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US Performance Versus Peers

Arkady

Arkady

President
One problem with grading someone's economic performance is accounting for the context the person was working with. For example, if your company shows no growth during the year, that reflects very differently on your CEO if the rest of your industry lost 1/3 of their business in the same period, versus if the rest had banner years. Holding steady looks like a great accomplishment in a setting where most others had catastrophic losses, whereas holding steady looks catastrophic, in itself, in a setting where most others were gaining by leaps and bounds. The same is true in politics. A governor whose state holds steady during a big national recession looks good, whereas a governor whose state holds steady during a huge national boom looks bad. The same thing should be true at the international level. National leaders are also operating against a larger global economy they have little control over, which pushes nations up or down. So, judging them relative to the backdrop makes sense.

Ideally I'd like to do this using GDP numbers, but finding GDP history for dozens of nations and indexing them is too much work, so I'll leave that to a more ambitious poster. Instead, I'll take a rough shortcut and use two comparable stock indexes. One is the S&P 500 -- an index of 500 big publicly traded US stocks. The other is MCSI's EAFE Index -- an index of big publicly traded stocks in wealthy nations other than the US (e.g., Western Europe and Japan). The move of EAFE should give us a feel for how the world in general is doing, and comparing that to the S&P should give us a sense for whether the US is rising or falling relative to its peers. When the EAFE is falling and the S&P is rising, it suggests that investors are very pessimistic, generally, but relatively optimistic about the US's economic future. And when the opposite is happening, it suggests that investors are generally optimistic, but are relatively pessimistic about the US's economic future.

Anyway, here's the performance for each of the last four party eras of White House control (all rates are annualized):

Reagan/Bush: S&P +10.6% EAFE +11.4% Delta -0.8%
Clinton: S&P +15.2 % EAFE +9.0% Delta +6.2%
GW Bush: S&P -6.2% EAFE -3.6% Delta -2.6%
Obama: S&P +16.6% EAFE +7.5% Delta +9.1%

Takeaways: In each Democrat-led era, the US outperformed its peers. In each Republican era, our peers outperformed us. The best performance, in the global context, has been on Obama's watch.

That last point shouldn't be surprising. Although the recovery in the US has been disappointing, it's been steady, whereas our international peers have been scaring the crap out of investors with currency panics and serious rating downgrades. So, even as money has returned to stocks everywhere (as we move past the global meltdown under Bush), it's a lot more eager to return to stocks in the US.
 
Thank you for your efforts. I, for one, truly appreciate seeing these breakdowns from people far more advanced in their knowledge of things financial and legal than I.

I've seen such breakdowns along UE lines over the years...and save Reagan (I believe), the rate has increased under every R and decreased under every D.
 
OldGaffer said:
Yeah, but none of that changes "beliefs", and that is what Wingers use to determine their state of mind.
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Unfortunately, all my fact-based arguments are probably missing the mark, because facts aren't what drove them into the arms of the GOP in the first place. Other than among the very rich (for whom lower taxes under the Republicans trump just about all other considerations, in their rational self-interest), Republicans are nearly always people who came to the party for emotional reasons -- a sense of cultural identification, fear of change, dislike of foreigners and minorities, dislike of intellectual complexity, etc. I can talk facts at them all day and it won't make a scratch on any of those things. But I'm not good at playing on gut-level reactions, so it's all I've got.
 
Arkady said:
That last point shouldn't be surprising. Although the recovery in the US has been disappointing, it's been steady, whereas our international peers have been scaring the crap out of investors with currency panics and serious rating downgrades. So, even as money has returned to stocks everywhere (as we move past the global meltdown under Bush), it's a lot more eager to return to stocks in the US.
Click to expand...

LeRoy: Many of our international peers have opted for austerity policies which simply don't work, are actually counter-productive, and make getting control of government debt even more difficult.

John Maynard Keynes: The boom, and not the slump, is the time for austerity.

[Oh, and good post, Arkady; very interesting data!]
 
LeRoy: "Dislike of intellectual complexity" is, I would suggest, the central defining characteristic of the Republican Party these days....
 
Arkady said:
One problem with grading someone's economic performance is accounting for the context the person was working with. For example, if your company shows no growth during the year, that reflects very differently on your CEO if the rest of your industry lost 1/3 of their business in the same period, versus if the rest had banner years. Holding steady looks like a great accomplishment in a setting where most others had catastrophic losses, whereas holding steady looks catastrophic, in itself, in a setting where most others were gaining by leaps and bounds. The same is true in politics. A governor whose state holds steady during a big national recession looks good, whereas a governor whose state holds steady during a huge national boom looks bad. The same thing should be true at the international level. National leaders are also operating against a larger global economy they have little control over, which pushes nations up or down. So, judging them relative to the backdrop makes sense.

Ideally I'd like to do this using GDP numbers, but finding GDP history for dozens of nations and indexing them is too much work, so I'll leave that to a more ambitious poster. Instead, I'll take a rough shortcut and use two comparable stock indexes. One is the S&P 500 -- an index of 500 big publicly traded US stocks. The other is MCSI's EAFE Index -- an index of big publicly traded stocks in wealthy nations other than the US (e.g., Western Europe and Japan). The move of EAFE should give us a feel for how the world in general is doing, and comparing that to the S&P should give us a sense for whether the US is rising or falling relative to its peers. When the EAFE is falling and the S&P is rising, it suggests that investors are very pessimistic, generally, but relatively optimistic about the US's economic future. And when the opposite is happening, it suggests that investors are generally optimistic, but are relatively pessimistic about the US's economic future.

Anyway, here's the performance for each of the last four party eras of White House control (all rates are annualized):

Reagan/Bush: S&P +10.6% EAFE +11.4% Delta -0.8%
Clinton: S&P +15.2 % EAFE +9.0% Delta +6.2%
GW Bush: S&P -6.2% EAFE -3.6% Delta -2.6%
Obama: S&P +16.6% EAFE +7.5% Delta +9.1%

Takeaways: In each Democrat-led era, the US outperformed its peers. In each Republican era, our peers outperformed us. The best performance, in the global context, has been on Obama's watch.

That last point shouldn't be surprising. Although the recovery in the US has been disappointing, it's been steady, whereas our international peers have been scaring the crap out of investors with currency panics and serious rating downgrades. So, even as money has returned to stocks everywhere (as we move past the global meltdown under Bush), it's a lot more eager to return to stocks in the US.
Click to expand...

Your well-considered piece hints at an essential "problem" that bedevils ANY Democrat, and will probably continue to do so, for just about ever.

The very simple fact is that given the circumstances around the economic reality extant when Obama took office, his performance on our behalf hasn't just been "not as bad as some say", nor "coulda been worse", nor "adequete". It's actually been...."remarkable" - no two ways about it. And it's been especially so, given that he's not availed himself/us of some of the traditional near term tricks and fixes that might've been at least plausibly available to him - such as massive increases in guvment spending, or fomenting a war, or maybe....huge mortgage subsidies.

IF a GOP president had accomplished what Pres. Obama has, the GOP would now be proudly singing his praises from the rooftops, and calling for his visage to be carved into Mt. Rushmore. Alas....a Democrat can't do that. No Democrat can do that. For to do so, would be to suggest to his "base" that he's satisfied and that things are "good enough", and that he's ignoring/writing off those who still aren't benefitting from the economic improvement.

Sooner or later...Democrats need to find away of overcoming this inherent handicap of theirs. Otherwise, we're doomed to this neverending cycle.
 
LeRoy_Was_Here said:
LeRoy: "Dislike of intellectual complexity" is, I would suggest, the central defining characteristic of the Republican Party these days....
Click to expand...

I think it's a particularly strong factor on the libertarian right. It's like they got frustrated with serious economic discussions, and the hard mental work involved in understanding such a complicated system with any kind of detail, and so they settled on a simple all-purpose rule of thumb that they were apply religiously: less government is always good.

It would be like a gardener who got frustrated with all the considerations that factor into tending a productive garden, and so he threw his hands up and decided he'd do nothing at all, other than to proclaim whatever weeds happened to sprout up on their own as definitionally the best of all possible crops.

I think the dislike of intellectual complexity is somewhat less important among social conservatives, for whom it's more about cultural identification. They don't like people who don't "smell like their kind" for whatever reason (race, color, national origin, religion, hobbies, or what have you). Intellectual complexity factors in there, too, but indirectly -- they react against that complexity not out of direct intellectual laziness on their part, but out of a negative emotional reaction against the kind of pointy-headed wonks who'd care to talk about that stuff in the first place, rather than just "speaking plainly." The minute you get into wonky discussion, you identify yourself in their minds as "the other."
 
LeRoy_Was_Here said:
LeRoy: Many of our international peers have opted for austerity policies which simply don't work, are actually counter-productive, and make getting control of government debt even more difficult.

John Maynard Keynes: The boom, and not the slump, is the time for austerity.

[Oh, and good post, Arkady; very interesting data!]
Click to expand...

Krugman called this one brilliantly. As soon as Europe started turning to austerity, he predicted their recovery (which, to that point, had looked stronger than ours) would go bad. And he was right.
 
Arkady said:
Unfortunately, all my fact-based arguments are probably missing the mark, because facts aren't what drove them into the arms of the GOP in the first place. Other than among the very rich (for whom lower taxes under the Republicans trump just about all other considerations, in their rational self-interest), Republicans are nearly always people who came to the party for emotional reasons -- a sense of cultural identification, fear of change, dislike of foreigners and minorities, dislike of intellectual complexity, etc. I can talk facts at them all day and it won't make a scratch on any of those things. But I'm not good at playing on gut-level reactions, so it's all I've got.
Click to expand...

That post reminds me of this guy:

I can still remember when I first realized how naïve I was in thinking—hoping—that laying out the “facts” would suffice to change politicized minds, and especially Republican ones. It was a typically wonkish, liberal revelation: One based on statistics and data. Only this time, the data were showing, rather awkwardly, that people ignore data and evidence—and often, knowledge and education only make the problem worse.​

http://truth-out.org/index.php?opti...cated-conservatives-deny-science--and-reality
 
The recovery could have been better, but what I'd call remarkable is that we've had any kind of decent recovery when one of the traditional triggers was impossible. In all other modern recoveries, the Fed was able to slash interest rates deeply to spur growth. This time around, though, interest rates were already relatively low when the crisis hit, so that even taking them down to zero wasn't a huge cut. And by the time Obama was sworn in, they were already effectively zero, so there would be little additional monetary stimulus (other than whatever the Fed was able to invent using non-traditional means). Obama was also left with a record deficit, which made it politically very difficult to push through additional fiscal stimulus. It's like Bush left Obama in a collapsed mine, but without the lantern and pick-axe that previous stranded miners had on hand to get out of similar predicaments in the past.
 
Yep, I'm in a similar situation. I can't help myself -- I keep making the wonky arguments, but I've gotten to the point where I understand they won't make a dent.
 
Arkady said:
Yep, I'm in a similar situation. I can't help myself -- I keep making the wonky arguments, but I've gotten to the point where I understand they won't make a dent.
Click to expand...

Reading your posts is still enjoyable for the rest of us.
 
My ramble was less to the specifics of Obama's economic performance, than it was to the Democrats' historic inability to make the case for their own economic acumen. The top-poster uses a specific set of economic indices to make his case. His use of those indices is valid and illustrative. But then, the same Dem vs. GOP case can be made across almost the entirety of the economic empirical record over the last 75 years, yet "the people" seem to remain blissfully ignorant and unaware.

Why IS that? Is it simply because "the people" are stupid and uninterested in the facts? Is it because the GOPs are "liars" who've been successful in misrepresenting the facts? Is it because of the dirty ding-dang "corporate media"?

OR....might the Democrats themSELVES have at least something to do with it? After all....when's the last time you've heard either a Democratic elected, or a Democratic wannabe-elected, actually make the case that he, she, and the Democrats had actually done a GOOD economic job and that they OUTperformed the GOP? We almost never hear that sort of thing from Democrats.

When a GOP achieves 2% economic positivity, he struts to the microphone, pounds his chest, and does himself a little endzone dance around how wonderous and indispensable he is. When a Democrat achieves 10% economic positivity....he slithers up to the microphone with his head hung low....assures everyone as to how disappointed he is in his own pissant performance and promises that he'll try to do better next time.

Now then...the one prominent exception to my rule, MAY be Pres. Bill Clinton. I'm anxious to see what he does at the convention next week. My hope is that the Clinton and the Democrats finally find a way of tooting their horn as it should be tooted.
 
Arkady said:
One problem with grading someone's economic performance is accounting for the context the person was working with. For example, if your company shows no growth during the year, that reflects very differently on your CEO if the rest of your industry lost 1/3 of their business in the same period, versus if the rest had banner years. Holding steady looks like a great accomplishment in a setting where most others had catastrophic losses, whereas holding steady looks catastrophic, in itself, in a setting where most others were gaining by leaps and bounds. The same is true in politics. A governor whose state holds steady during a big national recession looks good, whereas a governor whose state holds steady during a huge national boom looks bad. The same thing should be true at the international level. National leaders are also operating against a larger global economy they have little control over, which pushes nations up or down. So, judging them relative to the backdrop makes sense.

Ideally I'd like to do this using GDP numbers, but finding GDP history for dozens of nations and indexing them is too much work, so I'll leave that to a more ambitious poster. Instead, I'll take a rough shortcut and use two comparable stock indexes. One is the S&P 500 -- an index of 500 big publicly traded US stocks. The other is MCSI's EAFE Index -- an index of big publicly traded stocks in wealthy nations other than the US (e.g., Western Europe and Japan). The move of EAFE should give us a feel for how the world in general is doing, and comparing that to the S&P should give us a sense for whether the US is rising or falling relative to its peers. When the EAFE is falling and the S&P is rising, it suggests that investors are very pessimistic, generally, but relatively optimistic about the US's economic future. And when the opposite is happening, it suggests that investors are generally optimistic, but are relatively pessimistic about the US's economic future.

Anyway, here's the performance for each of the last four party eras of White House control (all rates are annualized):

Reagan/Bush: S&P +10.6% EAFE +11.4% Delta -0.8%
Clinton: S&P +15.2 % EAFE +9.0% Delta +6.2%
GW Bush: S&P -6.2% EAFE -3.6% Delta -2.6%
Obama: S&P +16.6% EAFE +7.5% Delta +9.1%

Takeaways: In each Democrat-led era, the US outperformed its peers. In each Republican era, our peers outperformed us. The best performance, in the global context, has been on Obama's watch.

That last point shouldn't be surprising. Although the recovery in the US has been disappointing, it's been steady, whereas our international peers have been scaring the crap out of investors with currency panics and serious rating downgrades. So, even as money has returned to stocks everywhere (as we move past the global meltdown under Bush), it's a lot more eager to return to stocks in the US.
Click to expand...

A good source of that GDP data is http://www.tradingeconomics.com/ Particularly since it has nice tools to slice and dice that data.

Secondly on the S&P or DJIA This is not particularly a new approach. ITs been done all the way back to the Great Depression, and if you think about it we had 44 years of Dem WH control and 42 years of GOP..

And if you run the numbers - the CUMULATIVE is that the Dems are abou 30% better for the economy than the GOP is.
 
worldlymrb said:
Isn't it amazing what govt can do w/o a budget and unlimited credit?
Click to expand...

As you'll remember, in the Bush years we went from a record budget surplus to a record budget deficit. And yet, despite that, we badly underperformed our international peers. So, apparently it takes more than just spending on credit.
 
I agree that Democrats have a lot of trouble making their case. I'm not sure exactly why that is, but I suspect it may have to do with the left's comfort with nuance/discomfort with oversimplification, versus the right's comfort with oversimplification/discomfort with nuance. That gives Republicans a natural kind of message discipline. They see the world in black and white, so it's easy for them to make an untroubled case that their guy is great and the alternative is a nightmare, whereas those of us in the left can't resist muddying our rhetoric with inconvenient facts.

As for Clinton's success, I suspect he got some of that rhetorical flourish from James Carville. If you read his book "We're Right, They're Wrong" it's a master class in how to brag up your own side's accomplishments while tearing the opposition to shreds.
 
degsme said:
A good source of that GDP data is http://www.tradingeconomics.com/ Particularly since it has nice tools to slice and dice that data.

Secondly on the S&P or DJIA This is not particularly a new approach. ITs been done all the way back to the Great Depression, and if you think about it we had 44 years of Dem WH control and 42 years of GOP..

And if you run the numbers - the CUMULATIVE is that the Dems are abou 30% better for the economy than the GOP is.
Click to expand...

Thanks, D. If you were up for crunching the GDP numbers (which is still going to be a lot of work), I'd love to see it.
 
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