Red and Blue Economies

RED AND BLUE ECONOMIES….As longtime readers know, Democratic administrations routinely deliver better economic performance than Republican administrations. Among other things, they deliver lower inflation, lower unemployment, higher economic growth, better stock market growth, and higher median wage growth. This performance is remarkably robust and consistent, and holds up even if you lag the analysis by a few years to allow time for economic policies to have an effect.

It’s also a bit odd, since as I’ll readily concede, presidents have only a modest effect on the economy. But it’s not a statistical fluke. There have now been enough years, enough administrations, and enough separate measurements since WWII to make these results something that can’t just be shrugged off.

I have my own idea about what causes this difference (nickel version: broad policy preferences that favor the working and middle classes vs. policy preferences that favor economic elites), but that’s just a guess. Over at Angry Bear, Cactus posits a different explanation: “Democrats tend to pursue policies that are less likely to run up the debt.”

Maybe so. In any case, Cactus decided to see if he could give Republicans a break by comparing economic growth to monetary policy. After all, maybe Democrats were just the lucky recipients of expansionary Fed policy. Long story short, it turns out to be just the opposite: Democrats do well even in the face of generally unfavorable Fed policies. Conversely, Republicans generally get a lot of help on the monetary side but their performance sucks anyway.

And of all Republicans, which one sucks the most? Do you have to ask? It’s the one “who has a penchant for under performing at everything.” Click the link for more good, clean fun.

In comments, Frank di Libero produces even more fun:

This discussion has historical as well as statistical roots. FDR used the campaign slogan “Vote Democrat and live like a Republican.”

….In trying to make better sense of the media’s use of BLS’ payroll survey results, I compared the data from 1921 on with working-age population data. (These data are highly correlated.) Taking the ratio of four-year growth estimates for each of these two series over the 21 administrations beginning with Harding, results in 9 out of the 10 Democratic administrations having a favorable growth ratio (i.e., greater than 1), compared with only 2 of the 11 Republican administrations.

His chart is on the right.