Republicans Are BAD For The Economy

by: Paul Rosenberg

Sat Feb 02, 2008 at 02:00

Bush's State of the Union was jam-packed with old Republican lies about economics, less as direct assertions that can be fact-checked in a bullet-point manner, but more as deep, insistent, persistent framing. Republicans get away with this for a variety of reasons (they get away with just about everything, don't they?) but one of the big ones is that progressive activists really don't grasp just how bad Republicans are when it comes to the economy.

And so, to make that point rather emphatically, I've put together a table, comparing what the economy would be like under three different scenarios-all involving smooth, unvarying rates of growth. One takes the average growth rate under all Presidents since 1932, another takes the average growth rate under all Democratic Presidents since 1932, and the last takes the average growth rate under all Republican Presidents since 1932,

I don't want to spoil the surprise by saying anything more. The table is on the flip....

Paul Rosenberg :: Republicans Are BAD For The Economy

The chart below is a rough approximation. That's because it's based on annual average growth rates, and then was adjusted with a constant fudge factor. However, the differences between Democratic and Republican peformance are so large, that this approximation method is perfectly acceptable. The overall growth rate is 3.95%. Under Republican Presidents, the rate is 2.74%. Under Democrats it is 4.98 perecnt. The bolded dates are explained below.

GDP Performance Under Presidents,
Dem vs. Rep, 1932-2006.
And Projected to 2072
Year Actual
GDP Smoothed
Average Smoothed
Dem
Average Smoothed
Rep
Average Dem/
Avg Dem/
Rep Rep/
Avg
1932 643.7 643.7 643.7 643.7 1.00 1.00 1.00
1933 635.5 669.13 675.75 661.34 1.01 1.02 0.99
1934 704.2 695.56 709.39 679.47 1.02 1.04 0.98
1935 766.9 723.04 744.70 698.10 1.03 1.07 0.97
1936 866.6 751.60 781.78 717.23 1.04 1.09 0.95
1937 911.1 781.29 820.70 736.89 1.05 1.11 0.94
1938 879.7 812.16 861.56 757.09 1.06 1.14 0.93
1939 950.7 844.24 904.45 777.84 1.07 1.16 0.92
1940 1,034.1 877.59 949.47 799.16 1.08 1.19 0.91
1941 1,211.1 912.26 996.74 821.07 1.09 1.21 0.90
1942 1,435.4 948.30 1,046.37 843.57 1.10 1.24 0.89
1943 1,670.9 985.76 1,098.46 866.69 1.11 1.27 0.88
1944 1,806.5 1,024.70 1,153.14 890.45 1.13 1.30 0.87
1945 1,786.3 1,065.18 1,210.55 914.86 1.14 1.32 0.86
1946 1,589.4 1,107.26 1,270.82 939.93 1.15 1.35 0.85
1947 1,574.5 1,151.00 1,334.08 965.70 1.16 1.38 0.84
1948 1,643.2 1,196.47 1,400.50 992.17 1.17 1.41 0.83
1949 1,634.6 1,243.74 1,470.22 1,019.36 1.18 1.44 0.82
1950 1,777.3 1,292.87 1,543.42 1,047.30 1.19 1.47 0.81
1951 1,915.0 1,343.95 1,620.26 1,076.01 1.21 1.51 0.80
1952 1,988.3 1,397.04 1,700.92 1,105.50 1.22 1.54 0.79
1953 2,079.5 1,452.23 1,785.60 1,135.80 1.23 1.57 0.78
1954 2,065.4 1,509.59 1,874.49 1,166.94 1.24 1.61 0.77
1955 2,212.8 1,569.23 1,967.81 1,198.92 1.25 1.64 0.76
1956 2,255.8 1,631.22 2,065.78 1,231.78 1.27 1.68 0.76
1957 2,301.1 1,695.66 2,168.62 1,265.55 1.28 1.71 0.75
1958 2,279.2 1,762.65 2,276.58 1,300.24 1.29 1.75 0.74
1959 2,441.3 1,832.28 2,389.92 1,335.88 1.30 1.79 0.73
1960 2,501.8 1,904.66 2,508.90 1,372.49 1.32 1.83 0.72
1961 2,560.0 1,979.90 2,633.80 1,410.11 1.33 1.87 0.71
1962 2,715.2 2,058.12 2,764.93 1,448.76 1.34 1.91 0.70
1963 2,834.0 2,139.42 2,902.57 1,488.47 1.36 1.95 0.70
1964 2,998.6 2,223.94 3,047.08 1,529.27 1.37 1.99 0.69
1965 3,191.1 2,311.79 3,198.77 1,571.19 1.38 2.04 0.68
1966 3,399.1 2,403.12 3,358.02 1,614.26 1.40 2.08 0.67
1967 3,484.6 2,498.05 3,525.20 1,658.50 1.41 2.13 0.66
1968 3,652.7 2,596.73 3,700.70 1,703.96 1.43 2.17 0.66
1969 3,765.4 2,699.31 3,884.93 1,750.67 1.44 2.22 0.65
1970 3,771.9 2,805.95 4,078.34 1,798.65 1.45 2.27 0.64
1971 3,898.6 2,916.80 4,281.38 1,847.96 1.47 2.32 0.63
1972 4,105.0 3,032.02 4,494.52 1,898.61 1.48 2.37 0.63
1973 4,341.5 3,151.80 4,718.28 1,950.65 1.50 2.42 0.62
1974 4,319.6 3,276.31 4,953.17 2,004.12 1.51 2.47 0.61
1975 4,311.2 3,405.73 5,199.76 2,059.05 1.53 2.53 0.60
1976 4,540.9 3,540.27 5,458.63 2,115.49 1.54 2.58 0.60
1977 4,750.5 3,680.13 5,730.38 2,173.47 1.56 2.64 0.59
1978 5,015.0 3,825.51 6,015.66 2,233.05 1.57 2.69 0.58
1979 5,173.4 3,976.63 6,315.14 2,294.26 1.59 2.75 0.58
1980 5,161.7 4,133.73 6,629.54 2,357.14 1.60 2.81 0.57
1981 5,291.7 4,297.03 6,959.58 2,421.75 1.62 2.87 0.56
1982 5,189.3 4,466.78 7,306.06 2,488.13 1.64 2.94 0.56
1983 5,423.8 4,643.23 7,669.79 2,556.33 1.65 3.00 0.55
1984 5,813.6 4,826.66 8,051.62 2,626.40 1.67 3.07 0.54
1985 6,053.7 5,017.33 8,452.46 2,698.39 1.68 3.13 0.54
1986 6,263.6 5,215.54 8,873.26 2,772.35 1.70 3.20 0.53
1987 6,475.1 5,421.57 9,315.01 2,848.34 1.72 3.27 0.53
1988 6,742.7 5,635.75 9,778.75 2,926.42 1.74 3.34 0.52
1989 6,981.4 5,858.38 10,265.57 3,006.63 1.75 3.41 0.51
1990 7,112.5 6,089.81 10,776.64 3,089.04 1.77 3.49 0.51
1991 7,100.5 6,330.39 11,313.14 3,173.71 1.79 3.56 0.50
1992 7,336.6 6,580.46 11,876.36 3,260.70 1.80 3.64 0.50
1993 7,532.7 6,840.42 12,467.61 3,350.08 1.82 3.72 0.49
1994 7,835.5 7,110.64 13,088.30 3,441.90 1.84 3.80 0.48
1995 8,031.7 7,391.54 13,739.89 3,536.25 1.86 3.89 0.48
1996 8,328.9 7,683.54 14,423.92 3,633.18 1.88 3.97 0.47
1997 8,703.5 7,987.07 15,142.00 3,732.76 1.90 4.06 0.47
1998 9,066.9 8,302.59 15,895.83 3,835.08 1.91 4.14 0.46
1999 9,470.3 8,630.58 16,687.19 3,940.20 1.93 4.24 0.46
2000 9,817.0 8,971.52 17,517.95 4,048.20 1.95 4.33 0.45
2001 9,890.7 9,325.94 18,390.06 4,159.16 1.97 4.42 0.45
2002 10,048.8 9,694.35 19,305.59 4,273.16 1.99 4.52 0.44
2003 10,301.0 10,077.31 20,266.71 4,390.29 2.01 4.62 0.44
2004 10,675.8 10,475.41 21,275.67 4,510.63 2.03 4.72 0.43
2005 11,003.4 10,889.23 22,334.86 4,634.26 2.05 4.82 0.43
2006 11,319.4 11,319.40 23,446.78 4,761.29 2.07 4.92 0.42
2007 -- 11,766.56 24,614.05 4,891.79 2.09 5.03 0.42
2008 -- 12,231.39 25,839.44 5,025.88 2.11 5.14 0.41
2009 -- 12,714.58 27,125.84 5,163.64 2.13 5.25 0.41
2010 -- 13,216.86 28,476.27 5,305.17 2.15 5.37 0.40
2011 -- 13,738.98 29,893.94 5,450.59 2.18 5.48 0.40
2012 -- 14,281.73 31,382.18 5,599.99 2.20 5.60 0.39
2013 -- 14,845.92 32,944.51 5,753.48 2.22 5.73 0.39
2014 -- 15,432.39 34,584.63 5,911.19 2.24 5.85 0.38
2015 -- 16,042.03 36,306.39 6,073.21 2.26 5.98 0.38
2016 -- 16,675.76 38,113.87 6,239.68 2.29 6.11 0.37
2017 -- 17,334.52 40,011.34 6,410.71 2.31 6.24 0.37
2018 -- 18,019.31 42,003.27 6,586.43 2.33 6.38 0.37
2019 -- 18,731.14 44,094.36 6,766.96 2.35 6.52 0.36
2020 -- 19,471.10 46,289.56 6,952.44 2.38 6.66 0.36
2021 -- 20,240.29 48,594.05 7,143.01 2.40 6.80 0.35
2022 -- 21,039.86 51,013.26 7,338.80 2.42 6.95 0.35
2023 -- 21,871.02 53,552.91 7,539.96 2.45 7.10 0.34
2024 -- 22,735.02 56,218.99 7,746.63 2.47 7.26 0.34
2025 -- 23,633.15 59,017.81 7,958.96 2.50 7.42 0.34
2026 -- 24,566.75 61,955.95 8,177.12 2.52 7.58 0.33
2027 -- 25,537.24 65,040.38 8,401.25 2.55 7.74 0.33
2028 -- 26,546.07 68,278.35 8,631.53 2.57 7.91 0.33
2029 -- 27,594.75 71,677.53 8,868.12 2.60 8.08 0.32
2030 -- 28,684.85 75,245.93 9,111.20 2.62 8.26 0.32
2031 -- 29,818.02 78,991.98 9,360.94 2.65 8.44 0.31
2032 -- 30,995.96 82,924.53 9,617.52 2.68 8.62 0.31
2033 -- 32,220.43 87,052.85 9,881.14 2.70 8.81 0.31
2034 -- 33,493.27 91,386.70 10,151.98 2.73 9.00 0.30
2035 -- 34,816.39 95,936.31 10,430.24 2.76 9.20 0.30
2036 -- 36,191.78 100,712.41 10,716.14 2.78 9.40 0.30
2037 -- 37,621.50 105,726.29 11,009.87 2.81 9.60 0.29
2038 -- 39,107.71 110,989.78 11,311.65 2.84 9.81 0.29
2039 -- 40,652.62 116,515.31 11,621.70 2.87 10.03 0.29
2040 -- 42,258.57 122,315.92 11,940.25 2.89 10.24 0.28
2041 -- 43,927.96 128,405.31 12,267.53 2.92 10.47 0.28
2042 -- 45,663.29 134,797.85 12,603.79 2.95 10.70 0.28
2043 -- 47,467.18 141,508.64 12,949.26 2.98 10.93 0.27
2044 -- 49,342.33 148,553.53 13,304.20 3.01 11.17 0.27
2045 -- 51,291.56 155,949.13 13,668.86 3.04 11.41 0.27
2046 -- 53,317.78 163,712.92 14,043.53 3.07 11.66 0.26
2047 -- 55,424.06 171,863.22 14,428.46 3.10 11.91 0.26
2048 -- 57,613.54 180,419.28 14,823.95 3.13 12.17 0.26
2049 -- 59,889.51 189,401.29 15,230.27 3.16 12.44 0.25
2050 -- 62,255.39 198,830.47 15,647.73 3.19 12.71 0.25
2051 -- 64,714.73 208,729.07 16,076.64 3.23 12.98 0.25
2052 -- 67,271.23 219,120.46 16,517.30 3.26 13.27 0.25
2053 -- 69,928.72 230,029.17 16,970.04 3.29 13.56 0.24
2054 -- 72,691.20 241,480.97 17,435.19 3.32 13.85 0.24
2055 -- 75,562.80 253,502.89 17,913.08 3.35 14.15 0.24
2056 -- 78,547.84 266,123.30 18,404.08 3.39 14.46 0.23
2057 -- 81,650.80 279,372.02 18,908.54 3.42 14.77 0.23
2058 -- 84,876.35 293,280.30 19,426.82 3.46 15.10 0.23
2059 -- 88,229.31 307,881.00 19,959.31 3.49 15.43 0.23
2060 -- 91,714.73 323,208.58 20,506.40 3.52 15.76 0.22
2061 -- 95,337.84 339,299.24 21,068.48 3.56 16.10 0.22
2062 -- 99,104.08 356,190.95 21,645.96 3.59 16.46 0.22
2063 -- 103,019.10 373,923.60 22,239.28 3.63 16.81 0.22
2064 -- 107,088.78 392,539.05 22,848.86 3.67 17.18 0.21
2065 -- 111,319.23 412,081.26 23,475.15 3.70 17.55 0.21
2066 -- 115,716.80 432,596.36 24,118.60 3.74 17.94 0.21
2067 -- 120,288.09 454,132.78 24,779.69 3.78 18.33 0.21
2068 -- 125,039.96 476,741.38 25,458.90 3.81 18.73 0.20
2069 -- 129,979.56 500,475.52 26,156.73 3.85 19.13 0.20
2070 -- 135,114.29 525,391.25 26,873.69 3.89 19.55 0.20
2071 -- 140,451.86 551,547.39 27,610.30 3.93 19.98 0.20
2072 -- 146,000.28 579,005.68 28,367.10 3.97 20.41 0.19
2073 -- 151,767.90 607,830.97 29,144.64 4.01 20.86 0.19
2074 -- 157,763.35 638,091.29 29,943.49 4.04 21.31 0.19
2075 -- 163,995.66 669,858.10 30,764.25 4.08 21.77 0.19

The bolded entries are for purposes of comparison. All three entries for 2006 are bolded, along with those in each column that come closest to the 2006 values in other columns. Thus, under exclusively Democratic presidents, the GDP would have reached about the same level in 1974 that the GDP would have reached under exclusively GOP presidents by 2006-a full 32 years later. And under exclusively GOP presidents, it would be 2065 before the US would reach the level acheived under exclusively Democratic presidents by 2006-a full 59 years earlier.

The ratio columns tell us that under exclusively Democratic presidents, our GDP would be over twice what it is today-2.07 times as large, in fact. If we were to start this comparison in 1929, the first year of the data series this table is derived from, this ratio would be much higher-about three, in fact. That's how much of a difference would be made by including the three most devastating years of the Great Depression in the data table. So this table is actually being quite kind to the Republicans, by holding down the Democrat advantage. The ratio columns also tell us that exclusively Democratic presidents would have made us five times richer in 2007 than exclusively Republican presidents would have.

Now, of course this is only a projection. There is no way that a single factor, such as the party of the President can fully account for economic growth. Still, it is a remarkable difference, it directly contradicts the conventional wisdom that Republicans are better on the economy, and it is consistent with a wide range of other performance measures that show Democrats do much better setting economic policy.

Finally, it should be obvious that GDP is a rather crude measure. It measures economic activity, meaning that if you get in a fender-bender, the GDP goes up. If you get sick and go to the hospital, the GDP goes up. If you get robbed, and have to replace what was stolen, the GDP goes up. For some time now, there have been efforts to develop better measures, such as the Genuine Progress Indicator (GPI).. Wikipedia explains:

The Genuine Progress Indicator (GPI) is a concept in green economics and welfare economics that has been suggested as a replacement metric for gross domestic product (GDP) as a metric of economic growth. Its advocates claim that it can more reliably distinguish worthwhile growth from uneconomic growth: almost all advocates of a GPI would accept that some economic growth is very harmful.
A GPI is an attempt to measure whether or not a country's growth, increased production of goods, and expanding services have actually resulted in the improvement of the welfare (or well-being) of the people in the country. The GDP vs the GPI is analogous to the difference between the Gross Profit of a company and the Net Profit; the Net Profit is the Gross Profit minus the costs incurred. Accordingly, the GPI will be zero if the financial costs of crime and pollution equal the financial gains in production of goods and services, all other factors being constant.

More information on the GPI can be found at the thinktank Redefining Progress. This is just to remind us that there's more to producing a good economy than beating the Republicans at the existing numbers game. We also need to be thinking about better metrics to measure what we really want to have.

With that in mind, I close with the following, from Redefining Progress:

How We Measure Progress
The GPI starts with the same personal consumption data that the GDP is based on, but then makes some crucial distinctions. It adjusts for factors such as income distribution, adds factors such as the value of household and volunteer work, and subtracts factors such as the costs of crime and pollution.
Because the GDP and the GPI are both measured in monetary terms, they can be compared on the same scale. Measurements that make up the GPI include:
Income Distribution
Both economic theory and common sense tell us that the poor benefit more from a given increase in their income than do the rich. Accordingly, the GPI rises when the poor receive a larger percentage of national income, and falls when their share decreases.
Housework, Volunteering, and Higher Education
Much of the most important work in society is done in household and community settings: childcare, home repairs, volunteer work, and so on. The GDP ignores these contributions because no money changes hands. The GPI includes the value of this work figured at the approximate cost of hiring someone to do it. The GPI also takes into account the non-market benefits associated with a more educated population.
Crime
Crime imposes large economic costs on individuals and society in the form of legal fees, medical expenses, damage to property, and the like. The GDP treats such expenses as additions to well-being. By contrast, the GPI subtracts the costs arising from crime.
Resource Depletion
If today’s economic activity depletes the physical resource base available for tomorrow, then it is not creating well-being; rather, it is borrowing it from future generations. The GDP counts such borrowing as current income. The GPI, by contrast, counts the depletion or degradation of wetlands, forests, farmland, and nonrenewable minerals (including oil) as a current cost.
Pollution
The GDP often counts pollution as a double gain: Once when it is created, and then again when it is cleaned up. By contrast, the GPI subtracts the costs of air and water pollution as measured by actual damage to human health and the environment.
Long-Term Environmental Damage
Climate change, ozone depletion, and nuclear waste management are long-term costs arising from the use of fossil fuels, chlorofluorocarbons, and atomic energy, respectively. These costs are unaccounted for in ordinary economic indicators. The GPI treats as costs the consumption of certain forms of energy and of ozone-depleting chemicals. It also assigns a cost to carbon emissions to account for the catastrophic economic, environmental, and social effects of global warming.
Changes in Leisure Time
As a nation becomes wealthier, people should have more latitude to choose between work and free time for family or other activities. In recent years, however, the opposite has occurred. The GDP ignores this loss of free time, but the GPI treats leisure as most Americans do—as something of value. When leisure
time increases, the GPI goes up; when Americans have less of it, the GPI goes down.
Defensive Expenditures
The GDP counts as additions to well-being the money people spend to prevent erosion in their quality of life or to compensate for misfortunes of various kinds. Examples are the medical and repair bills from automobile accidents, commuting costs, and household expenditures on pollution control devices such
as water filters. The GPI counts such "defensive" expenditures as most Americans do: as costs rather than as benefits.
Lifespan of Consumer Durables & Public Infrastructure
The GDP confuses the value provided by major consumer purchases (e.g., home appliances) with the amount Americans spend to buy them. This hides the loss in well-being that results when products wear out quickly. The GPI treats the money spent on capital items as a cost, and the value of the service they provide year after year as a benefit. This applies both to private capital items and to public infrastructure, such as highways.
Dependence on Foreign Assets
If a nation allows its capital stock to decline, or if it finances consumption out of borrowed capital, it is living beyond its means. The GPI counts net additions to the capital stock as contributions to well-being, and treats money borrowed from abroad as reductions. If the borrowed money is used for investment, the negative effects are canceled out. But if the borrowed money is used to finance consumption, the GPI declines.

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Republicans Are BAD For The Economy | 15 comments

Business Cycles and Political Cycles (0.00 / 0)

Democrats might be better on the economy, but this really isn't the way to prove it. What you've got here is a very strong correlation. But I wouldn't go any further than that, especially given that the presidency tends to rotate between the parties somewhat cyclically and the economy tends to grow in the same fashion. If those cycles overlap, there's your explanation.

What I do believe is that typically Democratic policies may be better at growing the economy in the long term, but that kind of effect couldn't be picked up in this kind of data.

John McCain: Health insurance for low income children represents an "unfunded liability."

by: FuzzyDunlop @ Sat Feb 02, 2008 at 07:40:26 AM UTC

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And Hence The Link To More Data (0.00 / 0)

As well as the disclaimer, "There is no way that a single factor, such as the party of the President can fully account for economic growth." Still, if the correlation went the other way, do you think we'd ever hear the end of it?

Really, however, the correlation here is that Democrats predominated until growth started slowing down, and prosperity started narrowing, which happened during Nixon/Ford. Republican policies generally tend to take care of the well-off, and this doesn't tend to benefit the economy as a whole. Hence, once Republicans began dominating the presidency, income polarization began rising, and overall growth rates declined.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

by: Paul Rosenberg @ Sat Feb 02, 2008 at 10:40:07 AM UTC

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Gotcha (4.00 / 1)

"As well as the disclaimer, "There is no way that a single factor, such as the party of the President can fully account for economic growth." Still, if the correlation went the other way, do you think we'd ever hear the end of it?"

I didn't mean to imply that you weren't throwing in some caveats, and I definitely agree that if the trend went the other way we would never hear the end of it.

John McCain: Health insurance for low income children represents an "unfunded liability."

by: FuzzyDunlop @ Sat Feb 02, 2008 at 13:03:03 PM UTC

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Correlation and Sample Size (0.00 / 0)

I'm not sure you can even say there is a correlation here, much less a causation (though Fuzzy is right on everything he says). Since 1932 we have had 6 Democratic Presidents and 6 Republican Presidents. That is an incredibly small sample size for any data analysis.

Moreover, the historical contingencies just make this impossible. FDR was president during WWII. War is very good for the economy in the short-run. Does this mean Democratic economic policy is better than Republican? I don't think so. Who gets the credit for the oil shocks of the 1970's? Do we give Carter/Volcker points for stopping inflation through a recession?

Finally, it's important to remember that Eisenhower is hard to compare to Reagan politically, and Nixon implemented price and wage controls. Carter started deregulation. It's all just too mixed up to run any sort of analysis on. Like Fuzzy, I do think that the Democrats set up programs that grow the economy in the long-run (the three best things you can do are create a productive workforce, help women enter the workforce on equal terms as men, and have a liberal immigration policy). But this sure doesn't show it.

by: CT Student @ Sat Feb 02, 2008 at 10:13:31 AM UTC

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Public Investment Helps, Too (0.00 / 0)

I agree that this isn't proof. That's why I linked to the collection of metrics on which Dems outperform Reps. But it's a hell of a lot more than the normal less-than-annecdotal claims (i.e. lies, myths, etc.) that flood the political discourse and portray the GOP as superior.

And, of course, you left out a real biggie in terms of long-term economic growth--public investment. It used to be that the Federalists/Whigs/Republicans were the party of public investment--though the benefits tended to be tightly held. But since 1932, not so much.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

by: Paul Rosenberg @ Sat Feb 02, 2008 at 11:05:20 AM UTC

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re: public investment (0.00 / 0)

First, two wrongs don't make a right. Bad data doesn't become good data just because the other team doesn't use data at all. That's a dangerous attitude.

But more importantly, public investment is a mixed bag. Some kinds are obviously necessary - roads and other forms of infrastructure for instance. But if you're talking about industrial policy, it's a real mixed bag, because you have to guess right or you're throwing money down the drain. Plus, there are lots of kinds of public investment that don't create productivity growth, which means that it won't grow the economy in the long-run.

I don't disagree with you, but public investment is an almost meaningless term. That's why I didn't put it as a specifically liberal policy. Republicans are very good at driving public investment in the military, for example. I don't think that's what you meant, but precision is a value.

by: CT Student @ Sat Feb 02, 2008 at 11:23:41 AM UTC

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Context Matters (0.00 / 0)

It's certainly true that two wrongs don't make a right. But it's not my intention for this to be a definitive arguement, as is clearly indicated by the disclaimers offered. This is more on the order of a wake-up call, and as such, there is nothing wrong with it at all. While I welcome these comments for underscoring the fact that more data is needed, I have already provided a link to such data above.

As for your second point about the need for greater specificity regarding public investment, I couldn't agree more. In fact, I would go even further--even "roads and other forms of infrasrtucture" need to be carefully considered, as we can see quite clearly now how much of our past infrastructure development has built-in negative environmental consequences.

This is where the discussion of the GPI comes in. We need to be developing much more sophisticated ways to guide ourselves as the magnitude of our impact on the world we live in continues to escalate far beyond what humans were capable of doing in the past. It's pecisely because I'm such an enthusiastic futurist that I think we need to get orders of magnitude better at evaluating consequences in advance.

This leads into one final thought, regarding industrial policy. Generally speaking, the most effective thing that government can do is invest where private investors won't--in the sorts of things that don't have immediate payoffs and/or that have large postivie externalities, so that others will reap the rewards of their investment. Thus, the highest priority should be given to the sorts of investment that are the least likely to have the adverse effects you warn of.

That said, government should be in the job of shouldering some risks that others cannot or will not take on. So it is justified in making investments beyond those that are highest priority by the above criteria. But it should do so in a manner that is prudent, relative to its other responsibilities.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

by: Paul Rosenberg @ Sat Feb 02, 2008 at 13:06:31 PM UTC

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Public investment (0.00 / 0)

I will always have titters about the fact that, even at the height of Gingrich's power, no one even uttered a peep about abolishing the TVA--so much for the argument that government involvement in the economy is always bad.

by: Valatan @ Sat Feb 02, 2008 at 12:03:30 PM UTC

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Congrats on dealing with the economy (4.00 / 1)

Bravo for taking on more on the intersection between poltics and the economy. Most people here "know" that the GOP is worse for the economy and for 95% of the public, but don't really understand why, except that the GOP "favors the big corporations" or some such platitude. in addition, amny younger people are kind of libertarian, and seem to disdain government regulation and worship at the altar of "the market," perhaps planning to get rich quick themselves as an entrepreneur.

It would be a great service, greater even than you many diaries on the cultural revolution, to try to explain these phenomena. Here's my take.

1. First, the GOP doesn't really believe in free markets. They believe in markets rigged and skewed towards theri big contributors. The people who take top positions in a GOP admin are typically people like Cheney, Rumsfeld and even Paul O'Neill who have made their money in industries and sectors that are heavily regulated and/or dependent on government contracts. When they take opffice they steer more largesse towards their former employers and buds. We see this epitomized in Iraq. This creates inefficiencies and miallocations of resources.

2. Second, the Dems are expansionist in both a general philosophical sense and in the sense of wanting to expand prosperity to a broader base. Dem admins are characterized by greater hope for more people, more resources directed townard the lower 80% and investment in innovation and entrepreneurship, and breaks for small business much more than the GOP. Dem Admins are a time of greater (broader) hope and oportunity.

3. Dems skew investment and tax breaks toward the people who spend it not so much toward those who hoard it offshore or pass it to their immediate family. Broader prosperity means an expanding economy.

4. The Dems believe (more) in regulating the excesses of capitalism. GOPers believe that man is inherently sinful, yet they want to unleash human greed. Result? Massive income inequality and predatory people of every kind preying on the weak and unsophisticated.

Where the Dems went off track and got themselves in hot water with a large segment of the public is the kind opf regulation the Dems championed in the '60s qnd '70s--too much record keeping of hiring practices and the like. Too much bureaucracy. Too mcuh that the public perceived as pettifogging or moralistic. I'm not arguing against self-reporting per se, but especially in the pre-computer age much of it was burdensome to small business, and this fueled a very smart GOP campaign for deregulation that went way too far in the other direction, abetted during the Clinton Admin by the Dems' selling out the bottom third for the top half.

Deregualtion, particularly in the financial sector, plus the Bush tax cuts, have greatly accelerated income inequality to dangerous levels and created financial instability. people need to understand these issues to evaluate candidates. Thanks for starting.

John McCain--He's not who you think he is.

by: Mimikatz @ Sat Feb 02, 2008 at 10:35:56 AM UTC

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I Agree With Everything Except Where Dems Went Off Track (0.00 / 0)

I tend to come at such things from a large-scale comparative perspective as much as possible, and from that approach what really stands out is that US regulations tend to be more burdensome because US business makes them so. This is one conclusion reached by former Harvard President Derek Bok, in his book, The Trouble with Government.

Bok compares America with Europe, and finds that European regulations tend to work significantly better, even though they are often stricter. The main reason is buy-in. Businesses are more unified, have stronger trade associations, and norms that support playing by a common set of rules. This means that business can play a more unified, proactive role in shaping regulations, and generally does so in an open, above-board manner that's quite different from the fragmented, divisive and reactionary manner that US business culture tends to promote. Because they are prime architects in developing regulations, they are much more satisfied with the forms they take, much more willing to comply, and less willing to identify with others who break the rules.

What I would say happened in the 1970s was that businesses got a lot more organized politically, and poured a lot more resources into fighting regulations at the broad conceptual level, as well as specifically, but did so without any re-examination of their own cultural predelictions and the role they themselves were playing in creating a dysfunctional system.

But even so, they wouldn't have gotten nearly so far as they did without the anti-black, anti-feminst backlash which was the key element in fueling the sharp turn to the right after LBJ.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

by: Paul Rosenberg @ Sat Feb 02, 2008 at 13:43:26 PM UTC

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Interesting. (0.00 / 0)

You may be right. I think that with many laws, such as environmental, and non-discrimination, there was originally buy-in, but then some companies non-complied, some rather visibly, and the campaign you refer to got started and so oppositon became the norm.

The other factor I forgot that makes the Dems better for the economy is more spending on infrastructure and education--public owrks, plus making government work better because Dems actually believe in it.

John McCain--He's not who you think he is.

by: Mimikatz @ Sat Feb 02, 2008 at 16:14:15 PM UTC

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Aha (0.00 / 0)

I've never seen this point made in such detail.

You did some colouring to the chart about the economic stimulus plan and I'd suggest the same would make the above chart a little more digestable by colouring the Democratic and Republican years.

(also glad to see the GPI stuff make it into a diary)

by: Daniel De Groot @ Sat Feb 02, 2008 at 10:57:13 AM UTC

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GPI vs. GDP (0.00 / 0)

If you look at the graph from the site you liked, they track each other pretty well--with two notable exceptions--the early 1980s, when the GDP massively outstripped the GPI, and the stagflation era.

Ain't the former interesting, though, considering the myth of the Reagan economy--the real domestic product held steady, while the paper one grew very aggressively.

by: Valatan @ Sat Feb 02, 2008 at 12:08:41 PM UTC

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GPI (0.00 / 0)

GPI appears to be a great way to summarize the real economy. I love the analogy to Gross versus net profit.

My only problem with GPI as a formal measure is it seems like the kind of complicated calculation easily manipulated by further politics. As an analogy, it reminds me of tax breaks. You can easily come up with a bunch of tax breaks that perfectly reflect progressive ideals and policies, but once tax breaks become common they quickly become giveaways for corporate interests. It isn't hard to imagine something like "corn ethanol usage" working its way into the GPI, for example.

I think the greatest problem with GDP is its inability to measure wealth distribution. I'm no economist (obviously) but I'd love to see us focus on the average increase in wages. In other words, my 2% wage increase is give the same value as yours, as a migrant worker and as Bill Gates.

by: Mark Matson @ Sat Feb 02, 2008 at 15:47:52 PM UTC

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The GPI Is Obviously Somewhat Soft (0.00 / 0)

and subject to the sorts of potential problems you cite, although there are more in the nature of vulnerabilities to bad faith actors than anything else.

For example, if "corn ethanol usage" is evaluated in the terms laid out above, there are some obvious costs incurred which the GPI flages.

Traditionally, the much harder things to deal with are costs--such as environmental degredation--that are hard to quantify. Large uncertainties are bound to persist in such areas for a long time to come, but substantial strides have been made in recent years.

For example, the externalized costs of port pollution are a subject I've written about for some time, and I've seen it grow from an alien concept to one that's increasingly well-understood by the public and policy-makers alike, even though there's still considerable uncertainties involved. Whatever the costs are ($3.5 billion/year is the extreme lowball figure), they are clearly much greater then the ports' operating budgets and the costs to the public are much greater than the costs to the industries involved of cleaning things up.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

by: Paul Rosenberg @ Sat Feb 02, 2008 at 16:41:17 PM UTC

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Republicans Are BAD For The Economy | 15 comments

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