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Tilting at Windmills

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August 17, 2008
By: Kevin Drum

THE MONETARY-INDUSTRIAL COMPLEX....Matt Yglesias just finished reading Larry Bartels' Unequal Democracy: The Political Economy of the New Gilded Age, which argues (among other things) that Democrats are better for the economy than Republicans. But Matt says this is a mysterious claim:

What this book made me wish for was more economics: Bartels gives us a lot of empirical political science data that seems to indicate that partisan control of the White House is more economically important than you would think. Contrary to this, there's substantial economic theory that seems to argue that this can't possibly be the case.

This is true. The evidence suggesting that the economy performs better under Democratic presidents is surprisingly robust, but one of the reasons this evidence doesn't get taken very seriously is that there doesn't seem to be any plausible mechanism for it.

So let's take a stab at it. In general, I suspect that the mechanism is related to the fact that Republicans tend to focus their policy prescriptions heavily on tax cuts and inflation fighting, while Democrats tend to focus on employment — and employment is more crucial to economic growth than taxes and inflation. However, as longtime readers may recall, one of the things Bartels shows is that although it's true that Democrats generally outperform Republicans, in election years Republicans do better. By a lot. So this changes the question a bit. What happens in election years that makes the economy so strong under Republicans?

The answer, if you can believe a paper co-written by Jamie Galbraith last year, might be called the monetary-industrial complex. It's not so much that Republican presidents goose the economy in election years, it's that the Federal Reserve gooses the economy in election years. But only if the president is a Republican:

The hypothesis [] has two independent parts. On one side, it predicts that...monetary policy [is] more permissive in years when a Republican administration is seeking renewal, than when it is not. On the other side, the hypothesis predicts that...monetary policy [is] more restrictive, after controlling for the influences of inflation and unemployment, in years when a Democratic administration is seeking renewal.

....The results in Table 3 give striking confirmation to the most cynical historians of the 1970s. They show that, controlling for the impetus of inflation and unemployment, the Federal Reserve systematically intervened in election years [during the period 1969-1983]. Both variables are independently significant, of opposite sign, and together they suggest a habitual ceteris paribus differential in the term structure of between 200 and 300 basis points, favoring Republicans.

....Table 4 gives information on the modern period....Over the years 1984 to 2006, monetary policy moves strongly in favor of Republicans and (less strongly) against Democrats in election years.

So there you have it. When a Republican is president, the Fed eases interest rates in election years by much more than the objective economic circumstances dictate. Conversely, when a Democrat is president, the Fed tightens interest rates in election years by much more than the objective economic circumstances dictate. And for a while, anyway, the economy responds. And so do voters.

Nice little racket, eh?

Kevin Drum 2:55 PM Permalink | Trackbacks | Comments (50)

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Comments

It's slightly more plausible that the Fed is trying to anticipate the next President's fiscal policies, and thus builds more slack into the economy when it fears a Democratic presidency than it does for an anticipated Republican one. The common wisdom says that a Democratic president will support more inflationary policies, so it stands to reason that the Fed would want to give itself room to maneuver. I wouldn't be surprised if the candidates' promises during the campaign are the driving force, which would explain why a sitting President would receive the same treatment.

Posted by: Mario on August 17, 2008 at 3:13 PM | PERMALINK

> So let's take a stab at it. In general, I
> suspect that the mechanism is related to the fact
> that Republicans tend to focus their policy
> prescriptions heavily on tax cuts and inflation
> fighting,

Whereas I would say that the Republicans, at least when controlled by the Radical Right as has been the case for at least 25 years, focus their "policy" on looting and peculation. The Democrats are then forced to clean up the mess during their cycle, earning scorn and abuse in so doing and thus setting the stage for another round of looting.

Cranky

Posted by: Cranky Observer on August 17, 2008 at 3:24 PM | PERMALINK

What's amusing is how fond the economists are of their theories in the face of contrary data. When physicists get inexplicable results from their experiments, they start looking for ways to fix their theories.

Posted by: dr2chase on August 17, 2008 at 3:30 PM | PERMALINK

In that case Mario, the cycle of Fed interventions during election years would depend not on who is currently President, but on which party appears likely to prevail in that year's election. This is not what the charts show.

Given a very strong correlation between short-term economic performance and the incumbent party's electoral success and in the absence of a persuasive explanation for this disparity, suggesting that the Fed is deliberately stacking the deck in favor of the Republicans is not unjustified.

Posted by: tanstaafl on August 17, 2008 at 3:38 PM | PERMALINK

That paper by Galbraith shows why Greenspan lowered interest rates in 2004 to levels so low they had not been seen since the 50's. He was "goosing the economy" to get Bush reelected.

Greenspan was also extending and expanding the housing bubble by those lower interest rates. He started raising the interest rates immediately after the election, choking off the housing bubble and setting off the current credit crisis and recession.

This was not a set of economic decisions. It was specifically political. It was also unutterably stupid, something I would expect from either a movement conservative or a Libertarian.

Posted by: Rick B on August 17, 2008 at 3:41 PM | PERMALINK

Our country is simply corrupt. It is not as corrupt as some countries by a long shot, but it is essentially corrupt. Once people understand this, a lot of the confusing dynamics of the American experience make sense.

We are a plutocracy where the rich are getting richer and the poor are engulfed in the delusional perfumes of nationalism and monster trucks.

Posted by: BombIranForChrist on August 17, 2008 at 3:41 PM | PERMALINK

It was most evident, to my recollection, in the run-up to the election in 2000 at the end of the Clinton economic boom. Interest rates rose from 4.5% in mid 1999 to 6% in May 2000, including a heavy-handed 1/2 point jump that month, just as the election season was heating up. The Fed, Greenspan, HAD to chill that economy if Bush and the Republicans were to stand a chance in November. Didn't take a degree in economics to see what the Republicans at the Fed were doing.

Posted by: NealB on August 17, 2008 at 3:43 PM | PERMALINK

It is a back and forth cycle, generally an eight year cycle. The two parties have not created it, they simply correspond to the cycles, reinforcing them.

WHat Kevin fails to notice is that tax hikes on the rich reduce government share, and this happens in Democratic cycles. The reduction of the government share, in spite of all the denials, results in resources released to the non-government share, enhancing the economy.

WQHy does this enhance the economy? Because the Republicans own the government expansion cycle, so government contraction falls on Dems.

They, politicians, generally do not tell you this; but economists who are not trapped by ideology have know this for years and years.


Posted by: Matt on August 17, 2008 at 3:58 PM | PERMALINK

Mario: So Democrats are such inflation mongers that the Fed figures it needs to ease up every time one is in danger of winning, just so that it can then tighten up again after they do win? That's "slightly more plausible"?

In any case, (a) that doesn't fit the data, (b) Dems have a better record on inflation than Republicans, and (c) this would basically demonstrate partisan activity by the Fed anyway. Probably simpler just to figure the Fed is mostly populated by economic conservatives who generally prefer Republicans in office -- and either consciously or unconsciously act on that preference.

Posted by: Kevin Drum on August 17, 2008 at 3:59 PM | PERMALINK

Is it a surprise that the Fed would actively support the party to which its constituents belong, those constituents being Wall Street CEOs in general and the financial services industry in particular?

Other central banks have a primary mission of controlling inflation. Only the Fed makes its first order of business preserving growth in banking industry. The FOMC "feed" that pumps liquidity into the 38 largest financial institutions at critical times is but one example of Fed manipulation to boost its friends on Wall Street.

Over the past eight years it should have become obvious that our central bank could care less about Main Street, as long as Wall Street is protected.

Posted by: DevilDog on August 17, 2008 at 4:02 PM | PERMALINK

Put this down on the list of things that should have been figured out and publicized long ago.

Posted by: ferd on August 17, 2008 at 4:07 PM | PERMALINK

I think we are seeing a similar effect on gasoline prices. In 06 we had high prices in the first part of the year, and built excess product inventory, which was sold off prior to the election. There is a suspicion that Saudi Arabia, has been playing a similar game withholding/releasing oil with timing meant to influence US elections.

Posted by: bigTom on August 17, 2008 at 4:14 PM | PERMALINK

I remember a Republican (but not his name), once explaining why Republican financial and tax policies were unquestioned by so many voters:

"The rich vote Republican because they're rich. The rest believe they're going to win the lottery."

Posted by: alibubba on August 17, 2008 at 4:25 PM | PERMALINK

And this is all a surprise to who? Except for Jimmy Carter, who was somewhat a victim of circumstance, the U.S. economy has always done better with a Democrat in the White House.

It has become an article of faith to many Americans that low marginal tax rates translate into economic growth, when the evidence tends to show just the opposite. Some of the most vigorous, sustained economic growth in American history occurred in the 1950s and 1960s, when marginal income tax rates were 80 or 90%!

As the Firesign Theatre once said - Everything You Know Is Wrong!

Posted by: The Conservative Deflator on August 17, 2008 at 4:49 PM | PERMALINK

For the last 2 or 3 years DeLong and probably Krugman have been expressing their bafflement that in a thriving economy with steadily increasing productivity, wages are flat, and in general labor has been doing poorly.

I have suggested that outsourcing and immigration may have something to do with this, and also that part of the problem is that 7 or the last 9 Presidencies have been actively anti-labor. (And Clinton was by no means reliably pro-labor).

Probably when they reach emeritus status so that no one in the profession listens to them any more, these two guys will finally start wondering whether the theories that they'd been working with weren't intellectually worthless and biased against labor.

I'll be dead by then, though, and American labor (as defended by The Democratic Party) might be too.

Posted by: John Emerson on August 17, 2008 at 5:07 PM | PERMALINK

Conversely, when a Democrat is president [and seeking renewal], the Fed tightens interest rates in election years by much more than the objective economic circumstances dictate.

Kevin, I would argue that the Fed may have *needed* to tighten up monetary policy because the Dems have been more successful at getting the economy heated up and running well. That would fit better with the better performance of the Dem presidents. Easing monetary policy when a Republican is seeking renewal is probably *needed* because the economy is so weak as a result of their policies. Just a thought.

Posted by: Doc at the Radar Station on August 17, 2008 at 5:26 PM | PERMALINK

Note, by the way, that for practical purposes that's one Fed chairman we're talking about, and one whose penchant for political manipulation has already been well documented. "Honest services" anyone?

(Of course, it's also one democratic administration, too.)

Posted by: paul on August 17, 2008 at 5:33 PM | PERMALINK

I wonder if there is one other possible factor. If you are a CEO would your allocation of capital differ depending on a Republican or Democratic administration? Wouldn't you invest more money into lobbying if there was a greater chance that you could insure profits thru favorable legislation in a republican administration? And so would you invest more in R&D during a democratic administration?

Obviously both parties are lobbied but in the past 15 years the results are different in kind. Businesses lobby democrats to limit the damage from possible regulation; they lobby republicans to establish advantage in the market, the most obvious example being no-bid government contracts.

Seeking profits by investing more in innovation and efficiencies results in longer term and broader wealth effects. Republicans effectively reduce competition in the effort to help business insure profits. Less competition results in less innovation, less innovation results in less growth in the economy.


Posted by: BobFred on August 17, 2008 at 5:55 PM | PERMALINK

Democratic policies are expansionist--they try to expand the economy through fiscal policies that are stimulative and redistributionist, directing money and programs to the working and middle class and the poor, all of whom spend the money and keep employment up and the economy humming. Republicans skew programs and policies toward their cronies, with sweetheart deals that are economically inefficient, and repeal regulations that restrain capitalism so that the rich just take more and more and the economy thus constricts because demand eventually constricts (consumers run out of money). We tried to postpone the inevitable with more and more credit this time, but it only made things worse. Now the whole thing is collapsing. Many of the rich and corporations have taken their money offshore.

Reagan began to reverse the policies of the '60s and '70s, but Clinton stopped the process (or slowed it) so that we had more expansion and employment. But Bush/Cheney have accelerated the process, so we are in the current mess. Dems are better for the many, GOPers are better for the favored few., John McCain's "rich," the people with over $5 million.

Posted by: Mimikatz on August 17, 2008 at 6:06 PM | PERMALINK

Thus, Greenspan's uncalled for raising rates in 2000 when the government was collecting 21 % of GDP as revenue and helping drive the 2001 recession.

Posted by: bakho on August 17, 2008 at 6:19 PM | PERMALINK

>"Our country is simply corrupt. It is not as corrupt as some countries by a long shot, but it is essentially corrupt. Once people understand this, a lot of the confusing dynamics of the American experience make sense."

BombIranforChrist has it figured out.

The corruption is both systemic and structural... by definition it cannot simply be 'repaired'.

Posted by: Buford on August 17, 2008 at 6:27 PM | PERMALINK

In non-election years the Republicans play favorites by writing legislation favoring specific companies. This may provide huge benefits for those companies or maybe just for the management of those companies but it doesn't help the overall economy. Republicans have long ago given up trying to grow the overall economy.

While Republicans are more for this than Democrats the real problem is the ability of individual legislators to influence legislation in return for cash. It has always amazed me how a corporation like ADM can donate on the order of $100,000 or $1,000,000 over a few years to a small group of senators and congressmen and get back billions in benefit. The benefits are extraordinary. We ought to establish a peoples lobby. If every American pitched in $100 we have a $30B war chest to lobby our representatives to write legislation in favor of America and to undo the goofy earmarks of the special interests.

Posted by: JohnK on August 17, 2008 at 6:43 PM | PERMALINK

if it's true that dems are better at handling the economy than repubs, it only makes sense that monetary policy would be looser when a republican is president, mainly because it's more likely that the economy is going to be a mess and in need of juicing.

ford in 76 (inherited from nixon) reagan in 84, bush in '92 and to an extent bush in 2004 and of course in 2008 had economies in or near the toilet. the economy under clinton in 96 and 2000 was fairly robust. the exception was carter in 1980 who, as has been noted above, was something of a victim of circumstances.

Posted by: mudwall jackson on August 17, 2008 at 7:06 PM | PERMALINK

The point about the Fed's Republican bias bears repeating and further investigation. Good job Kevin!

But on to speculation:

** "In general, I suspect that the mechanism is related to the fact that Republicans tend to focus their policy prescriptions heavily on tax cuts and inflation fighting, while Democrats tend to focus on employment — and employment is more crucial to economic growth than taxes and inflation." **


No, I think the reason is related to market fundamentalism vs. economic pragmatism. Reagan gave us the S&L crisis by easing up banking regulation and allowing aggressive savings banks to make dodgy loans, backed by the FDIC's guarantee.

Clinton approved a careful bailout of Mexico in teeth of Republican opposition, thereby heading off a financial crisis.

Bush/Greenspan were asleep at the switch as banks made loans that were dependent upon an indefinite housing bubble.

In all cases, careful regulation or its absence made the difference.

Carter deregulated the airlines and trucking only after careful review by a team of economists. Bush/Cheney permitted Enron to take advantage of ill-considered moves towards electricity deregulation, figuring that if the market lacked regulation, everything would be fine. Admittedly, most of the errors were made at the state level (and during the 1990s!), but I daresay that President Gore would have been more pro-active when electricity prices spiked without reasonable fundamental basis.

Posted by: Measure for Measure on August 17, 2008 at 7:56 PM | PERMALINK
"(a) that doesn't fit the data, (b) Dems have a better record on inflation than Republicans, and (c) this would basically demonstrate partisan activity by the Fed anyway."

For A, I think it's a little hard to say that this isn't what the data shows unless you are willing to assume that the policy proposals put forward by the various campaigns by each party are roughly similar year-to-year.

For B, yes Democrats have a better record on inflation, but at least part of that would be explained by the Fed overestimating the Democrats spending plans and underestimating (by far) the likely Republican outcomes. Republicans spend far more than they say they will and Democrats far less. Since the Fed's stated goal is (or used to be) inflation stability, a poor understanding of the relation between partisan pandering and governance solves both the different outcomes between Presidents of different parties and the seeming partisanship of the Fed in election years.

For C, no. The Fed has attempted to keep inflation rates stable, so they need to act before problems arise, and they can only do that by responding to other clues, like employment figures and, apparently, political pandering. Obviously they aren't doing it right, but it is definitely something they shouldn't ignore. They just need to do a better job. If the Fed were truly partisan we would see the same activities every two years -- or are we to assume that their favor of Republicans does not extend to Congress?

Posted by: Mario on August 17, 2008 at 8:03 PM | PERMALINK

With the exception of Carter and Truman, the only times Dems have won the presidency since Woodrow Wilson was after the Republicans had sunk the economy. (Carter won because of Watergate, and the economy under Nixon wasn't too great, anyway, so I could call him a push). The same is not true of Republicans, except for Reagan. If you look at the economies inherited by Republicans, they were generally pretty good: this Bush took over, and ruined, a robust Clinton economy; Bush's daddy took over a strong Reagan economy; Nixon took over a solid economy from LBJ; and Eisenhower was handed a good economy by Truman. It only makes sense that, if one party is selected when times are bad, their performance is going to be better than the other. When times are good (the only place to go is down), the voters like Republicans; when times are bad (the only place to go is up), they choose Democrats. The data reflect that reality.

Posted by: MG on August 17, 2008 at 8:12 PM | PERMALINK

How about this for a reason the economy works better under Democrats: Democrats tend to run more fair administrations with more evenhanded application and enforcement of rules and regulations. If you believe, as I do, that regulation is good for the economy, that means the economy works better for everyone.

Posted by: RAM on August 17, 2008 at 8:23 PM | PERMALINK

but how does this fit with the facts on the ground around the 1992 election? The fed was criticized by Bush 41 for its actions then...

Posted by: aidan on August 17, 2008 at 8:37 PM | PERMALINK

For what they call the modern era, 1983-2006, Alan Greenspan was Fed chair man for all but the first three years, so we can blame him personally for a lot of it.

Posted by: anandine on August 17, 2008 at 8:57 PM | PERMALINK

Anyone wonder about all of the new trolls commenting on this blog? McCain’s campaign is paying trolls to comment on blogs.

Just thought you might like to know...

Posted by: The Conservative Deflator on August 17, 2008 at 10:36 PM | PERMALINK

The primary weakness in the hypothesis is sample size; Democrats have been in position to retain the white house only three times since the fed was really allowed to free without restriction with the 1971 demise of Bretton Woods. In contrast, there were seven opportunities for Republicans. And similar to the aidan's Bush 41 comment, I don't think anyone blames Gore's 2000 loss on Fed policy. (if anything it helped, because even by fall 2000, the tech bubble collapse aftershocks had not quite permeated the economy)

Now anecdotally, I totally agree that the fact that the fed left interest rates low for way too long from early 2003 to mid 2004 is the principal cause of the housing bubble and suspiciously convenient that it facilitates the re-election of any politician in Fall of 2004.

Posted by: Kolohe on August 17, 2008 at 10:37 PM | PERMALINK

Kevin,

Nixon, at least, did this explicitly:

http://michaelperelman.wordpress.com/2007/03/05/nixons-political-business-cycle/

http://econ161.berkeley.edu/Econ_Articles/theinflationofthes.html

Posted by: Notacrook on August 17, 2008 at 11:05 PM | PERMALINK

Republicans are inflation fighters? No way! They are lowering interest rates which eventually causes inflation.

As far as I can tell, the only economic policy vigorously pursued by Republicans is to lower taxes and help the rich grow richer. They truly believe in making the rich richer and the poor poorer 'cos they believe the poor are poor due to laziness and stupidity.

Posted by: rational on August 18, 2008 at 12:24 AM | PERMALINK

This isn't a radical thought. Greenspan was blatantly political. Especially after he got blamed for Bush senior losing. 2000 and 2004 were ridiculous.

Posted by: B on August 18, 2008 at 1:16 AM | PERMALINK

The state of economics is that you start with a political viewpoint and cherry pick statistics that support your prejudices. I don't know how anyone can take economics seriously at its present level of development.

Posted by: Luther on August 18, 2008 at 1:41 AM | PERMALINK

mimikatz makes many of the points I would advance as the reason for Demo superiority in managing the economy, but I am going to say them again. First note the existence of economists who are not puzzled by the contradiction between conventional wisdom and fact. These economists consider Democratic economic superiority to be a result of policy and may be called demand-side economists, their leader is Joseph Stiglitz.

As I understand their thesis, Republicans redistribute income upward and Democrats downward. If the country were suffering from a shortage of capital to productively invest, pushing dollars to the investing class would be a winner. If there is no such shortage, this policy will giddily blow bubbles. On the other hand, if there is sufficient investment in productivity, then pushing dollars to the spending class will increase demand which will be satisfied by increased supply aka GNP growth. Secondarily, infrastructure investment -- think the interstate highway program -- has an extraordinary rate of return. And I know that Ike initiated the interstate system. He also had a damn fine economy. Despite or because of a 90% top bracket.

Posted by: zeno2vonnegut on August 18, 2008 at 2:38 AM | PERMALINK

What we ought to do is reduce the capital gains tax on investment in productive companies and increase it on investments in financial instruments.

Of course, that might destroy Fannie Mae and Freddie Mac, so there might need to be some tweaking to the general thesis.

Posted by: anandine on August 18, 2008 at 8:21 AM | PERMALINK

but how does this fit with the facts on the ground around the 1992 election? The fed was criticized by Bush 41 for its actions then...

aidan, you referred to facts on the ground, and then only cited Bush complaining. Aside from the ref-working complaint, what fact on the ground do you have?

Posted by: derek on August 18, 2008 at 8:48 AM | PERMALINK

I have not read Bartel's book, but there is no question that the graph of income growth that was widely circulated was grossly overinterpreted:

http://www.skeptometrics.org/IncomeGrowth.htm

This graph does not at all prove, as many people assumed, that presidents somehow control economic growth on a year-to-year basis. This graph is an example of statistical cherry-picking. Most other data will probably follow the same time trends. I suspect that all of Bartel's data will have to be re-examined according to the alternate (well-known) hypothesis that what is important is long-term trends. The question from a statistical point of view is which hypothesis accounts for the greater part of the variance in the economic data, and that is not addressed by showing single graphs of the type referred to.

Of course the long-term trends also tend to show that conservative/Republican economic policies are inferior, but that is a different argument.

Posted by: skeptonomist on August 18, 2008 at 10:22 AM | PERMALINK

Derek - the fed was criticized by the republicans for not easing interest rates at this time...ie for not doing what Kevin's post implies they do when rep's are in office / up against an election

Posted by: aidan on August 18, 2008 at 10:22 AM | PERMALINK

I think one thing that's missed here, is that at least by modern terms, the Clinton administration was at a time where supply-side economics worked better than during well..every other term besides Clinton.

The whole concept behind supply-side economics, is if you build it, they will buy it. In most cases, this doesn't happen. Investors are very conservative, and will only put substantial money towards proven markets. However, during the 90's, a new market opened up which attracted a lot of funds...the Internet..and all that investment started coming downwards. The money rains turned into a downpour.

Would a Republican president have taken steps to prevent the Internet from becoming an economic force? I don't know. It depends I guess. And supply-side economics does NOTHING to sustain an economy outside of massive technological growth.

So for the next 8 years? It's easy. There's going to be an economic boom again. This time, it's renewable energy. Tons of jobs created, tons of factories, tons of new businesses. It's just good for everybody. Again, the question is, will McCain do something to block this, not from an economic pov but from a technological PoV? My guess in this case would be yes. Obama? It's all hands on deck full steam ahead.

Posted by: Karmakin on August 18, 2008 at 10:26 AM | PERMALINK

Kevin's readers seem to miss the point.

Economic cycles are just that, cycles. No party is immune from cycles, elections rely on them, economic policy is made within cycles. There is no surprise at all that one party picks one half of the cycle to get its program while the other picks the other half.

It is not a static world in which congress can fix prices for all time, they can onlyu fix them for a short period, then economic forces cause readjustment, via the political process.

We have been here for over 10 years, on this blog, we have lived and discussed these cycles as they happen, we, ourselves, have engaged in reinforcing these cycles on this blog.

Posted by: youngsanger@gmail.com on August 18, 2008 at 10:35 AM | PERMALINK

You seem surprised by this?
Hmmmmm.
Why?
It's clearly part and parcel with the overall cooptation of the public sphere by private/corporat interests.

Posted by: woody, tokin librul on August 18, 2008 at 10:45 AM | PERMALINK

Kevin,

I have to disagree with you about one thing. It's just false to say that Democratic economic policies focus on job-making. Well, I guess that would be true if you counted hiring new apparatchiks as job-making. But otherwise, what Democratic policies promote jobs? Jobs - real jobs in the private sector - come from sustained economic growth, and Democratic policies have always put economic "fairness" way ahead of economic growth.

For example, if Obama is elected president, we can count on Congress passing bunches of bills making thing "fairer" for employees and consumers - making it harder to fire employees, requiring more vacation and paid leave, imposing gender hiring quotas on scientific research labratories, mandating equal pay for work determined by some bureaucrat to be "comparable," making it easier to unionize particular factories and companies, making it easier to sue tangentially related parties for personal injuries, and so on and so on. I don't think anyone could reasonably argue that these types of regulations will do anything to promote job growth (except in the bureaucracy needed to implement them or in the ranks of the lawyers needed to litigate over them). On the contrary, they will make the economy more like France's - low growth and high unemployment, in exchange for a higher level of job protection and, perhaps, more "fairness." It would be refreshing if the Democrats were a little more honest about that.

To anticipate one objection - Obama's proposal to create "5 million" new jobs by taxing the productive sectors of the economy and giving that money to politically connected operators in politically favored industries would, obviously, create new jobs. It would just as obviously destroy even more jobs by taking money away from economically efficient sectors of the economy and giving it to the less efficient, with the bureaucracy taking a slice as its commission.

Posted by: DBL on August 18, 2008 at 11:13 AM | PERMALINK

I notice gas prices coming down almost every day. , and I seem to remember something similar in 1992. If they should start to take off again, say, on Nov. 6, should we take this as coincidence?

Posted by: jrosen on August 18, 2008 at 11:19 AM | PERMALINK

It is not a static world in which congress can fix prices for all time, they can onlyu fix them for a short period, then economic forces cause readjustment, via the political process.

seems to me you all into a trap when you asume 'economic' forces are equivalent to 'natural' ones.

Nobody'd ever have made or would ever make any money if economics were immmune from self-intersted manipulation at the macro-level.

Marx was right, of course. In a capitalist system, economics is definitive, the base, and the rest is super-structure, built--and dependent--upon the maintenance of the capitalist hegemony...

Posted by: on August 18, 2008 at 11:25 AM | PERMALINK

The Fed finances the bubbles for 'wealth creation' of Repubican benefactors.

Posted by: Brojo on August 18, 2008 at 12:21 PM | PERMALINK

What about the fact that Republicans are much more likely to stuff the executive full of corrupt political stooges? The whole problem with having a party that doesn't believe in government running the government is that they do a terrible job. It's like appointing a bad CEO to the biggest (by far) company in the US. Of course the economy is going to do badly. Only someone like an economist, who doesn't believe in 'minor' effects like quality management would overlook this.

Posted by: mpowell on August 18, 2008 at 4:45 PM | PERMALINK

> don't think anyone could reasonably argue that
> these types of regulations will do anything to
> promote job growth

Nothing except the historical record.

Cranky

Posted by: Cranky Observer on August 20, 2008 at 7:45 AM | PERMALINK

8VeVXj

Posted by: Ydpqouph on July 15, 2009 at 6:19 AM | PERMALINK




 

 

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