The NY Times & Obama: Blindside Economics
On August 30, The New York Times ran an interesting story entitled "Is History Siding With Obama's Economic Plan?" and reviews a book called "Unequal Democracy" by Larry Bartels.
Princeton economist Alan Blinder writes, "Many Americans know that there are characteristic policy differences between the two parties. But few are aware of two important facts about the post-World War II era...Understanding them might help voters see what could be at stake, economically speaking, in November."
(In full disclosure, Mr. Bartels is a colleague of Mr. Blinder at Princeton -- something the NYT doesn't explicitly state.)
"Data for the whole period from 1948 to 2007, during which Republicans occupied the White House for 34 years and Democrats for 26, show average annual growth of real gross national product of 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats.
"That 1.14-point difference, if maintained for eight years, would yield 9.33 percent more income per person, which is a lot more than almost anyone can expect from a tax cut...But Professor Bartels unearths a stunning statistical regularity: Over the entire 60-year period, income inequality trended substantially upward under Republican presidents but slightly downward under Democrats, thus accounting for the widening income gaps over all."
It isn't until the end of the story that Blinder says this: "The sources of such large differences make for a slightly complicated story." Or this: "Beginning with the Reagan presidency, however, growth differences are smaller and tax and transfer policies have played a larger role."
Or bringing up that levels of education account for the largest discrepancies in income levels -- not who's in the White House.
I think if Mr. Blinder had contacted an expert at Princeton in income inequality, he may have had a more balanced perspective on the issue. Then, Blinder may put his focus on which candidate provides the better education program rather than which group benefits under a Republican or Democratic presidency. Then again, Mr. Blinder thinks that the Clinton years were "whiz-bang," while simultaneously omitting that the Republicans were in control of Congress.
This is the problem during an election year: you get the facts as they are spun around a serious political bent. The trick is to lay bare the actual economic plans that the candidates are promising versus the hyperbole the campaigns are putting out. It isn't easy, but history teaches us this is the best lesson for making a decision. Just like investing, do your homework and you will be rewarded.