October 21, 2008
Yeah, But What Have You Done for Me Lately?
For a long time now it has been obvious that Democratic administrations, historically, are better for the economy than Republican ones. Why hasnít the peasantry noticed, then? Why do so many of the chickens vote for Colonel Sanders?
Kevin Drum of The Washington Monthly has an intriguing answer: that GOP presidents are able to pass anti-inflation measures and hand out money to their rich friends most easily during their first year, when their political power is at its peak.
These measures do nothing for the rest of us, of course. However:
Republicans, by contrast, tend to focus their honeymoon period on tax cuts for high earners and inflation-fighting measures. This may produce poor economic results on average, but it turns out to be timed to briefly produce a spike in activity three years in the future.
Posted by Jerome Doolittle at October 21, 2008 06:52 PM
Add in some extra generous spending just before election years and a possible partisan boost from the Fed (research by University of Texas economist James K. Galbraith suggests that, controlling for economic conditions, the Fedís monetary policy during election years is looser for Republican presidents than for Democrats), and you get consistently great economic performance during campaign seasons.
"you get consistently great economic performance during campaign seasons."
Oops, that didn't go as planned this time, did it. Bummer.
Maybe so, maybe not. There's the pesky Kondratieff Long Wave theory that I am told by the publisher of Complexity Digest that we are entering or have entered the "winter" phase of. Don't laugh, it's being discussed seriously in European economic circles by someone who I've promised to not name in blog posts. He claims to be a "closet Kondratieff enthusiast".
Although he didn't say anything about mentioning something about him in comments, so I added a clue about who I'm talking about in the early part of this comment for those who don't know think I know what I'm talking about.
But for those who are the curious sort, go read the clue and then catch the closet Kondratieff latest video post and then go into his video post history to hear the video introducing the theory.
If you believe in the theory, Allen Greenspan threw the current winter wave off with his crazy interest rate reduction decrees, in my opinion, in order to see Bush get reelected. (which essentially validates what Kevin has written).
And the man who I am talking about, who does have some serious credentials and a hardy and hearty distaste for the Bush Administration is quite serious about this Kondratieff stuff, even if up to now he's been a closet enthusiast for Kondratieff economic cycles.
Nikolai Dmitriyevich Kondratiev was executed by a Stalin firing squad in 1938. He was an economist who theories didn't make Stalin happy when Stalin realized the theory predicted that the depression in the US was going to end.
But don't take any solace in that. The Kondratiev winter is supposed to here now.
I've been one of the many in the US who have for years been laughing at what I thought were wild theories, like global warming and that oil was running out, and look where that's gotten me and the country. Maybe this Kondratiev theory has legs. We'll find out soon enough. And maybe it's something we don't want to know anyway.
Incidentally, there are two alternate English spellings for the man's name. Kondratiev and Kondratieff
And if you read Harry Truman's Whistlestop tour speeches, what Kevin said has been known to the world at least since the late 1940's.
But let's don't get into a discussion on national security. I don't want to ruin Harry's good name.