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Over at Dani Rodrik's place, Larry Bartels responds to concerns about his now legendary chart showing higher economic growth, and more equitable distribution of the gains, in Democratic presidencies. First, he dismisses the idea that this is all coincidence. Not only are the results statistically significant, but "the differences appear consistently in the pre-1974 (high growth) and post-1974 (low growth) eras; they persist even when any one or two administrations (or election years, or transition years) are omitted from the tabulations; and they persist even after taking account of a considerable variety of potential confounding factors." That's fairly strong evidence that we're not just seeing the scales weighted by a particularly good Democratic year here.Moreover, he says, "the largest partisan differences in income growth, by far, occur in the second year of each administration." That's interesting, as the administration's first year tends to be the most legislatively successful, particularly on economic matters. That casts tremendous doubt on my hypothesis that the economic conditions are causing the presidential choices rather than the presidential policies causing the conditions.As for the big question, how presidents achieve these effects, Rodrik has some ideas:
Douglas Hibbs did important work along these lines in the 1980s, documenting significant partisan differences in post-war macroeconomic policies. He found that Democrats favored expansionary policies producing substantially higher employment and growth rates, while Republicans endured and sometimes prolonged recessions in order to keep inflation in check. (Not coincidentally, unemployment mostly affects income growth among relatively poor people, while inflation mostly affects income growth among relatively affluent people.) In recent decades taxes and transfers have probably been more important. Social spending. Business regulation or lack thereof. And don't forget the minimum wage. Over the past 60 years, the real value of the minimum wage has increased by 16 cents per year under Democratic presidents and declined by 6 cents per year under Republican presidents; that's a 3% difference in average income growth for minimum wage workers, with ramifications for many more workers higher up the wage scale.As Bartels is the first to admit, this doesn't close the case. But the data is, to say the east, suggestive, and it all points in one direction: That Democratic policies are better for both growth and the distribution of that growth.
