by Adam Hartung
There was a time, before primaries, when each party’s platform was really important. Voters didn’t pick a candidate, the party did. Then voters read what policies the party planned to implement should it control the executive branch, and possibly a legislative majority. It was the policies that drew the most attention – not the candidates.
Digging deeper today than shortened debate-level headlines, there is a considerable difference in the recommended economic policies of the two dominant parties.
The common viewpoint is that Republicans are good for business, which is good for the economy. Republican policies – and the more Adam Smith, invisible hand, limited regulation, lassaiz faire the better – are expected to create a robust, healthy, growing economy. Meanwhile, the common view of Democrat policies is that they too heavily favor regulation and higher taxes which are economy killers.
Well, for those who feel this way it may be time to review the last 80 years of economic history, Bob Deitrick and Lew Godlfarb have done it in a great, easy to read book; “Bulls, Bears and the Ballot Box” (available at Amazon.com) Their heavily researched, and footnoted, text brings forth some serious inconsistency between the common viewpoint of America’s dominant parties, and the reality of how America has performed since the start of the Great Depression.
“Reason and facts are sacrificed to opinion and myth. Demonstrable falsehoods are circulated and recycled as fact. Narrow minded opinion refuses to be subjected to thought and analysis. Too many now subject events to a prefabricated set of interpretations, usually provided by a biased media source. The myth is more comfortable than the often difficult search for truth.”
Senator Daniel Patrick Moynihan is attributed with saying “everyone is entitled to his own opinion, but not his own facts.“ So even though we may hold very strong opinions about parties and politics, it is worthwhile to look at historical facts. This book’s authors are to be commended for spending several years, and many thousands of student research assistant man-days, sorting out economic performance from the common viewpoint – and the broad theories upon which much policy has been based. Their compendium of economic facts is the most illuminating document on economic performance during different administrations, and policies, than anything previously published.
The authors looked at a range of economic metrics including inflation, unemployment, corporate profit growth, stock market performance, household income growth, economy (GDP) growth, months in recession and others. To their surprise (I had the opportunity to interview Mr. Goldfarb) they discovered that laissez faire policies had far less benefits than expected, and in fact produced almost universal negative economic outcomes for the nation!
From this book loaded with statistical fact tidbits and comparative charts, here are just a few that caused me to realize that my long-term love affair withMilton Friedman‘s writing and recommended policies in “Free to Choose” were grounded in a theory I long admired, but that simply have proven to be myths when applied!
- Personal disposable income has grown nearly 6 times more under Democratic presidents
- Gross Domestic Product (GDP) has grown 7 times more under Democratic presidents
- Corporate profits have grown over 16% more per year under Democratic presidents (they actually declined under Republicans by an average of 4.53%/year)
- Average annual compound return on the stock market has been 18 times greater under Democratic presidents (If you invested $100k for 40 years of Republican administrations you had $126k at the end, if you invested $100k for 40 years of Democrat administrations you had $3.9M at the end)
- Republican presidents added 2.5 times more to the national debt than Democratic presidents
- The two times the economy steered into the ditch (Great Depression and Great Recession) were during Republican, laissez faire administrations
The “how and why” of these results is explained in the book. Not the least of which revolves around the velocity of money and how that changes as wealth moves between different economic classes.