Via Matthew, we have this:
Marginal Revolution: Why the growth rate is important
The importance of the growth rate increases, the further into the future we look. If a country grows at two percent, as opposed to growing at one percent, the difference in welfare in a single year is relatively small. But over time the difference becomes very large. For instance, had America grown one percentage point less per year, between 1870 and 1990, the America of 1990 would be no richer than the Mexico of 1990. At a growth rate of five percent per annum, it takes just over eighty years for a country to move from a per capita income of $500 to a per capita income of $25,000, defining both in terms of constant real dollars. At a growth rate of one percent, such an improvement takes 393 years.
That’s me quoting me, from a book I am just starting to write. The tentative title is “The Welfare Economics of Human Tragedy: A New Approach to the Theory of Economic Policy.”
If I had to explain, in one sentence, the reason I am not on the political left, I would cite the enormous long-run benefits of economic growth. Of course it still can be argued that various left-wing policies, properly understood, will contribute to long-term growth. But in my view, if you are not supporting growth-maximizing economic policies, you better had a pretty good reason in your pocket.
Luckily for Tyler, I happen to have one. Which is that the Left seems to have better policies for maximizing growth.
Dwight Meredith did the math in late 2002, comparing growth under Democrat vs. Republican administrations over the last 40 years. He concluded:
The economy grew in 19 of the 20 years in which Democratic Presidents submitted a budget and in 16 of the 20 years in which Republican Presidents submitted a budget.
For the twenty years for which Republican presidents submitted budgets, the average rate of GDP growth was 2.94%.
For the twenty years in which Democratic presidents submitted budgets, the average rate of GDP growth was 3.92%.
Almost the full percentage point that Tyler was looking for.
Put another way, if the averages held and we had Democrats instead of Republicans for all 40 years, instead of just 20, we’d have economic growth of at least 465% instead of just 385%.*
*Yes, I’m oversimplifying the last bit. I don’t feel like doing the big calculation, which would be to add .98% to the actual performance of each Republican presidential year. But it’s close enough for illustration.
Your argument assumes that the President is responsible for the economy, which is an over-generalization at best. Congress passes the laws that influence the economy. A President can have more or less influence on which laws Congress passes, which makes it difficult to calculate a President’s influence on the economy.
Furthermore, policy changes can take years to become fully manifest in the economy. So even if an Administration influences the economy, that influence is not likely to be realized until the next Administration, or the one after that, is in power.
Your second point has been anticpated and answered: Kevin Drum of CalPundit looked at economic growth by party of the President for the period from 1948 through 2001. He used “lag times” of 3, 4 and 5 years in assigning responsibility for economic performance to a President. In each case, economic growth was higher in Democratic administrations than in Republican administrations.
As for your first objection; folks can’t have it both ways– either it matters who you pick for a President and we should judge on results, or it doesn’t matter and Presidents and candidates shoudln’t try to take credit for when it does good, or claim that they can fix it when it goes bad.
One thing to remember is that Republicans aren’t really free market radicals. Tyler Cowen was arguing for growth maximization, and to an extent for more free market friendly policies. He wasn’t making a direct argument for electing Republican presidents.
As for Kevin Drum’s study – I would be interested in seeing the results if you change the start and end point. What holds for 1948 to 2001 might not hold from with earlier or later points for the start and end dates.