Megan McArdle Has a Question

by cactusMegan McArdle Has a QuestionMegan McArdle has a question:

What happens to the cottage industry among Democratic-leaning armchair economists grinding out analyses proving that Democratic presidents are, like, totally overwhelming for the economy? Presuming that we're stuck--as appear very likely--in at smallest amount a couple of years of really grinding low-to-no growth, Obama is going to destroy their figures. Are we in for a renaissance of belief in exogenous growth factors?Given my co-author and I will have a book out after that day that McArdle and her readers would consider "analyses proving that Democratic presidents are, like, totally overwhelming for the economy" I figure I am fit to respond. (BTW - regular readers of this blog know how hard I have tried to get crossways the not consequently subtle and single would think totally clear point that if single band of sorry oafchucks is less bad for the economy than the previous band of sorry oafchucks, that doesn't in any way entail that the less sorry oafchucks "are, like, totally awesome.")So here is my response: it depends on the motivations of those Democratic-leaning armchair economists, doesn't it? The right is not the only side with its Mankiws and its Sowells. There are plenty of those on the absent too, and they're negative different than their right wing counterparts. They believe that a (D) next some politician's name is short-hand for "that human being is single way otherwise another laudable."But there are others who believe that a (D) is short-hand for something else, that is that the lawmaker usually hews a bit additional closely to a particular set of policies that have worked a little better than the policies adhered to by people who have an (R) after their name. Its not a guarantee of performance.I have noticed that a lot of people who take the second approach have been criticizing Obama's approach even before he took office. I for single have posted (over and over and over) on the foolishness of bailing out the financial institutions that have caused this mess (since when is taking from the poor and middle class and sending to the fabulously rich compatible with the policies that usually define Democrats?), and I've had a a small number of posts noting that Christina Romer was a very poor choice for CEA preside over (Mankiw's backing alone should have been a tip-off even to an important person who never read her "narrative economic history" paper).Sure, exogenous factors do matter. Truman was a Democrat, but the economy was awful for the first a small number of years of his administration; transitioning from WW2 to a peacetime economy ain't easy. And it sucked in 1933 too, which was FDR's first year. This in spite of the fact that annualized, real GDP for each capita grew much faster under FDR than any previous President over the time period for which the BEA computed GDP, even leaving out the War years. Which also indicates something also - the economy might still turn out alright in spite of the a lot of Obama mis-steps. Time will tell.But there are a a small number of previous belongings - for one, you do not have only single (R) otherwise (D) administration to look at. You have likelihood and statistics. (And to forestall the point that inevitably gets brought up once more and once more and once more and again, that's what degrees of freedom are for.)And while negative theory is perfect, the better ones require fewer exceptions. If Obama starts acting like a Democrat and the economy still sucks by the end of his term, that means Democrats have to explain absent Obama and Truman. Republicans still have to explain why Republicans usually do consequently much not as good as when it comes to real GDP for each capita growth rates. The BEA has only been scheming real GDP for each capita since 1929, and yet the most excellent performing Republican, Reagan, is beat out by four Democrats, and all but single of the entire bottom not whole of the sample is taken up by Republicans. Tip to Megan McArdle: nobody can tell you for sure who's going to win after that year's World Cup in South Africa, but betting on Grenada to pull it off is a bad idea.And then there's the question that McArdle herself keeps bringing up - the mechanism. The mechanism doesn't apply if you do not have the right inputs. As I renowned above, Obama has not yet behaved like a Democrat; his policies on the bail-out have been essentially the same as those of his precursor who most certainly was negative Democrat.So in the end, here is what I say to Megan McArdle: ask your question once more when Obama starts doing belongings a Democrat would do. Pushing through the "public option" on a healthcare would be a start.
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