Economics

民主党真的对美国经济更好吗？

Jun 22, 2016 Jeffrey Frankel

坎布里奇—近几个月来，希拉里·克林顿反复声称，在民主党入主白宫时，美国经济表现显著更好。这话从推定民主党总统提名人口中说出来，可能显得有些像是政治伎俩。但真相是她的话绝对正确。

毫无疑问，总统只是决定经济的诸多因素之一，一些总统也显然比其他总统更加幸运。但这并不意味着克林顿的说法如一些媒体事实考据机构（包括获得普利策奖的PolitiFact）所言只是“半对”。民主党和共和党总统治下的经济表现区别是持久且显著的，并且差异显然要高于统计显著性阈值。

普林斯顿大学经济学家艾伦·布林德（Alan Blinder）和马克·沃森（Mark Watson）在一项最新研究中确认了这一民主党红利。他们的研究起点是一项观察：二战以来（从杜鲁门到奥巴马），平均年GDP增长率在民主党执政时期为4.3%，而共和党执政时期为2.5%。在往上追溯，将胡佛和富兰克林·罗斯福也包括在内，那么差距还会更大。即使将总统任期的前三个月（或最初几个季度）的责任归于其前任，结果也是类似。

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0 Comments on this paragraph, 27 Comments on this article

David Lloyd-Jones Jul 24, 2016

"If the chances of a recession starting during a Democratic or a Republican president’s term were equal, the odds of four successive recessions beginning under Republicans would be 16 to one – the same as getting “heads” on four out of four coin-flips."

Uh, no.

Fifteen to one. One in sixteen.
15 to one or one in 16 in some stylebooks.

-dlj.
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Mike Juha Jun 25, 2016

This article is total nonsense. Obama has not achieved a single year of GDP growth above 3%. Obama's 8 year presidency will go down in history as the slowest growth presidency. Obama is a Democrat. So, please tell me what statistical magic makes Democrats so good? The 100 million Americans who would like jobs but cannot find them would like to hear from you!
- Benedict Voon Jul 27, 2016
  
  Electing Obama is to keep the status quo.
  A new reply to this comment has been posted.
- Jeffrey Frankel Jun 27, 2016
  
  To Mike Juha, continued.
  The graphs for the early-2009 turnaround in GDP and job loss are available at an earlier blogpost of mine:
  http://www.jeffrey-frankel.com/2012/02/20/did-obama-turn-around-the-economy/.
  JF
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- Jeffrey Frankel Jun 27, 2016
  
  To Mike Juha,
  It's hard to believe that I have to explain this. Obama inherited from Bush the worse recession since the 1930s. The economy was in freefall by all measures in the first quarter of 2009,when he took office. GDP levelled out in the second quarter, marking the end of the recession, and turned positive thereafter. Please look at the graphs for growth or job loss during that period. It is hard to see how the economic gods could have drawn these graphs in some way that the timing could more forcefully support the proposition that Obama was responsible for ending the recession.
  But my column explicitly did not claim to assign responsibility. It was about the simple statistics of economic performance under the two parties. You ask "what statistical magic makes Democrats so good?" It's what the numbers say. Even if one assigns the last two quarters of the great recession to Obama (which seems to me unfair, but never mind), it is a simple statistical fact that, averaging over the post-war period, growth was substantially greater under Democratic presidents than under Republican presidents.
  JF
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Russell Almond Jun 24, 2016

Interesting piece, but it exploits a fairly common statistical fallacy, so I was able to use it in my intro Stat class as an example of what not to do. Here is my comments on the piece.

Paul Krugman once said that if you like the political conclusion of the article, you should be more, not less, suspicious of the methodology. This is because of confirmation bias, we are more willing to accept results we believe in than results we don't believe in.

So across my desk come this opinion piece by Jeff Frankel: [Link to this page omitted]

At issue is a remark by Secretary Clinton that over the past 35 years, the economy has fared better under Democratic presidents (Clinton and Obama) and Republicans (Reagan, Bush and Bush). Politifact rates this claim as "half-true", and Frankel takes issue.
Part of the problem is causal attribution. Although the economy did, in fact, fare better by several measures under Presidents Clinton and Obama, the U.S. Constitution is in fact set up so that power is divided between the Congress and the President. For most of both Clinton and Obama's presidency, the Congress was controlled by the Republicans. So maybe it is a Republican Congress, or a mixed government that causes economic growth. (Or maybe, it is something else entirely like the Chair of the Federal Reserve Bank).
Although Frankel acknowledges this point, he goes on to make a common statistical mistake. He calculates probabilities of past events. Let us break down one of his typical examples: Frankel notes that all 4 of the recessions that happened during that time period started under a Republican President. This is like tossing a coin tails 4 times in a row, the probability of which is 6.25%. So using the logic of Hypothesis Testing (Unit 13) we would reject the null hypothesis that this is just chance.

What is the problem? The problem is that Frankel picked that statistic because it looked remarkable, and then calculated the odds. So the real probability he should be calculating is not the probability of this event occurring 4 times in a row, but rather the probability of it occurring 4 times in a row given that Frankel noticed it.

This error is worth noting it because I've seen it in many different contexts. One of the most famous because I've seen it in many different contexts. For example, a large number of people have used it to calculate what are the odd of intelligent life on Earth, using various factors (planet so far from the sun, sun not to hot or cold, available water, &c). But, given that we are on Earth, and intelligent enough to calculate that probability, the answer is 1 (or maybe 0, given the quality of the arguments that come up :).

I think Politifact is right on here. Secretary Clinton's claim is half-true. It is indeed true that the U.S. Economy has faired better under the last 2 (or even 3) Democratic presidents than the last 3 Republican presidents. However, the implication of Secretary Clinton's remarks is that either Democratic policies or leadership caused this improved performance. The evidence provided by the historical record supports that claim but only weakly (it also provides weak evidence against the proposition that Republican policies/leadership produce better economic outcomes). Thus while Secretary Clinton's statement is truthful, and her logic is sound, she is reaching a stronger conclusion than is warranted from the data.
- David Lloyd-Jones Jul 24, 2016
  
  "But, given that we are on Earth, and intelligent enough to calculate that probability, the answer is 1 (or maybe 0, given the quality of the arguments that come up :). "
  
  Sorry, Russell, the presence of stupidity, presumably responsible for your "the quality of arguments that come up" has no effect on the probability of the existence of intelligent life on Earth. Both may exist.
  
  Yours may be the fallacy of trying to get a cheap laugh without actually making a joke.
  -dlj.
  A new reply to this comment has been posted.
- Jeffrey Frankel Jun 27, 2016
  
  To Russell Almond,
  1) The Blinder-Watson article explicitly considers the hypothesis that the Congress or Fed is what makes the difference rather than the party of the presidency, and statistically rejects it. So you have committed the common statistical fallacy of not reading the actual results.
  2) We are all familiar with problems of confirmation bias and sample selection bias, thank you. The calculations in Blinder-Watson are not subject to these biases. They look at all post-war presidencies. Their basic results are not affected by the precise choice of timing.
  3) I used the case of the last four recessions because I thought it would be useful for making the the basic logic of statistical significance accessible to a non-technical readership, via the analogy of getting the same result from four coin flips in a row. But you are welcome to ignore this example. The real point is the entire post-war record of growth and recessions, which is not subject to your critique.
  JF
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S Kaleberg Jun 24, 2016

Someone argued that the problem might be lag time, but this analysis has been done many times. It doesn't matter how much lag one assumes, Democrats are better for the economy for Republicans. It doesn't even matter if the lag is negative. You can download the numbers from the BEA and try it out in a spreadsheet for yourself. This analysis has been done repeatedly by many economists. Democratic superiority on economic issuse has been an established fact for decades. It's good to see Clinton bringing it up as a talking point.

My impression is that the economy and business does better in a "bad for business" political climate. It's the old red-state/blue-state paradox. States with anti-business policies tend to be wealthier as a result. It's like the minimum wage. A high minimum wage is "bad for business", but in fact it turns potential customers into kinetic customers by giving them more money.
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Michael Pettengill Jun 23, 2016

The factor that one armed economists don't consider any more is the absolute need for labor costs to increase for gdp and employment to increase. Reagan ushered in one armed economics, eliminating demand growth as a driving factor gdp growth, focusing on increase profit by cutting labor cost to increase supply, and then in the field of dreams believe that wealthy consumers would simply appear.

Before Reagan, economists had two arms waving instead of one, and would say, "sure cutting labor costs increases profits, on the one hand" before going on to say "but on the other hand, lower labor costs means consumers have less income and they will cut their spending unless businesses cut prices and eliminate their profits."

Republicans try to fix the lower demand from their policies of cutting labor costs to boost profits by promoting lending money to people who don't have the income or assets to service the debt. Thus the debt crisis that led to the bank failures from bad mortgages at the end of Reagan's term of bank deregulation, was very much like that which occurred at the end of Bush-Cheney terms.

Democrats pursue policies to increase labor costs which increases demand and thus gdp, the opposite of Republicans. Republicans favor cutting labor costs to boost profits which cuts gdp growth by cutting demand once increased personal debt becomes impossible to service.
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M M Jun 23, 2016

The US foreign and domestic policies have always been the same no matter who is in power. Obama's policies were very munch Republican and if a Republican is in power, it is the exact opposite. The US had two dynasties since the 90s: one the Bush Dynasty, then the Clinton Dynasty (Obama was just a filler) and now possibly back to the Clinton dynasty. What a joke.
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Mark Cancellieri Jun 22, 2016

The author mentions Alan Blinder and Mark Watson, but fails to mention that they wrote:

"...it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future. "

Presidents and the U.S. Economy: An Econometric Exploration

"It seems we must look instead to several variables that are mostly “good luck.” Specifically,Democratic presidents have experienced, on average, better oil shocks than Republicans, a better legacy of (utilization-adjusted) productivity shocks, and more optimistic consumer expectations (as measured by the Michigan ICE)."

Presidents and the Economy: A Forensic Investigation
- Jeffrey Frankel Jun 27, 2016
  
  To Mark Cancellieri:
  The point of my column was that Hillary Clinton's claim (that the economy has performed substantially better under Democratic presidents than Republicans) is 100% true. The difference is statistically significant.
  Of course identifying causal channels is much harder. It was not part of the Hillary's claim and therefore not part of the claim in my column.
  Causual channels require a separate and longer discussion. But note: the B-W finding that part of the performance gap comes via effects of oil prices, productivity, and consumer expectations does not preclude that presidential policies influence these effects.
  JF
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Robert Blake Jun 22, 2016

Is it possible that we are looking at causality the wrong way around -- instead of the president influencing the state of the economy, could the state of the economy be systematically be influencing the choice of president, as many models predict? If times are bad, do voters trust Democrats to protect their interests more than Republicans, and vice versa when times are good? Given the lags involved, if that were the case, one would expect Democrats to hold office during recoveries and Republicans to hold office during downturns.
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Steve Hurst Jun 22, 2016

So Tell me Jeffery, what economic damage was done by the Clinto administration ignoring this -

'The chilling details come from the Defense Intelligence Agency, which finally handed over an intelligence information report titled “Letters Detailing Osama bin Laden and Terrorists’ Plans to Hijack an Aircraft Flying Out of Frankfurt, Germany, in 2000.” The report is dated Sept. 27, 2001.'

http://www.washingtontimes.com/news/2013/nov/6/fitton-how-911-warnings-were-ignored/
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Robert Bostick Jun 22, 2016

Mr. Frankel your summary of economic performance under Democrats and Republicans borders on foppery.

You know full well performance lags policy. Perfect example: You and President Clinton brayed about budget surpluses for the next 75 years and decried the Bush-Cheney assertion that "deficits don't matter". In fact your budget surpluses drained net financial assets from the economy. That means those of us in the real economy had to go into debt, use up our savings to maintain consumption, quality of life, etc.

Yes, your Federal government drained our net savings from our checking and savings accounts. That always happens (see link/graph below) and always leads to recession which began in '97 persisting through 2001.

You only need to see the sectoral financial balances graph constructed by the Federal Reserve to "fact check."

http://media.fyre.co/L7CBTw3cTHibiKeHoi3t_US-sectoral-balance-graph-presidents1.jpg

This graph (the Red Line) also shows that the economy prospered most when budget deficits persisted.

What the Clinton surpluses generated was massive private sector debt. There is no other outcome when, on net, the Federal government taxes too much and spends to little.

Moreover, the Federal government never uses tax revenue. It destroys it. You've known this from your econ history class where you learned and may have taught the implications of Nixon's abandoning the gold standard in 1971.

Bush-Cheney knew this and the irrefutable fact that the Federal government can never run out of its own dollars, being the monopoly issuer of those dollars.

Abandoning the gold standard created a paradigm shift in American economics which, unfortunately, alludes or is marginalized by you and other traditional, commodity money economists. You refuse to accept the fact that the Federal government is finally free from having to rely on tax receipts and the sale of bonds to fund the Federal government.

Because of that, you will, NEVER, present an analysis of economic policy choices which reflect the operational reality of a monetarily sovereign Federal government.
- Michael Pettengill Jun 23, 2016
  
  You logic is strange. The budget surpluses while Clinton was president (when I grew my savings greatly) caused Americans to go into debt, but the massive deficits that began in Bush-Cheney first year did not result in Americans getting out of debt, but instead going into debt faster (and my savings shrank starting with Bush-Cheney), still argues for Democrats, not Republicans. Reagan ran huge record deficits, and savings shrank and debt increased for most American families. Personally I saw my house value fall below my mortgage and my stock portfolio go down a lot in Reagan's second term, just like I saw both fall in Bush-Cheney second term. Both had real estate and stock market bubbles that popped in 1986-7 and 2007-8, followed by massive bank "bailouts" called TARP in both cases.
  
  Both Reagan's and Bush-Cheney administration promoted bank and Wall Street deregulation to promote asset churn and asset price inflation to create "capital gains" which was mostly aging houses inflating in price due to ever higher debt of buyers.
  
  As for the gold standard, it was Nixon who ended the gold standard for trade so the Fed was completely unconstrained. If you are referring to FDR, then you must be pining for the days of $1 a day wages and wheat at ten cents a bushel, unless the harvest was good and it's under a nickel. And prices and wages needing to fall as the population globally increases faster than the quantity of gold sitting in bank vaults.
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P. Kamath Jun 22, 2016

How come the country has been going through booms and busts all these years during reigns of democrats or republicans? I think these economists consider themselves as some sort of supermen. That is the problem!
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Petey Bee Jun 22, 2016

From the abstract:
"...This paper asks why. The answer is not found in technical time series matters nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, and perhaps greater defense spending and faster growth abroad."

So rather than Democrats being "Better For" the economy, the authors suggest that the economy is "better during" Democrats.
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dan baur Jun 22, 2016

Pure BS. You claim to bring rain by beating the drum.
Communism never had recessions and then it failed. Recessions are part of the necessary creative destruction process.
You allow for up to a ridiculous 3 months lag in policy impact. Policy impact is more delayed and much longer lasting.
4 out of 4 and 8 out of 8 is not statistically meaningful in economics or other fields. Only ignorant Grandma can think she has a hot hand.
With debt and wasteful spending anyone can look good at the loss of future generations. Ask the Greeks.
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John Brian Shannon Jun 22, 2016

Hi Jeffrey,

So great to read uplifting essays like yours.

I believe Hillary Clinton's claim and have in prior years done minor research on this general theme, and it's true.

It's pretty easy for non-believers to verify the veracity of Hillary's claim, and any decent economics database can fully inform us about her assertions.

One Republican stands with the Democrats however:

Ike Eisenhower was the last Republican to tame deficits, run surpluses (3 years), paydown the federal debt, invest in major infrastructure -- creating the Department of Health and Human Services (April 11, 1953) providing the stimulus to create the Interstate Highway System (June 29, 1956) sponsoring and signing the Civil Rights Act of 1957 (September 9, 1957) NASA (July 29, 1958) and ending the Korean War (July 27, 1953) and so much more.

Eisenhower 'was the last fiscal conservative' as has been commonly noted and rather than be married to any particular economic theory or political ideology, Ike chose a pragmatic path -- as any person educated as a senior military officer would do in similar circumstances.

But one outlier does not make a trend.

Back to Hillary.

I fully expect that the U.S. economy will perform above expectations in a Hillary Clinton administration (the same would hold true for a Bernie Sanders administration) of that I've no doubt.

The best thing that former president Bill Clinton ever did IMHO, was to have a sign made that he placed on his desk which said; "It's the economy, stupid."

Which reminded him every day what was the most pressing issue for America and the rest of the world.

Let us hope that the next occupant of the White House takes that responsibility as profoundly and as energetically as former president Bill Clinton.

As always, very best regards, JBS
- John Brian Shannon Jul 1, 2016
  
  Hi Robert,
  
  Which is exactly where behavioral economics steps in.
  
  When government stimulus begins doing its work in the economy; The economy suddenly firing on all cylinders attracts a lot of attention.
  
  At times like that, consumers feel it is 'safe' to buy a luxury sedan instead of an economy car. They feel that with the economy clicking along and perhaps a raise at work in the offing, they can afford a 5-bedroom home, instead of the 3-bedroom home they considered when the economy was stalled. Or they may decide to do an entire home renovation instead of a paint job.
  
  And why? Because when the economy does better, 300 million consumers of all ages decide that the times warrant higher spending -- and consequently, many take on larger loans than they would have during administrations that didn't grow the economy -- either 'artificially' via government stimulus, or by policies designed to 'organically' grow the economy.
  
  Thank you for the link to the chart, which helps to prove my argument, especially in regards to the easily visible Clinton-years government budget surplus/higher debt levels and lower current account balances for consumers.
  
  And all of that caused by early and successful (Clinton) stimulus into the economy.
  
  Best regards, JBS
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- Robert Bostick Jun 22, 2016
  
  Bill Clinton's economics drove the private sector into massive debt and of course a recession. http://media.fyre.co/L7CBTw3cTHibiKeHoi3t_US-sectoral-balance-graph-presidents1.jpg
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Michael Public Jun 22, 2016

Correlation is not the same as causation. Maybe in years with better performing economies swing voters simply prefer to vote Democrat?

Maybe there is a time delay of 4-8 years between policy and the effect of those policies?

Lies, damned lies and statistics - eh?
- Kenneth Almquist Jun 24, 2016
  
  @Micheal
  Binder and Watson don't specifically test the idea that a better performing economy benefits Democratic candidates, but they do investigate (and reject) the hypothesis that the economy performs better under Democrats because of economic condidtions when Democrats are elected President. They also mention a bunch of research that shows that an improving economy prior to an election benefits the incumbent party. I don't know of any finding that an improving economy benefits the Democratic candidate.
  
  The real problem with all this is the one Russell Almond notes: "the real probability he should be calculating is not the probability of this event occurring 4 times in a row, but rather the probability of it occurring 4 times in a row given that Frankel noticed it." There seems to be no way to calculate the probability he should be calculating, and without that there is no way to rule out the possibility that superior performance under Democratic presidents is a random fluke.
  
  The really solid conclusion we can draw from Binder and Watson's analysis is that the data *don't* support the claim that Republicans are better for the economy than Democrats. To hear some Republicans talk, you would think that Democrats, with their "job destroying" policies, bring economic disaster. But the data say otherwise.
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- Steve Hurst Jun 22, 2016
  
  @Micheal
  I think you could be right. In the UK some think that when things get tough the Conservatives get the vote, then when they ease the other side, Labour, get voted for. It got a bit confusing when both sides tried to take the middle ground and you could barely seperate policy. There is also a general rule that employment uptick lags 3 years behind economic uptick
  A new reply to this comment has been posted.
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民主党真的对美国经济更好吗？

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