I had a post the other day summarizing findings from a bunch of other posts I had previously written looking atchanges in a number of series over various Presidential administrations beginning with Ike. The striking thing is that in general things (economic growth, abortions, drug use, dollar valuation, etc.) tend to go much better when Democrats are in office than when Republicans are in office.
So what’s going on? Well, maybe one place to start is with things that have been consistently different between Republicans and Democrats over that period of time.
1. Republicans are more inclined to say they think the government should be smaller (whether they actually shrink the government or not is a different story) and even view the government as the enemy. With that attitude, Republicans are likely to put less effort into thinking of ways they can use the government to benefit the economy.
2. Another consistent difference is that Republicans have consistently claimed to be the pro-business party. In practice, that has generally meant a more laissez-faire attitude toward business. The idea is: let business do its thing and it will improve the economy. But in the real world of the profit motive, the easiest way to improve one’s profits is often to export some of one’s costs onto others. (i.e., impose externalities on third parties) Some increases in output may come at the expense of much, much greater costs upon society, leading to a net reduction in the economy. (Examples may include pollution from manufacturing, cost avoidance by health insurance companies, etc.) Even with the exact same laws and regulations on the books, the President can push the emphasis on enforcement toward one or another direction. (Anyone who doubts that hasn’t been paying attention to the Justice Department in the past few years.)
3. Republicans have typically billed themselves as the party of law and order. In practice,the ratio of enforcement of concern over blue collar crime to concern over white collar crime goes up under Republicans and down under Democrats. But blue collar crime is more likely to be a crime of necessity. When it is believed that people get more time for robbing $50 than for looting a pension fund, respect for society diminishes.
4. Republican economic plans have typically taken the form of “what’s good for General Motors is good for the country.” Put another way… make things easy on the folks at the top, and eventually everyone benefits. Democratic economic plans have typically taken the opposite approach, whether one considers LBJ’s “Great Society” or Clinton’s attempt to reform healthcare. Perhaps the easiest way to raise all boats is to raise them directly, not with a warm stream of suspicious provenance trickling down from above.
5. Republicans are less likely to think much of the safety net. But as an entrepreneur myself, though not (yet) a successful one, I can tell you that the lack of a safety net makes me less likely to go out and try again. And it makes me less likely to continue operating as an independent contractor. I’m not worried about OSHA regulations or even a 5% increase in my taxes. I am scared to death that insurance costs will continue to rise at the rate its been rising and that I may not be able to eat if business dries up for a few months. From my own personal perspective, Republican policies are less conducive to entrepreneurship than Democratic policies.
6. Republicans are the party of lower taxes. But, as Oliver Wendell Holmes said, taxes are the price we pay to live in a civilized society. They pay for roads and public health and keeping the Canadian hordes at bay – things that allow businesses to function and improve the economy. They also mean less government borrowing, which means less debt, which means less interest on the debt.
Your thoughts? Agree or disagree? Have I missed anything that might explain some of the difference in performance?