Why the Economy Does Better Under Democrats

Mark ThomaIt is well known (among liberals at least), that the economy has done much better under Democratic administrations than under Republicans — going back to World War II. And the difference is big: it’s almost double in terms of GDP growth. But I’ve always been skeptical about the claim. While it is certainly true, it isn’t based upon a lot of data — just 12 presidencies. And besides, I tended to think that the president doesn’t have that big an effect on the economy. But then I read Mark Thoma in The Fiscal Times, The Political Party of the President Matters for the Economy.

Thoma is a liberal, but he’s no bomb thrower. He’s a very careful economist. If it had been just anyone writing such an article, I probably would have passed it by. But instead, I read it, and he makes a very compelling case. He goes through the many ways that presidents do, in fact, effect the economy. It wasn’t all new to me, but it I wasn’t thinking too clearly even about the stuff that I knew. One thing that did surprise me is that because people don’t stay on the Federal Reserve board for very long, both George W Bush and Obama were able to fill it with all their own people. That matters. As Thomas put it, if we had had a Republican in the White House “does anyone doubt that policy would have been much different? Would interest rates still be at the lower bound? Would the Fed’s balance sheet be as large?”

The more obvious way the president matters is in fiscal policy. Democrats approach recessions in ways that actually help: tax cuts for the poor and middle classes; extended unemployment insurance; infrastructure spending. Republicans approach recessions the way they do everything: tax cuts for the rich. Even though “there’s little evidence that cutting taxes on the wealthy spurs economic growth, particularly in a severe recession when the tax reductions mostly end up as idle savings.” Basically, a recession is just an excuse for Republicans to do what they want to do anyway.

What’s more, individuals and businesses are more confident about the economic outlook when the Democrats are in charge. So they spend and invest more. That, I must say, is a bit of a shock to me. If the people know that the economy will do better under the Democrats, why do they ever vote for the Republicans? I understand that turnout is an issue. But if even businesses know it, why hasn’t there been a huge amount of pressure on the Republican Party to change its economic policies?

When put this way, it all seems so clear. The Republicans really are all about the shock doctrine: they don’t care about doing what is best for the economy; they have a set of things they want to do — which they always want to do — and that is what they do. It would be like going to a dentist who only knows how to pull teeth. Before long, you would have no teeth.

If you want to do a little low key activism, you might discuss this issue with people who aren’t much into politics. You don’t have to mention policies. You just have to talk about how they feel about the economy under Democrats and Republicans. Because the last time the economy did reasonably well under a Republican was under Reagan — 30 years ago. And all the Republican Party has offered since are the same policies, only more so. And it hasn’t worked. And it isn’t intended to. It is intended to just take more money away from you and me and give it to the rich.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

8 thoughts on “Why the Economy Does Better Under Democrats

  1. The reason that business rarely bothers to go with Dems over Republicans is Republicans always give businesses what they want, not what they need. Democrats occasionally only give businesses what they need, not what they want.

    Businesses want educated populations, low taxes, preferences for their businesses in trade, low regulation and an infrastructure in place they don’t have to pay for to allow them to move their products.

    They need educated workers, strong regulations and a high quality infrastructure. Since this all costs money, they need to pay for some of it in the form of taxes.

    Democrats are all about the latter, the Republicans the former. So even though when they get the latter, they will go for the former.

    • That’s dead on. But also: it’s about them being really shortsighted. When the founders of companies ran them, they took the long view. Now they look at next quarter’s stock price and how that will affect their bonuses. It’s really bad for the would economy. Check out Robert Reich’s new video. I liked what he said about the “natural” state of the economy and what rubbish that is.

      • The Jack Welching of the economy is how I first heard about it. He was soley focused on the next quarter and because bad ideas breed like mold in the South…everyone copied him.

        • I read some book he wrote (or had written for him) when I was school. I was much more pro-business at that time than I am now. But even then I was repulsed by many of the things that he was bragging about. One thing in particular: he’s a proud liar. Of course, now we have Donald Trump getting upwards of a third of the Republican vote by saying very publicly that he is the same way.

          • The R base likes their leaders to be very firm about what they believe and if you are going to lie, the best way to do so is to act as if you believe the nonsense you are spouting off on. And since the base equally assumes everyone is lying, they appreciate when someone does a really good job at selling that snake oil sizzle.

            • Yeah, I’ve been giving a lot of thought to cynicism the last couple of years. Liberals cannot afford it. Cynicism helps the conservative movement. My arguments with conservatives normally go like this: (1) I show that the Republicans are totally wrong about whatever; (2) they admit that it is true and throw up their hands, “They’re all crooks!”; (3) they continue to vote Republican. And I really haven’t found a way around this, because the truth is that liberals aren’t perfect. So “They’re all crooks!” works great to stop them from having to rethink anything. And the Republican Party has been using this idea since at least Reagan.

              • I am tempted to start pointing out that it took women 73 years for the right to vote. And several hunger strikes. So change takes a while and starts with small steps, like a mother sending a little note to her son to vote for suffrage.

  2. Pingback: Democratic Economic Policy Is Better | Frankly Curious

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