American Economy: What Has Conservatism and Progressivism Done For America? - Short View (updated 4-2-16) [159*239]
Yet Another Way to Look at the Difference Between Political Philosophies
I POSTED SOME COMPARATIVE NUMBERS on my most popular hub, What has President Obama Done Right in Three Years? LOTS!, to show what has transpired from when President Obama took office until now. Also, I prepared a hub a few weeks ago titled, Comparing 12 Quarters Of President Obama With His Predecessors ... Not Too Bad, Considering, which is similar to this one, but considers many past presidencies over a much longer time period.
Those two hubs gave me the idea for this hub, which will offer a series of before-and-after charts; large ones so that you can read them. By design, this hub considers the 3-years leading up to the Recession and the 3-years following it. The purpose for using this time frame is two-fold. One is to show that in spite of the political ads swamping America during the Obama Presidency arguing the opposite, President Obama's record of achievement in bring the country back for the edge of depression shines in comparison to the Bush record for the same number of years that brought America into the worst Recession since 1937.
The other purpose was to show that President Obama began his presidency in the worst economic and social condition since 1933. Conservatives, and their libertarian billionaire backers, want to either minimize or have you forget altogether this fact as they bash him for the anemic recovery which America experienced the first several years after the recession. Problem is, the public Conservative agenda to destroy Obama involves not letting him do his job helping America recover from the economic crisis their policies left us in. As I said, no president in history, save for FDR, started from so deep a hole in terms of a collapsing economy and an on-going and accelerating job loss record left them by their predecessor as President Obama.
The following story supports the above allegations.
ECONOMIC INDICATORS - GROWTH
ONE OF THE PRIMARY INDICATORS BEING BANDIED ABOUT TODAY is economic growth as measured by % annual change in Gross Domestic Product (GDP). The conservatives complaint is that President Obama hasn't done enough to "grow" the economy; that his plan has failed or that he had no plan at all; Conservatives say that America should go back to the conservative way of doing things. This is what Chart 1 and Chart 2 would like you to consider.
Chart 1 provides a picture of President George W. Bush's two terms in office. The last 12 quarters of the Conservative economic plan would be 2006 Q2 to 2009 Q1 (President Bush owns 2009 Q1 because President Obama, or any other President for that matter, has no effective control over the economic output of the first quarter of their presidency). Besides showing the ups and downs of the quarterly growth rates, expressed in terms of annual percents, I also included three GDP numbers for comparison purposes, the first one at the beginning of the period under consideration, the second one is the high point in Bush's presidency, and the third one is his low point.
Chart 2 presents the first 14 quarters of the Democratic (Progressive) plan. The two GDP numbers, which are in constant 2009 dollars, btw, are the low and high points (to date) for President Obama's 14 quarters.
The dip in 2014 Q1 is a result of one of the worst winters in the Midwest and East coast seen for decades. It was followed by two very strong quarters.
LET US COMPARE
INDEPENDENTS, SINCE YOU ARE THE MOST IMPORTANT PEOPLE IN AMERICA right now, I hope you taking this hub seriously for it you make the wrong choice come November, America could be in serious trouble.
Keep in mind the conservative's arguments are 1) their economic system works better and 2) President Obama has failed to pull America out of the recession. Are these assertions true? What do the two charts tell you?:
- (Keep in mind,
- -- in 2006, Bush had a totally Conservative Congress, and in 2007-2008, nothing passed Congress that the Conservatives didn't want passed.
- -- in 2009 - 2010 Obama had a veto proof Democratic Congress, and in 2011-2012, nothing passed Congress that the Conservatives didn't want passed plus, Conservatives had vowed to stop President Obama from achieving anything at all including fixing the economy
- In the first 13 quarters presented
- -- Conservative economics managed one quarter of 4% growth or more while President Obama had two such quarters
- -- Conservative economics managed six quarters of growth between 1% and 4% compared with nine.
- -- Both President Obama and Conservative economics produced two quarters of near 0% economic
- -- and only Conservative economics had four quarters of negative economic growth, two of which were -8.9% and 5.3%, respectively; the worse America has experienced since 1937.
The final two points I want to make are these:
- I can repeat Chart 1 over 20 more times during the period of American history when Conservative economics was dominant. I cannot come up with one chart that is as bad as Chart 1 when Progressive economics was dominant, not one! I am not blowing smoke or making hyperbole, if you don't believe me, and have the time, read A Short History of American Panics, Recessions, Depressions: Why Conservative Economics Can't Work , soon to be out in paperback ... really.
- Conservatives have been unabashedly working, since 1981, to re-implement their economic philosophy; they have made no secret of that, they aren't now. Over the almost 30 year period, Conservatives have worked hard to dismantle the regulatory barrier put in place after the Great Depression to protect Americans from just the type of catastrophe that began occurring Jan 2006 with the reversal in home prices and construction, and then brought down the world in 2008. They completed their task in the early 2000s; after that, it was only a matter of time before America returned to the bad times of the 1800s
ECONOMIC INDICATORS - STOCK MARKET
THE STOCK MARKET IS OFTEN KNOWN AS A "LEADING" indicator of economic times to come. This is so because people who buy and sell stocks are betting on what they believe the future holds for both an individual company and the economy as a whole. As a result, once the stock market, generally viewed through the popular Dow Jones Index of 30 "blue chip industrial" stocks, has established a long-term trend in one direction of another, the economy almost always follows suit.
There is an exception to this theory, however. There are times when the economy flattens out or turns down first, but the stock market keeps on sky-rocketing; this happened between Jan 2006 and Sep 2006. It also happened before the Crash of 1929 and before almost every other "bubble" which led to a major recession or depression in America's history. Conservatives might point to the "Tech bubble" of 2000 and observe that this "pop" led to only a minor recession and they would be right; that is why I say "almost"; there are always exceptions to the rule, but there aren't that many. There are two common factors to most of these major "bubbles", 1) the "bubble" was due to real estate speculation in one form or another and 2) Conservative economics was dominant; never Progressive economics.
OK, let us take a peek.
JUST TO ADD A LITTLE CONTEXT
IT HELP A LITTLE TO KNOW WHAT GOING FROM 2006 TO 2008. The housing market peaked in the 1st quarter of 2006, but credit and fraudulent loans were getting much easier to get and give. This was also the period of the mega-mergers of mega corporations. Even though the economy had stopped growing in 2006, nobody cared nor paid attention; that included the Federal Reserve, the various federal regulatory agencies, the President, and Congress. Those who did notice were State regulators and governments, but when they approached the federal government and its agencies, they were turned away saying the economy is doing exactly what they intended it to do; not to worry. (My source for all of this, btw, is the authorized edition of The Financial Crisis Inquiry Report.)
From very late 2006 through Oct 2008, as housing prices began to fall, and then plummet, the financial markets (a small part of which were Fannie Mae and Freddie Mac) started to sweat and squirm under the declining value of their sub-prime based portfolios. Huge pressure built up as the financial markets, with the help of the Federal Reserve and President Bush, tried to put a bright face on it until, in October 2007, it couldn't be kept under wraps any longer and news of the impending disaster finally hit the mainstream media.
After that, it was a losing battle with corporations trying every gimmick known to man and some that were unknown and still are today, to try to stave off the inevitable. In Sep 2008, the Federal Reserve made the infamous decision to let Lehman Bros. go bankrupt, i.e., no bail out following the conservative economic model. After that, the history is well known, the American and world financial markets imploding and a global depression was on its way.
THE DEMOCRATIC (KEYNESIAN) SOLUTION
KEYNESIAN ECONOMICS SAYS that there are two forces at work in any economy, "microeconomics" aka conservative aka Austrian School aka "trickle down" aka "supply-and-demand" economics and "macroeconomics", which considers things like employment, inflation, and interest rates. Conservatives dispute the need to consider macroeconomics because it has a bit of baggage that comes with it, government intervention in business affairs; with macroeconomics, a laissez-faire economy cannot exist and that is the rub.
It was controlling all three of these "levers" that led to the Troubled Asset Relief Program (TARP) in October 2008. Virtually 100% of economists were convinced that if the financial institution went bankrupt, which they were in the process of doing in late 2008, then that would have frozen all credit and bankrupted most businesses globally leading to unimagined unemployment, hyperinflation, and sky-rocketing interest rates. Most conservatives who were not economists did not believe this senario could happen as supply-and-demand would correct everything; even though it never has throughout American history in these situations.
In the end, TARP worked. In fact, America made an actual profit from the effort and make still more.
Another Keynesian economic program are stimuli, but only when certain conditions are in place. The main two are 1) that the private sector is not hiring, regardless of the reason, and 2) that there is major or massive unemployment. Both of these conditions existed in February 2009. What wasn't available to the incoming Obama administration before he assumed office was the information needed to guage just how much stimulus was needed to put into ARRA which would be passed just a couple of weeks after he was sworn in. The purpose of any stimulus, in terms of macroeconomics, is directed at employment; to infuse enough money into the economy to increase demand enough so that the private sector will start hiring again to replinish decreased inventories; and not, as Conservatives suggest, for the federal government to creat jobs.
As it turned out, the data for the last quarter of 2008, which really became available not too long before ARRA was passed, surprised all the experts in its devastating numbers; Obama's stimulus was going to be short, by half. Unfortunately, by the time the results of the initial stimulus became known to be insufficient, the conservative counteroffensive to stop President Obama was such that future stimulus legislation was impossible.
- Where the markets tops out in 2011 is the beginning of the Conservative-inspiered debt crisis.
- The big drop is July 2011, when the Obama and Conservatives compromise on the debt crisis and agree to the super-committee, which failed in Nov 2011. More importantly, July is when the debt crisis led to the downgrade of America's debt rating.
- The period from July to Dec 2011 is the fight over the budget.
- Dec 2011 is when Democrats and Conservatives failed to reach a compromise and the sequestration fail-safe became a reality giving the market some direction as to what was going to happen.
EMPLOYMENT INDICATORS - FIRST TIME JOBLESS CLAIMS
THIS IS ANOTHER HOT BUTTON FOR CONSERVATIVES; well, the unemployment rate is, but this is related and we will get to the other shortly. First Time Jobless Claims measure Layoffs. the level at which Americans are getting fired by their employers.
Charts 5 and 6 are pretty self-explanatory.
YOU CAN SEE FROM CHART 5 that the business community tried to hold on as long as they could. Layoffs didn't begin to increase until the beginning of 2008, but held off the major increases until the end of the year with the announcement of the Lehman Bros. bankruptcy.
A DIFFERENT LOOK AT GROWTH RESULTS
THIS NEXT TABLE TAKES A LOOK at long-term economic growth during various administrations. Because there are terms of varying lengths, I present two metrics. One is simply total growth in GDP (or projected linear growth) over the eight-year length of a presidency from the 2nd quarter of their term to the 1st quarter that includes the last month of their term. For those Presidents who had less than eight-years, I just did the arithmetic to extend their actual results to eight-years Also, for those periods where one President didn't complete a full-term (Kennedy and Nixon), I combined terms with their successor.
The second metric looks at the annualized growth rate. Between the two metrics, you get a pretty good picture of how each presidential term did relative to the others. The 'P' stands for Progressive and the 'C' stands for Conservative.
THE NEXT TIME YOU HERE CONSERVATIVES COMPLAINING about how bad President Obama has done on the unemployment front, remember this chart. Remember that President Obama's 3-year monthly average 1st time unemployment claims is only 20,000 more that President Bush's 8-year average and that Obama's numbers are now 160,000 claims below Bush's average as well as 60,000 below the 42-year average!
8-YEAR GDP GROWTH (4-year growth)
ANNUAL GDP GROWTH RATE
G. W. BUSH (C-4)
W. BUSH (C-8)
ISN"T THAT INTERESTING! If President Obama continues, his "worst President in history" economic growth record the Conservatives trying to make America believe is true for another 5 years, Obama will have surpassed, Presidents G. W. Bush, W. Bush, and nearly equaled Eisenhower!
Imagine what Obama could have done with a Congress that helped, rather than hindered him?
LONG-TERM VIEW OF CONSERVATIVE vs PROGRESSIVE ECONOMICS
THE NEXT TWO CHARTS DEPICT the relative stability of the two economic systems. The conservative Austrian system was used prior to 1937 and the Keynesian was used after 1937 until 2001, and then again from 2009 on. The height of each spike on the top chart represents the severity of the Panic, Depression, or Recession; and the width its longevity from the economic peak to the following economic trough.
On this chart, only those economic downturns picture is slightly distorted in that those downturns shown prior to 1945 can be generally related to internal monetary or fiscal policy, or simply to boom-bust economic cycles are shown. Depressions and recession caused for other reasons, like wars and turmoil in Europe are not shown. After 1945, all recessions are shown because, if I didn't, no recessions would be depicted until the 2000 tech-bubble and then the Great Recession of 2008. Every other recession you see began because of external events, mainly problems in the Middle East. (to make the two sides comparable, flat-line all recessions from 1945 to 1999, and then compare.)
The bottom chart is the result of a thought I had in tracking how unemployment grows in the lead-up to a major recession or bigger. It turns out, each recession has its own unemployment signature, but the resulting chart was interesting in its own right. The two tall towers on the left are the increasing unemployment rates leading up to an into the two really great depressions in our history. The three on the right are the largest recessions after WW II. The numbers '1' and '2' represent which economic system was at work at the time.
The thing to know when looking at this chart is that virtually all other recessions and depressions prior to the 1929 depression were bigger than the three shown on the right. I can't show unemployment numbers for those because I can't find any past the ones estimated for 1890. Nevertheless, all you need to do is use a little common sense to fill in the blank as to where you would draw those bars relative to what you do see in front of you.
Obviously, what I am trying to get across is that there is a definite, undeniable difference between the conservative and progressive economic systems. The question you have to ask yourself is "Which one would I rather live under?" My choice, of course, is the one with lower unemployment and less volatility, the Keynesian system.
MUCH ADO ABOUT DEFICITS
MAY 7, 2013 - NOW THAT WE HAVE FOUR YEARS IN, let's look at the deficit picture. This has been one of the mainstay arguments for Conservatives; that President Obama has destroyed the economy by running up, presumably for no particularly good reason, the deficit, and therefore the public debt.
Now there is enough data to draw some conclusions regarding how guilty Obama is of these charges. In looking at Graph 4, you will see the shaded blocks, representing each president's time in office, overlap the next presidents election. The reason for this is a new president rarely has the ability to influence the near-term economy and budget, instead, the previous president's policies normally have just as much impact.
Leading up to the Great 2008 Recession, it is clear the deficit had been brought under control during the Clinton Administration; in fact, America experienced its longest sustained period of growth during this time period. Of course, all good things must come to an end and in 2001, the economy softened and the budget surplus shrank a bit.
Then, beginning September 11, 2001, America experienced a series of shocks starting with the attack on the Pentagon and World Trade Center. This was quickly followed by the War in Afghanistan, the War in Iran, and the Bush tax cuts, all of which cost significant amounts of budget dollars. All of this combined wiped out the surplus and left the country with a deficit as large as any experienced during the Reagan-Bush administration.
The housing bubble and merger mania provided enough growth to begin bringing the deficit back down in 2005. This decline lasted until the economy eventually collapsed in 2008 under the weight of all of this artificially growth, speculation, and greed and the deficit skyrocketed. In another hub, I show where about 2/3rds of the 2009 deficit was the direct result of the costs surrounding the recession itself, e.g., unemployment payments.
Notice that in the Obama administration, after the run-up from the recession, the deficit has been in a continuous decline since! In 2013, there is a sharp reduction which, while still an estimate, is pretty much in the bank with actuals from Oct 2012 through April 2013. In fact, for the 2nd quarter, 2013, the CBO is expecting the first quarterly surplus (from April tax receipts) in six years.
If you look past 2017, however, Obama is not out of the woods. The CBO projects increases in the deficit from that point on due to the still unresolved Medicare/Social Security problems.
A SURVEY (POLL) FOR INDEPENDENTS ONLY PLEASE
ONES THAT VOTE FOR THE BOTH SIDES ONCE IN A WHILE, that is. I am especially looking for those who voted Republican in 2010 but hope any Independent will take time out to vote in this survey. (I am hoping any Conservative/Progressive votes will cancel each other out since they are a given.)
What I am trying to gauge with the following two questions is your belief that, despite all of the ads, statements, speeches, etc about how poor a job Obama has done which Conservatives have flooded the airwaves with, 1) President Obama's (the Progressive) approach to running the economy was, in reality, better or worse than that when President Bush was President and 2) whether the Conservatives voted into office in 2010 have had a important role in the economy not improving as much as it could have, keeping in mind their stated political agenda for 2011 - 2012 was to prevent President Obama from succeeding.
Some will say these question are biased, and I suggest they are not. In the first question, if the Conservatives had not "flooded the airwaves" with such messages, and I was being hyperbolic, then the question would be biased, but my phrase is absolutely true and not particularly inflammatory, just accurate. In the second question, if the Conservative agenda to stop Obama from succeeding was a "hidden" agenda, they by saying it was a "stated" agenda would be false and the question would be very biased; fortunately, many Conservatives have made variations of that statement many times in the last two years.
INDEPENDENT VOTERS -
Despite all of the Rhetoric in the last Two Years that President Obama has done a Poor Job with the Economy, do youSee results without voting
239 Independent Respondents:
- Great Job - 98
- Good Job - 98
- So-So Job - 17
- McCain Better - 24
- Not Sure - 5
INDEPENDENT VOTERS -
Do you believe that the Conservative Agenda to Prevent President Obama from Succeeding played an Important role in slowing down the Economic Recovory?See results without voting
221 Independent Respondents:
- YES - 179
- NO - 24
- MAYBE - 13
- NOT SURE - 2
DEMOGRAPHIC SURVEY #1
For those who read this hub, do you think your beliefs line up more closely withSee results without voting
- PROGRESSIVES - 126
- MODERATES - 71
- CONSERVATIVES - 18
- OTHER - 16
DEMOGRAPHIC SURVEY #2
Are youSee results without voting
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