The economy has been the major issue discussed in this election season. I don't think there is a single person who doesn't think that our economy needs some improvement. However, the public discussions so far seem to have focused on two things (1) who is to blame for where are now and (2) why the other candidate will result in a wholesale collapse of life as we know it. This is not hyperbole. Read the news, on both sides.
But what influence does the President really have on the economy? Not just in what ways but exactly
how much influence? Throughout history the stance by both parties has been:
- if the economy is bad, it's due to issues beyond the control of the President or government
- if the economy is good, it's because of their programs and policies which have had sweeping influence
Our critique of the candidate views on the economy should acknowledge what is actually within their power to change. It just doesn't make sense to congratulate either party for saying that they will do things that legally they just can't and it also just doesn't make sense to hold a person or a party accountable for problems that they don't have the power to fix directly.
I’ve read/listened to a few interesting articles and podcasts recently that all agree that the President has limited power over the economy. Limited. Not none, but let’s be careful how much blame or hope we put on either one of these candidates to fix everything. One article said that the most influence the President really has is as a spokesperson or cheerleader, not in the actual money spent or policies enacted. The President’s speeches and positions can inspire or set the tone for the rest of the economy (businesses, individuals) to react positively or negatively.
ReplyDeleteHere are some excerpts and links:
From a Washington Post story (http://www.washingtonpost.com/business/economy/2012/01/13/gIQAvsjQxP_story.html)
“…Romney’s campaign also asks us to believe that every job created in Massachusetts while he was governor was Mitt Romney’s doing…George W. Bush, who was president during Romney’s governorship, gets no credit for the jobs created in Massachusetts during his administration…The Obama campaign isn’t much better. It wants credit for every job created, but not for every job lost…Gov. Rick Perry’s campaign, meanwhile, assigns Obama responsibility for every job lost nationwide, but Perry gets credit for every job created in Texas. Neat trick…To buy much of this requires that you hold deeply ridiculous beliefs about the American economy. You must believe that Obama bears responsibility for events that predate his presidency and deserves applause for the demand created by aging cars and worn-down machinery. You must believe that Congress…bear little or no responsibility for the economy, but that the president is the primary driver of job creation…You also must renounce belief in Christmas — or at least its influence on the consumer-driven economy.
..But it would be even better if voters had a consistent benchmark for judging a president’s performance…So I put the issue to an exclusive club of economists. And I asked each the same question: How much of national job creation during a presidency can we properly attribute to the president?.. “Very little,” wrote Harvard’s Martin Feldstein who led the Council of Economic Advisors (CEA) under Reagan…Laura D’Andrea Tyson, a Berkeley economist who served under President Clinton, emphasized the need to consider timing in our evaluations. “There are significant lags between the time a President proposes a policy, the time it is enacted by Congress and the time necessary for it to take effect”…Greg Mankiw, a Harvard economist who served as CEA chair under George W. Bush, “Randomness is a fact of economic life,” Mankiw wrote, “and it would be a mistake to judge a president by the economic outcome during his administration.”
From a Freakonomics Podcast titled It’s Not the President Stupid (http://www.freakonomics.com/2012/03/08/it%E2%80%99s-not-the-president-stupid-a-new-marketplace-podcast/)
“This segment focuses on the president’s influence over the economy — which, if you believe polling data, will be the central concern for many voters as the 2012 election unfurls… Austan Goolsbee, the University of Chicago economist who has served President Obama as both campaign adviser and chairman of the Council of Economic Advisers:” … most all of the economy has nothing to do with the government.” I asked Donald Rumsfeld about parallels between the roles of president and CEO of a company (a role Rumsfeld himself has held). His answer was most interesting:”… Well, they’re really very, very different, and being good at one doesn’t suggest that one would necessarily be good at the other.”