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Part 2: Party Performance and GDP
One of the hallmarks of the American experience has been our sustained economic
growth. The causes of this growth have been many and varied. Some would argue
that much of this growth has little to do with the party that occupies the White
House. Certainly, the individual contributions of millions of red-blooded American
workers explain a substantial proportion of this growth along with the talents of
hosts of entrepreneurs and managers. Clearly, the effective uses of capital
equipment and financial resources have also been key factors.
Of unique relevance to presidential campaigns, however, is the unique
contribution of public policy to our continued economic growth. Clearly, it would
seem that if one party implemented policies that were superior to the opposing
party, then the annual growth in real (adjusted for inflation) value of goods and
services produced should be greater on average than its competition.
In recent decades, the Republican Party has been the most vocal of the two parties
in claiming to be the party of business. As expected, a gaggle of party candidates,
philosophers, pundits and surrogates are quick to proclaim that the GOP is the best
party to promote business growth with all of the conviction of Middle Age
philosophers who debated how many angels could dance on the point of a needle.
If the Republican view is correct, then it would stand to reason that the annual
change in gross domestic product adjusted for inflation (commonly known as real
GDP), would be higher in the years that Republican Presidents were in power than
during Democratic rule. Since the change in real GDP is a publically available
number, then putting the proposition the Republican Party's policies encourage
the economy to grow can be easily put to the test.
Using the official government change in Real GDP data from 1950 to 2006
(http://www.bea.gov/National/Index.htm), I performed a simple statistical test to
see if there was a statistical difference between the two parties. I chose 1950 to
start the series because it represented the approximate beginning of the post-war
era that economists have made famous. It is a common starting point because
WWII distorted the economy sufficiently that inferring from that period would
likely give us a distorted view. I stopped with the 2006 datum since that was the
last full year that data were available. I used the annual change in real GDP
instead of total GDP to minimize the effects of a generally rising curve, which
would favor more recent presidents than former presidents.
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