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Question of the Day
07 Jul 2009 12:56 pm
What happens to the cottage industry among Democratic-leaning armchair economists grinding out analyses proving that Democratic presidents are, like, totally awesome for the economy? Presuming that we're stuck--as seem very likely--in at least a couple of years of really grinding low-to-no growth, Obama is going to destroy their figures. Are we in for a resurgence of belief in exogenous growth factors?
Are you talking about Chauncey? Surely you jest.
Just give him a few more days. His order of magic pixie dust is arriving soon...
I foresee two retorts. One, it's not his fault Bush screwed things up so badly - I mean, really, is it fair to judge Roosevelt on his first term? Two, it would have been worse if McCain were in charge. Detroit would have gone out of business all at once, instead of in stages, leaving Michigan and swathes of Illinois in Mad Max-land.
Speaking of MI, what is really surprising is the fact that few businesses are moving to MI to take advantage of the cheap job market (presumably) and extraordinarily low cost of living. When most people find out you can buy a good size house for under 100k, and even get a modest fixer upper for 30k or less in MI they are shocked. It would seem to be a recruitment boon to be able to transfer to a new state where you can pay for your house in the first year. And if you've got bad neighbors on both sides of you, just buy their houses...
But since this does not appear to be happening one can only presume the government or MI is inept and not doing a thing to recruit business, most likely actively discouraging it from coming into the state, and that unions and the union mentality have a choke-hold on the local labor. I'd love to be proved wrong though.
Are you missing an "aren't" here?
Some suggest becoming a right to work state is the answer. I don't disagree. Seeing what happened to unionized industry in the Midwest and looking down the barrel of Card Check, who is to blame employers for steering clear?
samX,
What the hell are you talking about? Your logic is that MI labor is cheap and that all MI needs to do is 'sell' people on it as a bargain. The reason MI is so cheap is because people are leaving in droves--and by the way this has been happening for a long time. As a person that grew up as a Michigander, I would love to see it turn around, but Rome wasn't built in a day. And the reason MI isn't recruiting business right now is that no state is really rousing up business these days.
I think you miss the point.
Cheap land, available labor would normally make a place attractive to business.
But it isn't. And hasn't been even during the boom years.
So why? Maybe other factors make it very unattractive to business. Which is why land is cheap and labor available.
Derek
Hmm. I miss the point. Arkansas, Mississippi? These are pretty low cost states as well. Anyway, I'll give you the actual answer: states (and people generally) are TERRIBLE at managing decline. This is not unique to Michigan. And yes, you have this same discussion about Arkansas if Walmart hit hard times. Also, I'm not so sure that cheap land and labor is the recipe for thriving local economy. Many thriving business regions have a high level of education and ultimately income. This is of course begs the chicken or egg question, but my point was that samX was just throwing out a tired old meme.
1). It's Bush's fault! (Predictable)
2). McCain would have been worse! (impossible to prove either way).
Megan, you keep underestimating the capacity the Democrats have for whining, spin, and self delusion. Given that they control the media, they will certainly succeed in getting their side to be accepted.
Thank you for using your second sentence for illustrate what "whining, spin, and self delusion" really is.
Given that they control the media, they will certainly succeed in getting their side to be accepted.
Care to prove this? How do they "control" the media?
2). McCain would have been worse! (impossible to prove either way).
I guess you missed the episode when McCain "suspended" his campaign last year. He had long admitted that he didn't know a damn thing about economy. Do you really think having Phil Gramm in control of the Treasury would have been a good thing?
I didn't say McCain wasn't an idiot. What I said was, it is impossible to prove one way or the other whether he is a BIGGER idiot than Obama. Thus deflection of blame can proceed unimpeded.
1). Trying to document this would take more time than I care to spare. If you haven't figured out that the media has a conscious or unconcious bias in favor of the Democrats, there is not much I can do for you. NY Times fake stories too numerous to mention. Rathergate. Reuters fake photos. Wa$hington Po$t. Studious inattention to questions about Obama.
Yes John, I've been wondering where the birth certificate is too.
Re:1 Yes, but to borrow a line from the Bush haters -
Its all happening "on Obamas watch"
Yes, people in politics prefer to blame things on opponents instead of changing their worldviews. This should not be a surprise.
Probably the same thing that should happen to the idea that Republican presidents are, like, really awesome for national security. I mean after the last 8 years it's gotta be next to impossible to keep that meme going, right?
Right?
If there is a terrorist attack in the US in the next three years, it might be a growth industry again.
Let's keep our fingers crossed.
You can cross your fingers if you like.
Nobody ever claimed Republicans were peaceful, they claimed that Republican foreign policy dissuaded attack. Bush's terms can be reconciled with that worldview fairly easily.
"One, it's not his fault Bush screwed things up so badly"
Ah, but if we adjust for starting conditions, then Bush looks pretty good in his first term, given that he inherited a collapsing stock market bubble and the Enron/Worldcom/Fannie/Freddie accounting scandals, plus there was the Sept. 11 attack which was planned under Clinton and certainly didn't help the economy. How do we account for all of that?
The argument before used mindless totals based only on who was in the White House, without adjusting for anything else (and certainly without any way to determine causality). Once we start adjusting for other factors, who knows where it will all end up?
who knows where it will all end up?
Probably ends up heavily correlated to the size of the federal budget as a percentage of GDP. Negatively correlated, for sure. Color of the shirt on the current occupant of White House has got to be irrelevant.
Let's all agree right now. Every good thing between 1930 and 1976 was caused by Roosevelt and every bad thing was caused by Hoover. Between 1976 and today, every bad thing was caused by Carter and every good thing was caused by Reagan.
Y'know, I meant this as a joke. I had not yet scrolled down to the point where zic pretty much does exactly this (yet in the completely indefensible alternative).
Clever observation, Megan!
Ann:
None of them will admit that the Clinton "prosperity" and "surpluses" were an illusion built on the Internet bubble.
By their definition, growth with a Democrat is real, growth with a Republican is inequitous and built by crushing the little people.
A pox on both their houses.
None of them will admit that the Clinton "prosperity" and "surpluses" were an illusion built on the Internet bubble.
It was built on Alan Greenspan's stupidity.
Yeah, that whole "advent of a new technology that drastically increased productivity and created new demand for novel skills and services" was totally a damn fabrication. It's just like in the 1800's when that crazy "industrial revolution" happened and everyone put all their money into those crazy "machines" that produced those whacky "goods" which turned out to be a complete "fad."
Not like the housing bubble, which was based around solid economic laws that say housing prices will grow exponentially forever.
Fucking brilliant, bob.
The PC revolution began in the late '70s, with 8 bit microcomputers. It took off when the IBM PC came out in 1981 with hardware that could be easily copied. This made a standard platform that steadily improved.
By the end of the '90s most of the easy productivity improvements had been factored in.
The US federal budget "surpluses" were revenue from capital gains taxes paid on the exercise of stock options. They went away when the internet bubble burst.
Are we in for a resurgence of belief in exogenous growth factors?
No. When you work backward to find evidence that supports conclusions you are already committed to, then actual facts will have no bearing on your "findings."
So just like, for Republican partisans, George Bush was responsible for the "Cedar Revolution" in Lebanon and the opening up of Libya -- after all, everything that happens in the world is a reaction to the American president's agency -- some Democrats are already claiming that the pro-Western election results in Lebanon and the protests in Iran were facilitated by Obama's speech in Egypt. Just like, for Democrats, the housing bubble had no roots that went beyond 2001 -- note their reluctance to cite any statistics that go back beyond then -- a lot of Republicans (like Drudge) were measuring the Dow averages dating to Jan. 20, 2009.
That all of this rhetoric from both sides was quasi-religious idiocy and faith-based posturing was rarely acknowledged.
Partisanship is very comforting to insecure and mediocre intellects, because it makes the big and complex world a lot easier to "understand." Facts are threatening to them, so they prefer narratives instead. Here's a simple test: if you can pinpoint all of humanity's problems on a simple list of malefactors and isms (e.g. greedy bankers, illegal immigrants, American "militarism," global "Islamofascism") you are taking comfort in false reductivism. It's no different from blaming "Jews" and "Freemasons" and "the Negro Race" for everything.
There will always be a market for such comforting simplism: Howard Zinn is the archetypal example in the modern US. (Ta-Nehisi and most of his commenters have a good perspective on such overly simplistic historical polemics.) Off the top of my head, the Nation and the Washington Times are really egregious reductivists. It's Michael Moore's modus operandi (remember when he was confused why the terrorists would strike New York when it had voted for Gore). Matt Taibbi at Rolling Stone is really good at ignoring context and facts to make highly complex and long-term developments seem like the sinister schemes of just a few Illuminatti banKKKers, oversimplifying history for his 17-year-old wannabe hipster readers. The John Birchers who saw communists under every rock in the 50s were hardly more paranoid than Taibbi.
Dude -- what are you talking about? It was totally Goldman Sachs that caused all of this -- this article sez so.
"Here's a simple test: if you can pinpoint all of humanity's problems on a simple list of malefactors and isms"
Unless you blame government interference in free markets, in which case you're rationally self interested?
You really are a one-trick pony, aren't you? As well as an endless spring of predictable and substance-free non-sequitors. Who's talking about rational self-interest and free markets here? I know it's harder and takes more mental effort, but you would strengthen your points -- if you have any -- if you argued with what people actually said, rather than a cartoonish caricature of what you imagine them thinking.
Silly Megan - facts don't matter!
I don't understand. How could one data point destroy a result based on solid statistics? One data point would only matter if you were doing something absurd, like using only 5 data points.
Oh. Nevermind.
Presuming that we're stuck--as seem very likely--in at least a couple of years of really grinding low-to-no growth, Obama is going to destroy their figures.
Mighty big presumption. And I have no idea which economists you're talking about.
Most of the prognostications have been saying for some time now that GDP growth is not likely to resume until Q4 2009 or so. And that unemployment wouldn't begin falling until many months after that. And that debt overhang and excess property inventory make it almost a sure thing that the early part of the recovery will be tepid. But if you want to start your schadenfreude prematurely, then hey, go for it -- you're not likely to get much satisfaction from the much stronger, second-term inducing growth of 2011 and 2012.
You're forgetting that it's not about jobs lost or jobs created. It's about jobs "saved".
So as near as I can tell, as long as at least 1 person still has a job in this country, the master economic plan is unfolding perfectly. All is well. Nothing to see here.
And Republican presidents are awesome for the economy?
I look at much of the malaise we're seeing now, and trace the roots back to Ronald Reagan turning away from Carter's policies.
Now pile on with the high-interest rates complaints, etc. But with peak oil, the gas-guzzling American auto industry, and 2 Iraq wars later, I'll stand by the notion that Reagan did more harm as he did good. (I don't credit him with the fall of the Soviet Union; it was the bankruptcy caused by the invasion of Afghanistan; and we went and repeated the mistake. Freakin' brilliant.) Not to mention the failure to continue investing in our social capital; you know, those work training programs you think don't work.
Are you pining for the interest rates we had under Carter?
Zic, thanks for proving Megan's point for her. She was arguing that it's dumb to attribute every economic vicissitude to whomever is president. For you to interpret that as her defending Republican presidents -- in the abstract -- is just willful misunderstanding.
Besides, others can (and have!) copy your argument and trace every modern problem to the New Deal and Great Society, with equal attention to evidence and logic. The point of this post is that it's inherently silly to try to make these kinds of reductivist arguments. I agree that its oversimplification to argue that Reagan single-handedly brought down the USSR. So how is it NOT oversimplification to blame him for economic malaise 30 years later?
She may have said that, but since she has never attacked a republican anything about anything, it seems to me like she's doing more of the same.
I call bullshit. I recall her voting decision posts in 2004 being fairly finely balanced, and her ones in 2008 being a lot less balanced, given that she was planning to vote Obama pretty much from the point where he won the nomination. A lot of Republican legislation has also been attacked on these pages over the years. Megan is a free marketeer, but that is (sadly) not a partisan viewpoint, since neither party is very good at it.
I'm confused...which of Carter's economic policies was trending toward sustainable economic growth? What did Reagan "turn away from" that Carter was doing so well?
Carter inherited, and was unable to successfully combat, double-digit inflation. The interest rates have already been mentioned, and a consistent criticism of Carter economic policy is that his administration could not address the macroeconomic situation because they were obsessed with micro details. Some even claim that his only successful economic policy decision, which finally bore fruit under Reagan, was sending Volcker to the Fed.
Granted, he had a few really ugly distractions come along (Iran hostage crisis), but even so.
this post seems, tonally, very reminiscent of this one:
http://meganmcardle.theatlantic.com/archives/2008/07/i_know_i_saw_that_recession_ar.php
"I know I saw that recession around here somewhere..."
Oh, the pain.
Damn you and your archives from hell. Anyway, that was a long, long time ago. It's going to make a year at the end of the month.
Owned.
Can I say "owned" here? Well, I'm saying it anyway.
Owned.
It stayed growing longer than most people expected, which was still a win. She hardly claimed it proved that there was no problems anywhere. And yeah, it did stave off a recession quite literally, since that's the stat that determines whether something is a recession or not.
Please enjoy my recipie for Political Stew:
- Take one U.S. Presidential election cycle and bring it to a boil.
- Take one U.S. Economic cycle and allow it to simmer for decades, bringing it to a boil periodically to taste.
- Slowly fold in political pundits, cable news talk shows, talk radio hosts, and blog commenters who don't realize they're proving the bloggers point by randomly naming every president for the last four decades aside random economic statistics.
Season to taste & serve.
Brian, what are you talking about? Aren't you completely ignoring the fact that when James K. Polk took the Southwest from Mexico, he ensured that we would have this immigration problem today that is the root of our national debt? Also, don't forget Thomas Jefferson and the Louisiana Purchase. How many millions have we sunk into New Orleans ever since?
They'll be quite happy getting fat off George Soros's handouts and advocate massive debt spending to crush our currency while he cleans up on his short position...
Matt Yglesias responds.
Excerpt:
"Average incomes actually declined over the course of the Bush administration, the worst performance of any president ever. So even if Barack Obama were to turn in a very disappointing pattern of zero income growth over the course of four or eight years, you’d simply see the level of both lines decline, not the relationship between them shift."
Average incomes declined from the top of the internet bubble? You don't say?
They say figures don't lie, but liars figure.
Well, how many years have to pass to make up for the .com bubble? Bush was in power for 8 years. Many commenters around here are screaming failure on the stimulus after just 4 months.
Just to be clear, I'm very skeptical of this story as well. It's very hard to build a compelling causal case on the whole Democratic presidents story. But what Yglesias is saying is that it's not likely Obama will screw the pattern, even if there's very little growth during his administration. This is the kind of post that may come back to bite you.
I hope it does. Everybody makes bad predictions. But it's annoying watching people being almost happy that the economy is going down the drain, just so they can stick it to Chauncey. And, as you can see from dgf3 comment, hubris tends to be a bitch.
If you put your money into the stock market at its peak in 1929 you wouldn't have broken even until 1954. The only reason the passing of the dot-com bubble isn't remembered as a huge blow to the economy (except in IT) is an even bigger bubble was blown in its stead.
To the extent that average incomes were worse under Bush I don't think he can be blamed. His role in the housing bubble is a bit more damning, though, as well as the profligate spending that occurred from 2000 - 2006.
But none of that excuses Obama's treasury busting. It will be a generation before the country recovers from the damage done in the last six months.
Ugh, this is another one of those "quintiles=people" arguments.
Megan, maybe you could blame Ross Douthat for the problems at the NYTimes.
Bush inherited a budget surplus, 4% unemployment, low inflation, and interest rates that could be lowered. We could expect some backsliding after that asset bubble popped, but we sure have slid a lot. I believe that the reason for easy money in 2004 that led to the housing bubble was an attempt to justify Bush's policies and to give him a boost in the 2004 elections.
Obama has been in office less than 6 months and inherited a $1.2t deficit, 0 percent interest rates, $4-5t in additional debt over the previous 8 years, and an 8% unemployment rate and declining. I guess Megan wants to blame Obama for failing to stop a fast-moving boulder rolling downhill.
For those who say Clinton's success was just about the Internet, consider that the 1980s growth was largely driven by the personal computer becoming a ubiquitous device -- all the manufacturing and software -- some by companies that are big names today and others that have since died. I believe it was 1982 when the personal computer was Time Magazine's (idiotic) "Machine of the Year." Reagan inherited a $60b deficit and left about $250b.
Not to pick here, but I thought that the deficit really ballooned under the Obama stimulus plan. It was a matter of fierce moral urgency or somesuch.
I think the answer to Megan's question, as best I can answer it is this: The last time this happened we ended up with Ronald Reagan.
Now, to be fair, the last time this happened it took the Nixon price and wage freeze, Ford Whip Inflation Now, a war or two and just about another in Israel, a smattering of gasoline rationing, and topped off with the Carter's stagflation, misery index double digit inflation sky high interest rates.
I gotta give Obama credit for trying to do all of that in one term. He is an ambitious man with an ambitious agenda.
No, I believe the deficit was about $400-500b, then add in TARP before the stimulus. The stimulus plan of $700b is a mix of tax cuts and spending, much of which we are starting to see now in items like road projects.
Now you can say, and Megan sometimes does, that Obama voted for the stimulus. But this was to deal with the Bush mess.
Just checking here... you realize the Democrats regained control of Congress in 2006, right?
Since Congrees handles most of the economic issues, I would look for a relationship there.
Time analysis is really very poorly suited in these situations. You really need to have different states or countries with different governing philosophies, and compare across different administrative regions.
There would be many factors complicating any good time analysis:
Many or most policies would have a lag between legislation, implementation, and effect. These lags would be highly variable and some of them would be quite long.
Some of the effects would be due to oversight, and would have short lags. Corruption discovered by oversight would require would appear in this time period's (quarter) results, but reflects on previous time period's performance. Changing accounting or uncovering corruption rules shouldn't punish a congress.
Some of the effects would be due to new programs (establishing unions, tax and trade, affordable housing, lower/higher taxes, education) and may not appear for 10 years or more.
Just to really keep you second guessing, the markets try to account for all of this - and they are imperfect at doing so. So interest rates and equity and commodity prices can be reflected immediately - more confusingly it can be with or without merit.
It's enough to make you throw up your hands and declare it futile. In general I don't think much of this sort of regression. But, you can get a little from it if you take it with a healthy measure of skepticism.
“armchair economists” that's funny. That's exactly what mcardle is.