The Volokh Conspiracy - The Economy under the GOP vs Dems:

On today's NY Times op-ed page, Tommy McCall has a very interesting graphic on the performance of the stock market under Democratic and Republican presidents. Each of the two parties has been in control of the White House for 40 of the last 80 years; on average, during Democratic administrations, the S&P index has increased 8.9% annually. During Republican administrations, the corresponding figure is 4.7% — and that's if you exclude the Hoover years (during which time the market declined an astonishing 77%). If you include Hoover, the Republican "annualized return on investment" is an even more dismal 0.4%. Put another way, if you put $10,000 in the market and left it in only during Democratic administrations, you'd have $300,000, compared to around $12,000 (or $51,000, again excluding Hoover from the calculations) if you adopted the same strategy for Republican administrations.

This follows a number of articles this summer addressing the similarly-pointing argument advanced by Larry Bartels' in his book "Unequal Democracy," in which Bartels' data show average economic growth of 2.78% under Democrats, 1.64% under Republicans (roughly a 67% difference). (I don't recall discussion of Bartels' book here on the VC, but I might have just missed it)

Most people, I think it fair to say, would have predicted just the opposite. Republicans would then say "You see?? Our policies really are better for the economy," and the Democrats would say "Well, that's just Wall Street — what about the poor and the marginalized, and the social safety net . . ." etc. etc.

But with the actual results, it's not so clear what to say — in particular, what Republicans say. On its face, it's a very damning indictment of Republican economic policies — not an indictment in theory, but an indictment in fact. The economy grows more slowly, and the stock market increases in value more slowly, when a Republican is in the White House than when a Democrat is in the White House.

Has there been, or is there, a consensus response on the Republican side? I'm curious to know how those of you who are staunch Republicans respond. I can think of some responses: one can concede the point, but argue that Republicans are preferable on other grounds; one can point to flaws in the data (the sample is small (only 80 years); the effects from one administration "spillover" into later administrations, blurring the significance of any one year's data; the comparison ignores differences that may be due to control of Congress by the other party, etc.). But it does seem worthy of thought and discussion, even if we weren't simultaneously in the midst of an economic crisis and a presidential election.

UPDATE: A number of readers pointed to responses published here, and here, both of which give some good arguments for looking at the results of these studies at least with some skepticism. I don't find it too persuasive to argue, as Luskin does, that if you treat Nixon and GHW Bush as 'Democrats,' and JFK and Clinton as 'Republicans,' the results turn around -- if you call elephants 'mice,' and mice 'elephants,' then 'elephants' weigh less than 'mice.' But the more cogent criticisms seem to fall into two categories: first, that the Nixon presidency, like the Hoover years, had a disproportionate effect on the Republicans' poor performance and (b) that at least as far as the GDP numbers are concerned, one needs to take into account a President's actions and the effects of his policies, and that with a 2-year lag the data show almost equal GDP growth under Republicans and Democrats.

	[David Post, October 14, 2008 at 2:46pm] Trackbacks The Economy under the GOP vs Dems: On today's NY Times op-ed page, Tommy McCall has a very interesting graphic on the performance of the stock market under Democratic and Republican presidents. Each of the two parties has been in control of the White House for 40 of the last 80 years; on average, during Democratic administrations, the S&P index has increased 8.9% annually. During Republican administrations, the corresponding figure is 4.7% — and that's if you exclude the Hoover years (during which time the market declined an astonishing 77%). If you include Hoover, the Republican "annualized return on investment" is an even more dismal 0.4%. Put another way, if you put $10,000 in the market and left it in only during Democratic administrations, you'd have $300,000, compared to around $12,000 (or $51,000, again excluding Hoover from the calculations) if you adopted the same strategy for Republican administrations. This follows a number of articles this summer addressing the similarly-pointing argument advanced by Larry Bartels' in his book "Unequal Democracy," in which Bartels' data show average economic growth of 2.78% under Democrats, 1.64% under Republicans (roughly a 67% difference). (I don't recall discussion of Bartels' book here on the VC, but I might have just missed it) Most people, I think it fair to say, would have predicted just the opposite. Republicans would then say "You see?? Our policies really are better for the economy," and the Democrats would say "Well, that's just Wall Street — what about the poor and the marginalized, and the social safety net . . ." etc. etc. But with the actual results, it's not so clear what to say — in particular, what Republicans say. On its face, it's a very damning indictment of Republican economic policies — not an indictment in theory, but an indictment in fact. The economy grows more slowly, and the stock market increases in value more slowly, when a Republican is in the White House than when a Democrat is in the White House. Has there been, or is there, a consensus response on the Republican side? I'm curious to know how those of you who are staunch Republicans respond. I can think of some responses: one can concede the point, but argue that Republicans are preferable on other grounds; one can point to flaws in the data (the sample is small (only 80 years); the effects from one administration "spillover" into later administrations, blurring the significance of any one year's data; the comparison ignores differences that may be due to control of Congress by the other party, etc.). But it does seem worthy of thought and discussion, even if we weren't simultaneously in the midst of an economic crisis and a presidential election. UPDATE: A number of readers pointed to responses published here, and here, both of which give some good arguments for looking at the results of these studies at least with some skepticism. I don't find it too persuasive to argue, as Luskin does, that if you treat Nixon and GHW Bush as 'Democrats,' and JFK and Clinton as 'Republicans,' the results turn around -- if you call elephants 'mice,' and mice 'elephants,' then 'elephants' weigh less than 'mice.' But the more cogent criticisms seem to fall into two categories: first, that the Nixon presidency, like the Hoover years, had a disproportionate effect on the Republicans' poor performance and (b) that at least as far as the GDP numbers are concerned, one needs to take into account a President's actions and the effects of his policies, and that with a 2-year lag the data show almost equal GDP growth under Republicans and Democrats.