Predictably irrational may indeed be bad enough

Fantastic study about average voter behavior, from the 2008 Wilson Quarterly (Princeton University’s Woodrow Wilson School of Public and International Affairs).  It adds credence to the idea that BHO may yet play Hoover to Romney’s FDR.

In this piece the author argues that if FDR’s “recession within the depression” in 1937-38 had come a little earlier, he would likely have been a one-term president.

Larry Summers (I think) has similarly argued elsewhere that, but for the looming war, FDR would have lost in 1940 and been remembered for his failed economic policies.

Stephen Moore, in The WSJ Political Diary (email subscription, no link available), argues FDR had to resort to a soak-the-rich strategy in ’36 because (a) he needed the $ and (b) it was his best campaign option since the economy still lagged.  Moore further argues that it was, in fact, FDR following through on those promises to soak the rich that triggered the recession within the depression.  With apologies (and full credit) to the WSJ I’ll cut&paste the relevant section below the jump.

Here’s an excerpt from Bartels’ piece:  From the aforementioned 2008 Wilson Quarterly, Larry M. Bartels in The Irrational Electorate:

While voters are busy meting out myopic, simple-minded rewards and punishments, political observers are often busy exaggerating the policy content of the voters’ verdicts. The prime example in American political history may be the watershed New Deal election of 1936. Having swept into office on a strong tide of economic discontent in 1932, Franklin Roosevelt initiated a series of wide-ranging new policies to cope with the Great Depression. According to the most authoritative political scholar of the era, V. O. Key, “The voters responded with a resounding ratification of the new thrust of governmental policy”—a stunning 46-state landslide that ushered in an era of Democratic electoral dominance.

The 1936 election has become the most celebrated textbook case of ideological realignment in American history. However, a careful look at state-by-state voting patterns suggests that this resounding ratification of Roosevelt’s policies was strongly concentrated in the states that happened to enjoy robust income growth in the months leading up to the vote. Indeed, the apparent impact of short-term economic conditions was so powerful that, if the recession of 1938 had occurred in 1936, Roosevelt probably would have been a one-term president.

It’s not only in the United States that the Depression-era tendency to “throw the bums out” looks like something less than a rational policy judgment. In the United States, voters replaced Republicans with Democrats in 1932 and the economy improved. In Britain and Australia, voters replaced Labor governments with conservatives and the economy improved. In Sweden, voters replaced Conservatives with Liberals, then with Social Democrats, and the economy improved. In the Canadian agricultural province of Saskatchewan, voters replaced Conservatives with Socialists and the economy improved. In the adjacent agricultural province of Alberta, voters replaced a socialist party with a right-leaning party created from scratch by a charismatic radio preacher peddling a flighty share-the-wealth scheme, and the economy improved. In Weimar Germany, where economic distress was deeper and longer lasting, voters rejected all of the mainstream parties, the Nazis seized power, and the economy improved. In every case, the party that happened to be in power when the Depression eased went on to dominate politics for a decade or more thereafter. It seems far-fetched to imagine that all these contradictory shifts represented well-considered ideological conversions. A more parsimonious interpretation is that voters simply—and simple-mindedly—rewarded whoever happened to be in power when things got better.

Stupid? No, just human. And thus—to borrow the title of another current bestseller, by behavioral economist Dan Ariely—-“predictably irrational.” That may be bad enough.

Truman or FDR?

There’s a debate raging in 2011 among political watchers as to whether Barack Obama is campaigning like it’s 1936 or 1948.

In 1936 Franklin Roosevelt won re-election despite a lousy economy by running not on his own four-year record — which featured double-digit unemployment — but by rallying the middle-class and poor against the super rich. It was an us-versus-them message.

Alternatively, Mr. Obama may steal the rhetoric and maneuvers of Harry Truman, who won re-election against Thomas Dewey in 1948 by running against a “do nothing Republican Congress.” It was one of the most successful political turnarounds in American presidential history. Mr. Obama has already shown signs of borrowing from the “give ’em hell, Harry,” theme. He’s railing against Republicans in Congress for not passing a jobs bill and for supposedly putting politics ahead of country.

When Mr. Obama was asked about this, he responded coyly: “If Congress does something, then I can’t run against a do-nothing Congress. If Congress does nothing, then it’s not a matter of me running against them; I think the American people will run them out of town.” Under this scenario, Mr. Obama will try to persuade swing voters that Congress, not the White House, is the source of their frustration and the political failures in Washington.

Merrill Matthews, a scholar at the Institute for Policy Innovation, notes that the historical parallels between what Roosevelt was saying in 1936 and what Obama is saying now are striking. “FDR needed more revenue to support his big-government schemes,” he writes. “He needed a villain to explain why, given the passage of his New Deal legislation, government spending and regulations, the economy was still struggling. So he proposed raising taxes on the rich, which he dubbed a wealth tax.”

Mr. Roosevelt declared in 1935: “Our revenue laws have operated in many ways to the unfair advantage of the few, and they have done little to prevent the unjust concentration of wealth and economic power.” He proposed a 79% tax rate on the rich. Sounds familiar? Mr. Matthews also reminds us that after FDR won that election and raised taxes, the unemployment rate rose to 19% in 1938 from just over 14% in 1936.

My guess is that Team Obama hasn’t decided which of these tactics — blaming Congress or blaming the fat cats on Wall Street — will work best. Maybe the president will try out both messages at once. Even Mr. Obama has acknowledged that this is going to be a different kind of campaign. If “hope and change” is out, don’t be surprised if fear and envy replace them.

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6 Responses to Predictably irrational may indeed be bad enough

  1. Paul Marks says:

    Yes – some people (on both sides) are ideological. But a lot of people just vote on “are things getting better or getting worse”.

    Had Roosevelt been up for election in 1938 (not 1936) he would have lost.

    As for the present time…….

    We all know the credit bubble economy is going to crash – the question is WHEN?

    If the present phony boomlet crashes before November 2012 – then Comrade Barack is toast.

    All the lies of the “mainstream” media (including the entertainment media) and so on, will not be able to win him the election.

  2. Erica Blair says:

    I cannot be so compelled against rich people as I can against politicians. A rich person is more likely to invest their money (adding more credit to banks, allowing more loans to be taken out by people who find themselves in immediate need), start businesses (creating more jobs for people who need or want them), and give to charities (in order to escape public damnation). Politicians are more likely to simply take money from people without producing anything at all, except inefficient programs, many of which end up hurting more than helping the mode man.

    I’m not so worried about Obama. If he remains in office, the house will continue to cock-block his programs. At this point, I tend to think nothing getting done is better than… pretty much everything else. 🙂

    • John says:

      Very well said. And, very well said! lmao.

      “Don’t just do something, stand there!” …with a possible exception made for straightening out the entitlement mess, which is on autopilot to destroying the republic.

  3. Paul Marks says:

    The House has passed 15 Bills designed to reduce unemployment by deregulation (and so on).

    The Democrat controlled Senate will not even allow a vote on them.

    Yet when Barack Obama (finally – after waiting years) sent the (Bush era) Free Trade deals with Korea and Columbia to be ratified by the Senate, the Republican Senators cooperated at once.

    Yet the “mainsteam” media talk about an “obstructionist” and “do nothing”, “Republican Congress”.

    Actually the “free market”, “economically liberal” Economist magazine is perhaps the worst bit of the msm (worst because it pretends to be the opposite of what it is).

    For example, in the latest issue it denounces (the half hearted, a lot more could have been done to defeat the agenda if the Republican leadership had really been totally committed to doing so, and unsucessful) resistance to the Obama agenda in 2009 and 2010 as “Extreme” and “Obstructionist” (those words are actually part of the title of the article).

    It is not “exteme” to support things like the Stimulus Act, Obamacare, and the Dodd/Frank (Obama) Act – all of this ultra big government agenda the Economist magazine (of course) supported.

    But it is “extreme” (and so on) to oppose this agenda – even half heartedly.

    The politics of the New York TImes – with a phony “free market” mask upon it (it is not for nothing that I detest the Economist and the Financial Times).

    Nor are they any different in relation to British matters.

    How supportive is the Economist magazine to people who want to get some powers away from the E.U. (to stop the tidel wave of regulations). “Just Grow Up” (the title of the sneer filled article in the last issue for October) that is a typical reaction from the Economist crowd. Far from supporting nations getting out of the E.U. (and thus removing a layer of government – with its endless regulation power), the Economist (and BBC and…..) do not even support getting any real powers back from the E.U.

    And remember these people are educated in the elite universities – and are the pet media of the political (and financial) elite.

    Our civilization is in real trouble.

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