Regular readers might recall I frequently note that I’m not a huge fan of the Democratic Party – I generally lean toward Democrats, though, because it seems to me that Democrats are less obnoxious than the Republicans, and have been for a few decades. One sign of being less obnoxious is following policies that make more sense. Now, we can sit here and argue about one or another policy, but in the end, what matters are results. (At least until Marketing blurs the picture.)
Regular readers may recall I often look at different series – debt per capita, healthcare costs, whatever, by Presidential terms. So in this post, I was planning to do the same with GDP per capita. (I vaguely recall having a post in which I’ve looked at real GDP per capita growth already.) But when I do something like that, there is invariably someone who doesn’t like the results and decides to blame the business cycle.
The problem with the business cycle is that in some ways it makes sense to take into account recessions (or booms), and in some ways it doesn’t, when comparing growth across Presidencies. Sometimes recessions (or booms) are inherited, and thus the President should not be faulted for a recession (or credited for a boom), but the President’s policies may exacerbate them or even create them. Or, to put things another way… one bad year (or one spectacular year) may not be the President’s fault (or to the President’s credit). So maybe knocking off the best and worst years of a President’s term is a helpful way to look at things. (A President can inherit a recession, but if stagnation is still around after a year, something is seriously wrong, and there’s a good chance that something is the President.)
The problem is that removing the best and worst year can be a real problem when a President served only three years, such as JFK, or worse, two years, such as Ford. So instead of looking at administrations, this time around I’m looking at “full terms.” For purposes of this exercise, say JFK & LBJ served a full term from 1961 to early 1969, and Nixon & Ford together served a full term from 1969 to early 1977.
The Table below shows the annualized percentage change in real GDP per capita, the growth in the best year of a full term, the growth in the worst year of a full term, and the average of the annual growth when the best and worst years are left out.
From the table, we can learn a few things.
1. It doesn’t appear that leaving out best and worst years makes much of a difference.
2. Growth rates in real GDP per capita tend to be higher under Democrats than under Republicans. There were three Democrat administrations and five Republican administrations, and all three Democrat administrations were among the 4 fastest growth administrations. All four of the slowest growing administrations were Republican.
3. The Republican hero-worship of Reagan makes sense, in that he’s the only Republican under whom the growth rate was comparable the growth rate under Democrats. Of course, he’s no JFK LBJ, but he’s probably within the margin of error of being Clinton and a bit better than Carter if one looks only at real GDP per capita and ignores such issues, say, debt.
4. When Republicans perform poorly, they don’t mess around. Every Republican administration had at least one year of negative growth, and for all but one of the Republican administrations, real GDP contracted by more than 1% in the worst year. By contrast, among Democrats, only Carter had a year in which real GDP per capita shrunk.
So what do we learn from this? Well, either Republicans pursue policies that simply don’t work (assuming the goal is to make us all better off), or God really doesn’t like it when the President is Republican.
A few wrap-up details….
a. I hope to find debt by calendar year data and have another post looking at growth of real gdp less debt per capita some time soon. Regular readers may recall that here at Angry Bear we’ve had quite a few posts looking at deficits and growth rates, most recently this one, showing that running big deficits is merely a way of postponing taxation and cutting growth in later years. Accounting for deficits and debt will probably make a fiscally irresponsible President like Reagan look worse.
b. data is from BEA’s NIPA Table 7.1
c. For the umpteenth time I ask… why do those who claim they are pro-growth support policies which so obviously lead to slower growth?
d. Don’t people who sell the American public on these silly policies bear some responsibility? Its one thing when its done once, or twice. But at some point, isn’t it fraud to push a policy that so obviously hurts most of us?
e. As always, my spreadsheets are available to anyone who wants ’em.