Democrats, Republicans, and the Economy

Courtesy of Dani Rodrik, one of the best development economists in the business:

This chart comes from Princeton political scientist Larry Bartels, and looks at how average annual real income evolves during the four years of a presidential term, by income distribution quintile. The picture is stark, so stark that Rodrik refers to it as “the most telling picture about the U.S. political economy I have ever seen” (and you can be sure that Dani has seen a lot!). When a Republican is in power, the gains are skewed heavily toward the rich, and indeed, how you do depends on where you sit on the income distribution scale. The difference is 1.5 percent a year between the bottom and top quintiles. In contrast, the poor do comparatively better under Democratic administrations, but the fruits of economic growth are broadly shared. And here’s the clincher: every income group, including the rich, do better under Democratic presidencies.

Now, Bartels’ analysis is quite careful. He shows that this is not the result of Democrats simply coming to power in more favorable economic circumstances, or of Republicans cleaning up the mess after a Democratic presidency. This is real. It fits with what I have been trying to emphasize on this blog in the context of Catholic social teaching, including how workers are increasingly being left behind and how the so-called “Reagan revolution” was largely a myth.

But we have an unanswered question. If Democrats are simply better for the economy across the board, why do people vote Republican? Clearly, things like culture and foreign policy play a role, but we can’t avoid the assumption in many circles that Republicans are good economic shepherds. Except they aren’t, and never really have been, in the postwar era anyway.