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Originally Posted by California Tanker
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Gawd I hate stupid people. There are reasons why economists shouldn't dabble in politics. (Stupid people = the author of this article, not California Tanker, who is himself very bright and wellspoken).
What we have here is the author, Jim McTague, doing some GOP cheerleading in an investment magazine, designed to hearten conservatives who, like IRON MAN, don't give a shit about the country as long as they make money.
McTague even gives the reason why his analysis is wrong:
It's true that our formula isn't foolproof. In 1958, 1974 and 1994, the wave of anti-incumbent sentiment was so strong that money didn't trump voter outrage. We appreciate that voters in 2006 are hopping mad at the GOP because of the war and because of scandal. We just don't agree that the outrage has reached the level of those earlier times. The reason is that the economy in 2006 is healthier. And the economy is the only other factor that figures in our analysis.
But then tries to tell us that the reasons for the past failure of his model don't apply to the 2006 election - but in reality, they do apply:
In 1958, in sharp contrast to now, the country was in a deep recession. Though the Democrats controlled the House, voters blamed their pain on Republican President Dwight David Eisenhower, and it cost the GOP 48 seats.
Note how McTeague sets up the comparison here. "Though the Democrats controlled the House, the voters blamed the President..." as if that control of the House somehow meant that no recession should exist. And, that voters ought to direct their anger at the House. Two points:
a. the role of the Senate; and
b. the fact that the president, especially a popular one such as Eisenhower, uses his office as the bully pulpit for policies he wants to see carried out
The fact that McTeague ignores/skips both (a) and (b) in setting up his accusation against the House and the Democrats is revealing of his pro-business, money at all costs attitude.
No, the voters blamed Eisenhower for unemployment
precisely because he *was* to blame. From the US Dept of Labor:
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The Eisenhower Administration did not reject training for combating unemployment. The experience of unions, industries and state governments indicated its effectiveness. But the philosophy of limited governmental intervention prevented the White House from usurping control of both state and private programs or even competing with them. The fact that these activities existed without federal assistance meant to some that the situation did not require additional legislation.45 Eisenhower's economic advisers believed that monetary policy and over-all economic growth was a better approach to the unemployment problem than concentrating on specific areas or industries. The White House's emphasis on tight fiscal policy promoted federal reliance on existing labor market programs (e.g. UI, USES) to cushion the hardships of unemployment rather than initiating new spending programs.
The Eisenhower policies came under severe attack. Reacting to the increasing numbers of unemployed constituents, Democratic leaders attacked the White House as the chief cause of the economic malaise. The JEC, composed of a majority of Democrats, attacked the Administration's preoccupation with price stability and inflation. Since the end of the Korean War, these critics claimed, the restrictive monetary policy served to reduce employment in manufacturing.46 Had the government expanded its fiscal policy, the committee charged, the overall growth rate could have been higher and unemployment lower. While Democrats shared the Eisenhower-Burns concern with curbing inflation, they rejected the sacrifice of growth to gain stability. Moreover, they believed that the neglect of an active manpower policy limited the productive capacity of the economy.
National dissatisfaction with the limitations of "fiscal orthodoxy" became clear in the 1958 election, where unemployment was the chief issue. The Democrats gained 12 seats in the Senate and 49 in the House, all previously held by Republicans. But positive action from the Democratic leadership did not immediately materialize. Labor leaders, especially, were disenchanted when the new Congress failed to pass an emergency extension of UI benefits.47
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Moving along to the next broke-dick analysis:
In 1974, a Watergate year, inflation and an Arab oil embargo pinched household budgets and helped fuel voter anger at Republicans.
1. The Arab oil embargo was started as a response to US support for Israel during the Ramadan War in October of 1973. By the time of the Nov 1974 elections, the Arab oil embargo had been run its course, and had ended six months earlier (as of March 18, 1974). The US had 13 months to adjust to the new prices. Anger at the price hike was directed at OPEC and the Arabs, not at the Republicans.
2. Notice how McTeague utterly fails to mention the fact that the Republican President, Richard Nixon,
was embroiled in the Vietnam war, appeared to be losing that war, and no end of US involvement was in sight. Probably the single largest element in getting Nixon kicked out of office, and McTeague misses it. Is it because he's just a crappy historian? Or because he realizes that Bush is in a similar position as Nixon, with Bush's Iraq war?
3. And finally, notice how McTeague hurries past the sleaze factor, instead of focusing on it. HE doesn't seem to get that Watergate was to the GOP in 1974 what Foleygate is to the GOP in 2006.
On to 1994:
In 1994, though the economy was improving, unemployment was above 6% and personal income began to fall in the quarter prior to the election, souring the mood of the electorate. People blamed their pain on high taxes, which they associated with Democrats, and ushered in Newt Gingrich & Co.
Nonsense on both counts.
1. A one-quarter change in personal income is not going to impact the voters at the polls. The average person isn't even *aware* of a one-quarter decline - not only because they don't feel the impact that quickly, but also because the economic data tends to be published with a lag of at least 1 or 2 months. The fact that McTeague focused on that obscure fact shows that he is either:
(a) out of touch with what the average voter is worried about, or
(b) he runs with affluent circles where tracking such minutiae is part of doing the daily business.
2. People did not blame their pain on high taxes. They blamed it on a lagging economy.