Thursday, July 23, 2020

Sorry Forbes, national prosperity DOES depend on the government

I've touched on this issue before, but a new analysis by Forbes shows with great clarity that the stock markets do much better under Democratic presidents than under Republicans.
The difference is stark: an average increase of 10.6% under Democrats compared to 4.8% under Republicans since the Second World War. The big winners were Bill Clinton (210%) and Barack Obama (182%) while the big losers were George W. Bush (-40%) and Richard Nixon (-20%). Donald Trump is a middle-of-the-pack also-ran, with 43% to date.
Forbes concludes, though, that stock exchange performance merely reflects periods of economic expansion and recession, and is unrelated to the colour of the political party in the White House. This seems disingenuous to me: the economic conditions are generated - not wholly, but to a large extent - by the political decisions of the party in power. This is at least the case with the USA, which is in a position to be able to dictate world events (albeit less so since the Trump administration).
For example, Obama inherited a very shaky economy from George W. Bush, but quickly turned things around by smart decision-making. Trump inherited Obama's strong economy, and managed not to fritter it away too badly over the first couple of years despite some very bad decision-making (of course, then the pandemic hit....) To say that it really doesn't matter who is in power seems somewhat cavalier and indefensible to me.

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