Presidents and the Economy

[Nathan F]

In numerous political science and economics classes I have had, and in various publications, I have read that the economy isn't necessarily to blame on any president. Presidents have only a very little influence, and the economy usually works on it's own. I mean, really, can we really state anything that any president has done that has a huge effect on any economy, besides maybe going to war?

I'm just saying that everyond is screaming over a bad economy and possibly placing the blame in the wrong area.

[Cornelius]

If presidents had no control over the economy, why would they propose economic plans/packages?

1.If these plans get approved and they ruin the economy, then the President is to blame for comming up with the idea, and the congress is to blame for passing the idea right?

[Cornelius]

I guess you can cite Reaganomics.

[RedImperator]

The President, with Congress's cooperation, can screw the economy up, but the best he can do to improve it is to get out of the way. Government in general is not very good at dealing with the economy--in fact, it's not very good at dealing with anything unpredictable and extremely complex. Look at the record of government on things like the environment or social engineering.

[The Dark]

It's really the Fed that "alters" the economy. So, blame Greenspan .

Actually, the reason for the recent shake-ups are easy to pin down. An excessive optimism over dot-com stocks inflated the economy. This caused warning signs for some people, and when they began selling, it caused a successive crash in the stock market (which actually was quite well-handled by the government).

Wars also cause economic problems, as spending is diverted from investment and output to maintaining warfare.

And Red, I'll have to semi-disagree with you here. I agree that currently we haven't studied macroeconomic theory sufficiently to know what to do at every point, but a complete laissez-faire approach is just as bad, if not worse, as the markets are inherently unstable. Indeed, the Sherman and Clayton Acts are probably the only reason the United States didn't undergo a Marxist revolution sometime in the late 1920s or 1930s.

[Joe]

What the government can do to better the economy is fairly limited, but what it can do to destroy the economy is virtually unlimited.

[The Kernel]

In numerous political science and economics classes I have had, and in various publications, I have read that the economy isn't necessarily to blame on any president. Presidents have only a very little influence, and the economy usually works on it's own. I mean, really, can we really state anything that any president has done that has a huge effect on any economy, besides maybe going to war?

I'm just saying that everyond is screaming over a bad economy and possibly placing the blame in the wrong area.

I actually agree with you Nathan, which is precicely why I am NOT voting for Bush. The economy can take care of itself regardless of who is elected President, but social issues, foreign policy and civil rights can be torpedoed pretty easily by those in power (much as Bush has done the past four years).

[The Kernel]

What the government can do to better the economy is fairly limited, but what it can do to destroy the economy is virtually unlimited.

Oh come on Joe, that is theoretically true, but what are the actual chances of that happening? They would have to be intentionally trying to destroy the economy, and even then they would need the assistance of the Fed to do it. When are you fiscal conservatives going to realize that the office of the Presidency really doesn't have much to do with the state of the general economy?

[Joe]

What the government can do to better the economy is fairly limited, but what it can do to destroy the economy is virtually unlimited.

Oh come on Joe, that is theoretically true, but what are the actual chances of that happening? They would have to be intentionally trying to destroy the economy, and even then they would need the assistance of the Fed to do it. When are you fiscal conservatives going to realize that the office of the Presidency really doesn't have much to do with the state of the general economy?

Herbert Hoover's protective tariffs and tax hikes (something even the Keynesians agree that you NEVER do during a recession) arguably helped turn a recession into a global Depression.

[Joe]

When are you fiscal conservatives going to realize that the office of the Presidency really doesn't have much to do with the state of the general economy?

An' another thing, where do you get off lambasting fiscal conservatives for being the only ones to hold this belief? Al Gore practically ran on the fact that the economy was booming during the Clinton years in his 2000 campaign!

[Darth Wong]

Herbert Hoover's protective tariffs and tax hikes (something even the Keynesians agree that you NEVER do during a recession) arguably helped turn a recession into a global Depression.

It would appear that the lesson George W. Bush learned was to get rid of the tax hikes while going hot 'n heavy on the protective tariffs.

[Straha]

If presidents had no control over the economy, why would they propose economic plans/packages?

They propose these plans so that they can look good, and so it seems like they have a plan.

[Joe]

Herbert Hoover's protective tariffs and tax hikes (something even the Keynesians agree that you NEVER do during a recession) arguably helped turn a recession into a global Depression.

It would appear that the lesson George W. Bush learned was to get rid of the tax hikes while going hot 'n heavy on the protective tariffs.

True, true, although the union/big steel pandering in question was nothing compared to the monster that was the Hawley-Smoot tariff.

[Darth Wong]

I'm just saying that everyond is screaming over a bad economy and possibly placing the blame in the wrong area.

It is overly facile to blame George W. Bush for the current state of the economy. However, blaming him for fiddling while Rome burns is perfectly reasonable; in the midst of this situation, the guy is off prosecuting a grudge match against his daddy's enemies and using America's credit card to pay the bills. And in order to keep the folks at home happy, he buys them a big-screen TV, again on the same damned credit card.

[The Kernel]

When are you fiscal conservatives going to realize that the office of the Presidency really doesn't have much to do with the state of the general economy?

An' another thing, where do you get off lambasting fiscal conservatives for being the only ones to hold this belief? Al Gore practically ran on the fact that the economy was booming during the Clinton years in his 2000 campaign!

Granted the liberals aren't any better, but I was more refering to the fact that you (and other fiscal conservatives) seem to support the Republicans almost solely based on their handling of the economy, while disagreeing on social issues. I see it as the President being able to enact far more change on social issues and foreign policy, thus why I vote Democrat.

[The Kernel]

Herbert Hoover's protective tariffs and tax hikes (something even the Keynesians agree that you NEVER do during a recession) arguably helped turn a recession into a global Depression.

Granted, but things have changed considerably since then. Although a President has the ability to take these sorts of actions, it is practically impossible to raise taxes or increase tarrifs during a recession (he MIGHT be able to get away with a tax hike, but it is extremely unlikely).

[The Kernel]

Herbert Hoover's protective tariffs and tax hikes (something even the Keynesians agree that you NEVER do during a recession) arguably helped turn a recession into a global Depression.

It would appear that the lesson George W. Bush learned was to get rid of the tax hikes while going hot 'n heavy on the protective tariffs.

Actually, Bush's tarrifs aren't nearly the extent of those that Hoover indulged in. Most of his tarrifs have been in extremely narrow areas, and although I disagree with them, they aren't widespread enough to make any difference.

[The Dark]

Herbert Hoover's protective tariffs and tax hikes (something even the Keynesians agree that you NEVER do during a recession) arguably helped turn a recession into a global Depression.

Well, yes, Hoover screwed up there. That's largely because the Fed was just created in 1914, and didn't even know exactly what authority they held, and because the empirical study of macroeconomics wasn't really begun until the 1930s.

And what do you mean, "even the Keynesians." The Keynesians were the first to say that that sort of thing would screw up the economy. Classicists (the only other school at the time) thought everything would magically balance itself out. Friedman and the Monetarists generally hold that only the money supply matters (which would have placed them against the tax hike, but also against the tax cuts that later historical evidence shows probably would have helped, since it would have increased the money supply without there really being sufficient inflation to cover it). The Keynesians, post-Keynesians, monetarists, and maybe some neo-classicists (neo-Walrasians) would all be against hiking taxes during a recession. The only ones I can think of who wouldn't automatically be against it would be classicists.

[Joe]

And what do you mean, "even the Keynesians." The Keynesians were the first to say that that sort of thing would screw up the economy. Classicists (the only other school at the time) thought everything would magically balance itself out. Friedman and the Monetarists generally hold that only the money supply matters (which would have placed them against the tax hike, but also against the tax cuts that later historical evidence shows probably would have helped, since it would have increased the money supply without there really being sufficient inflation to cover it). The Keynesians, post-Keynesians, monetarists, and maybe some neo-classicists (neo-Walrasians) would all be against hiking taxes during a recession. The only ones I can think of who wouldn't automatically be against it would be classicists.

I could be wrong, but as I recall there were plenty of economists that had opposed Hoover's depression policies at the time. A hundred of them got together and wrote a letter begging him not to pass the Hawley-Smoot tariff, among other things. IIRC, of course.