old myth that Republicans do better at managing the economy. Their peer-reviewed paper finds that since World War II the economy has performed substantially better under Democratic presidents. Their analysis of the data reveal that on average, real GDP has grown about 1.7 times faster under Democrats than under Republicans.
Their findings for job growth are even more striking: employers have added jobs on average a nearly 2.2 times faster rate under Democrats than under Republicans. For both jobs and GDP, Blinder and Watson state that the “performance gap is large and significant.”
At noon Tuesday I will hold a tele-press conference with Dr. Blinder to discuss his findings and to give skeptics a chance to ask questions. I invite readers to join.
Economists Blinder and Watson are careful to explain that the reason for the significant differences in economic performance under Democratic and Republican presidents is not fully understood. There are many possible factors at play, including some a President has little control directly like oil prices and productivity growth. They write that the major factors that drive the large differences in the performance of the economy under Democrats and Republicans “might be considered blends of good policy and good luck.”
But, as Professor Blinder explained in a past interview, to some extent Presidents create their own “luck.” Blinder writes that “the fact that we entered several wars in the gulf area (the latest in 2003) under Republican presidents, thereby driving up oil prices, was not just luck – it was policy, though not economic policy.”
Regardless, the authors find absolutely no evidence that Republican Presidents are better at managing the economy – the data point in exactly the opposite direction. So let’s just bury that old myth and move to a more evidence-based discussion.