News from the Votemaster

One of the key issues this election--unless health care manages to preempt it--is going to be the economy. Both parties are going to claim they are better at managing the economy. While economists like to look at all kinds of macroeconomic data such as GDP, for most people, the only metric they care about (assuming they care about metrics at all) is the unemployment number. So under which party does the unemployment number go up and under which does it go down? Or maybe it is random?

Turns out there is a lot of data on unemployment rates at the Bureau of Labor Statistics, including monthly averages since 1948. A reader, Bob Palais, has kindly made a graph showing the data with the background indicating which party was in the White House. Here it is.

Since WWII there have been 10 major peaks in unemployment. Laymen might speak of "10 recessions," but economists typically reserve the term "recession" for two consecutive quarters of negative growth in GDP. While this correlates well with unemployment, in a year where GDP grew by -3%, 0%, -5%, and 0%, there might be a lot of unemployment, but it might not formally qualify a recession, so we will stick with "peaks in unemployment."

From the graph above, all but two or three peaks (#1, #4, and maybe #7) started during Republican administrations. Peak #7 is a bit ambiguous. The rise certainly started during Carter's administration, but then it began to fall during the early days of the Reagan administartion. After that it rose sharply. So one could arguably allocate peak #7 to either Carter or Reagan. In most cases it continued for a while during the administration where it started, one exception being the Bush II administration, which ended before the damage due to the bubble bursting was fully visible.

The fact that unemployment tends to spike during Republican administrations is not an accident. It has to do with fundamental differences between the parties. Republicans prefer to let the market run its course, and if that means high unemployment, so be it. To some extent, businesses like high unemployment because it keeps wages down (although it also reduces the collective buying power, which they don't like). Democrats generally are interventionists and believe the government should take action to reduce unemployment when it threatens, so they can often hold it at bay. In other words, Democrats tend to be Keynesians while Republicans are more laissez faire when it comes to the economy.

Another difference between the parties is that Democrats often propose and execute large government programs (although Eisenhower built the interstate highway system). Large government programs create jobs, mostly in the private sector since the government contracts out much of it.

In 2008, we posted a page showing the correlation (or actually, the lack thereof) between a President's experience and how well he did. A priori, one might think that a President who had served in a state legislature, then 10 years in the House and 10 in the Senate, was ambassador to Russia and England, and served as Secretary of State would be a pretty good President, but historians rate James Buchanan as the second worst President, better only than the corrupt Warren "Teapot Dome" Harding. Lincoln, whose experience was one term in the Illinois state legislature and one in the House a decade before running for President is generally seen as the greatest President.

In a similar vein, it would be nice to run a scatterplot of a President's interest in religion against his performance, but while it is easy to count the number of years a President had in elected or appointed office before becoming President, similar data for religious practice is much harder to come by. Nevertheless, CNN has attempted to make a qualitative analysis of religion vs. performance. For example, Richard Nixon was a life-long Quaker and church-going Christian, but is not regarded as an especially good President. In contrast, George Washington was not a Christian, Thomas Jefferson was actively opposed to organized religion, Abraham Lincoln never belonged to a church, and Franklin Delano Roosevelt, while nominally an Episcopalian, rarely went to church and reportedly died in the bed of his long-time mistress, Lucy Mercer. In short, anecdotal evidence suggests that being religious does not make one a better President.

Romney is a devout Mormon whereas Obama attends church from time to time, in part due to security issues.

Obama has been running blistering ads in swing states accusing Romney of being ruthless and putting profits for Bain Capital ahead of people's jobs and lives. Strategists for both parties agree they are effective. However, Romney pulled in $100 million June, nearly all of which is going to be spent on equally blistering television ads portraying Obama as a cravenly political figure. Romney's problem is that it is relatively easy for a President to define an unknown challenger but much harder for a challenger to define a sitting President since people already have a fairly good idea of who he is. Still Romney is going to blanket the airwaves trying. It is going to be one of nastiest and most negative campaigns in modern history.