Two days ago, I had a post looking at the growth rate in real GDP per capita by Presidential administration. Yesterday, I looked at the grwoth rate in real GDP less change in debt per capita by Presidential administration. I probably got more critical comments (and e-mail) about these two posts than about anything else I’ve written. I thought it would be worth addressing some of those critiques in a post. (Especially since I’ve been collecting data to do a follow-up.)
So to begin, I realize there was no analysis in these two posts and that I didn’t take into account any of the myriad of things that might have mattered. I’ve had any number of posts on growth rates before in which I have tried to take into account lags and whatever other factors for which I could find data. I’m sure I’ll have more. This post was inspired by something else. Republican Presidents are generally supported by people who call themselves “pro-growth.” Republicans tell us that their policies will lead to more growth. Presumably, then, we would expect to see faster growth when Republicans are President.
Alternatively, one might insist that there are lagged effects that only kick in after 8 years of a Republican administration. That might conceivably explain JFK-LBJ, or Carter, but not why it took so much longer for Reagan’s policies to kick in (i.e., GHW’s term didn’t go so well, and it took a bit of time for Clinton to start putting up numbers on growth).
Anyway, without redoing all the previous posts I’ve had, let me speculate on why we see what we see:
1. Republicans generally (claim to) prefer smaller government. In effect, this means less social programs. At the margins, at the levels of spending on those programs that we’ve observed, additional dollars in those areas produce more growth than additional dollars spent on areas the Republicans prefer.
2. Republicans (other than Ike) seem to have been more willing to run large deficits. PGL and I (not to say folks at other blogs) have had posts showing that greater growth is achieved with smaller deficits or even small surpluses.
3. There is an optimal tax rate for producing growth because there is an optimal size of government. I’ve had posts showing that this optimal tax rate is probably higher than it was, say, when Reagan left office.
4. Republicans may be less competent than Democrats. Reagan clearly had no idea what was going on by the end of his term. Considering several times early on he confused movies with reality, perhaps he was always out of it. GW has clearly been over his head from day one.
5. Republicans may take government less seriously. GW has famously been running up his time in Crawford. Reagan famously did the same in California and Camp David. Ike was known for his time in the golf course, and Nixon’s hobby apparently was criticizing Jews and trying get his enemies. By contrast, LBJ was known as a consummate deal maker (whether you liked him or not), Carter was such a micromanager he kept track of who was using the tennis courts, and the Clinton administration was known for its late meetings that required pizza deliveries.
6. Republicans may be more tolerant of corruption and corruption creates its own problems. I’ve had posts looking at tax enforcement and the funding of the Treasury and the IRS budget that get at this. Similarly, consider recent scandals. Clinton lied about sex. GHW claimed not to be in the loop about a violation of the National Security Act. Reagan claimed he didn’t remember when it came to sending a couple of planes loaded with missiles to Iran.
7. Those who vote Republican may be more interested in substance than delivery for whatever reason. Long time readers might recall my post on
abortions and unwed motherhood showing such a phenomenon may not be limited to economic issues.
8. Shear coincidence/God dislikes Republican Presidents and always throws obstacles in their path.
Anyway, so there… some speculation on why we observe what observe. Maybe I’m wrong about all of it. But… regular readers know that I will happily put up posts written by the readers. This includes posts with which I disagree, provided they are well thought out. (Regular readers no doubt can recall several examples of this.) My spreadsheets are available to anyone. In my posts, I have also provided links to the original data. If you feel something is wrong with the two posts I wrote… write a better one, and I will put it up. Show me that its something else.