AOL Money & Finance

If you like rising incomes, higher stock prices and economic growth, vote Democratic

More

The New York Times reports that a new book -- Unequal Democracy by Larry M. Bartels, a Princeton economics professor -- contains statistics that demonstrate an important historical pattern -- the U.S. economy does better under Democratic presidents than under Republican ones. That is, the last eight years -- in which the median income shrank while consumer prices rose -- is just an extreme example of the economic impact of Republican presidencies.

And based on statistics from Forbes, the stock market also does better under Democratic presidents. Forbes "found that the S&P 500 has averaged a total return of 14.1% per year under Democratic presidents since April 1945, and 11.8% under Republicans. The best total returns--17.4% per year--were under Bill Clinton, whose presidency ranked first in economic results."

How much better does the economy do under Democrats? The Times reports that between 1948 and 2007, Gross National Product (GNP) growth per capita was 1.14 percentage points higher under Democrats (2.78%) compared to 1.64% for Republicans. The Times reports "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."

The statistics also reveal that income inequality rises under Republicans. The Times writes "when Democrats were in the White House, lower-income families experienced slightly faster income growth than higher-income families - which means that incomes were equalizing. In stark contrast, it also shows much faster income growth for the better-off when Republicans were in the White House - thus widening the gap in income and median income grows 3 percentage points faster."

What the Times fails to analyze is why enough people have voted against their economic interests to put in power people who make the top 1% much better off at the expense of everyone else.

I'd guess that whatever Republican campaign strategies caused people to vote against their economic interests in the past will likely make November's election close. But I think some voters might like to factor in how much better off they would be if they voted Democratic.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA-0.3010,226.64
NASDAQ-6.332,147.73
S&P 500-1.641,091.44

Last updated: November 10, 2009: 02:32 PM

BloggingStocks Exclusives

Hot Stocks

DailyFinance Headlines

Latest from BloggingBuyouts

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

WalletPop Headlines