The candidates, the parties, and the economy

THE CANDIDATES, THE PARTIES, AND THE ECONOMY…. As of now, the Dow is down about 320 points, after having been down about 400 earlier today. Karl Rove, in analysis that’s even absurd by his low standards, has been telling Fox News viewers that the “volatility” on Wall Street “may be” a reflection of “people’s concerns about what would happen if Barack Obama” wins the presidential election.

It reminded of a great piece by the estimable Kevin Drum in the new issue of the Washington Monthly, on economic performance during certain parties’ presidencies.

In the postwar era, it turns out, Democratic presidents consistently produce higher growth rates, lower unemployment, better stock market growth, and less income inequality than Republican presidents. Nobody quite knows why, but the results are surprisingly robust.

Within the economics profession this topic is known as the study of “political business cycles,” and I first became interested in it 10 years ago, before the dot-com boom of the Clinton era and the weak recovery of the Bush era. Even back then the data was clear. Add up growth rates under Democratic administrations, and you get a higher number than under Republican administrations. Ditto for employment levels. Inflation rates are about the same. Do it again with lag times, since presidents inherit economies from their predecessors, and you get the same result. Change the lag time from one year to two, or three, or four, and you still get the same result. Fast-forward to 2008, and the results become even more dramatic. We’ve now had eleven presidents since World War II, with over sixty years of data points to draw from, and no matter how you slice the results, Democratic presidents are better for the economy.

And what produces these results? You’ll have to read the piece to find out.

As a reminder, Kevin’s piece is in the new issue, which we’d like to send you a free copy of. It’s easy to get this free, no-obligation issue in your hands. Just follow the link. If you want to subscribe after receiving it, you may do so for the very special rate of only $19.95 for one year. If not, the issue is still yours.

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Steve Benen

Steve Benen is a producer at MSNBC's The Rachel Maddow Show. He was the principal contributor to the Washington Monthly's Political Animal blog from August 2008 until January 2012.