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)
8-31-2008 @ 11:50AM
Don Burns said...
The point that is missed here is that the GOP president generally needs to spend enormous amounts of money to fix all the screw ups of the Dems. For example, Reagan and GWB both had to re-build our military after Carter and Bubba stripped them.
Of course if you are someone who believes that using our military to protect our way of life is bad, as most liberals do then you should vote for a Dem and start taking Chinese as a second language. Obama is a joke! The strongest part of his resume is that he DID run a lemonade stand back when he was nine-years old and it was successful!
9-06-2008 @ 11:31AM
Dennis said...
This article is utter BS. You cannot take a simple statement like this and make such broad generalizations. As anyone with half a brain knows, the reason democrat presidents "appear" to do slightly better is becuase they are prevented from instituting their policies by the Repubs. It is the fact that government does "nothing" during a democratic presidency that makes things better.
8-31-2008 @ 1:29PM
AEB said...
I find it rather shortsighted that the analysis does not consider the lag time required for major economic policy to have an effect on market conditions. I think one could argue that the policies of the prior president have a more direct impact on economic conditions than the policies of the current president. Structural policy changes take years for their effects to be felt.
8-31-2008 @ 2:41PM
Shaun said...
Wow that's very interesting.
I have heard a few statistics about certain days and months but not about political parties.
If the democrats win well have to see how the economy is affected.
http://www.stocks-simplified.com
8-31-2008 @ 3:43PM
Chris K. said...
Correlation does not equal causation.
Although the Bush administration surely did nothing to avert the housing bubble when times were good, neither did Clinton take any action during the dot.com bubble. Bush got to be in office when both popped, plus deal with the effects of 9/11.
Congress has the power of the purse, anyway. I'm much more concerned about how has control there, and tend to think we are all better off when neither party has total control, as that at least forces everyone to the bargaining table.
8-31-2008 @ 5:26PM
william lindblad said...
I don't think that this is the appropriate place for a political forum - but, since you insist:
"If you like rising incomes, higher stock prices and economic growth, vote Democratic"
Your Title?
Franklin Pierce and James Buchanan, both Democrats, are the start of the "panic of 1857", further Buchanan is considered the worst President to date. For what it is worth, the economic events of 1857 were felt into Washington-- Territory, that is.
(reports - Library of Congress)
Grover Cleveland presided over the 1893 Depression and is the root cause for Labor Day (happy anniversary). It was a concession for ordering troops to shoot striking railroad workers which resulted in a public outcry. Grover was a Democrat and the 1893 depression is only a slight second to the one of the 30's.
Jimmy Carter presided over another economic mess and that is recent enough for most to recall.
While the White House has considerable pull, it does not control everything and as such, the title does not have much merit.
I think this area should remain non-partisan, but since you are beating the drum --
Both the Senate and House finance committees are chaired by Democrats. These committees have control over the U.S. banking system. I assess this as a Democratic failure of monumental proportions.
I am just "one of many" as in e pluribus unum and in the sea of retirees that are going suffer greatly because of this failure.
By the way Peter - If you consider yourself middle class U.S.? Than you will have to thank a Republican as this prospect was first proposed on Sat. April 8th, 1882 in a speech on the House of Representatives floor (yes, they used to work on Sat.).
He was the 1st advocate - it did catch on.