In Paul Krugman’s latest, he wants to debunk the idea the Ronald Reagan ushered in a period of unprecedented growth. He uses this chart:
Now this is strange in two ways. First, he’s using productivity growth instead of growth. That’s misleading because most conservatives would claim that Reagan’s supply-side economics promotes labor and (especially) entrepreneurship, not productivity per se (that is: effort, not output per effort).
But more importantly, he lumps Reagan in with Carter, Ford, and some of Nixon and Bush 41! Throw all those guys together and sure, the numbers do look lousy.
Krugman tries to blame the Bureau of Labor Statistics for his poor choice of data:
Here’s one measure that the BLS happens to have put in a convenient chart, so that I’m not choosing the dates.
Ooo-kay. But Krugman did pick the dates by picking the chart. He could have picked a different chart. Or, he could have done what I did and go to the actual data. (Perhaps he did, and didn’t like those results as much.)
Here is Krugman’s contention:
We had an awesome performance in the generation following the war (despite very high tax rates on the rich and a very strong union movement); we had a long period of poor productivity performance that spanned the Ford, Carter, Reagan, and Bush I administrations; we then had a revival during the Clinton administration, but even so not up to postwar standards. By the way, I don’t give Clinton credit for that revival; it was about learning to use technology. But in any case, there is no hint of a Reagan miracle in the data.
Here’s the data, by administration:
- Eisenhower: 1.30%
- Kennedy: 2.56%
- Johnson: 2.37%
- Nixon/Ford: 1.01%
- Carter: -0.01%
- Reagan: 0.65% (1.26% if 1982 is omitted)
- Bush 41: 0.44%
- Clinton: 0.97%
- Bush 43: 1.11%
The average growth throughout the period was 1.22%. So I think we can say that the idea that Reagan opened a period of unprecedented growth is indeed debunked, at least as far as productivity is concerned. But the data don’t support Krugman’s story either. Aside from a boom during the 1960s, productivity has grown fairly steadily at about a rate of 1% per year; a bit lower during Bush 41, and much worse during Carter.
If you delete 1982 (the worst number in the entire data), you get Reagan at a little better than average; a dramatic improvement over the Carter catastrophe. I think that’s mostly how people remember Reagan’s economic record; he got America back on track after the malaise of the Carter years.
ASIDE: I think deleting 1982 is reasonable because it is pretty well accepted (even by Krugman, I would think) that the 1982 recession was collateral damage from the fight to tame inflation. History has shown that inflation can be tamed quickly, once the public believes you are serious, but after Nixon, Ford and Carter, it took time to do so.
It is interesting, however, that by this measure (endorsed by Paul Krugman), George W Bush’s administration was the best since the 1960s.
POSTSCRIPT: I also looked to see what would happen if we shifted all the administrations by one year, on the theory that during the first year of an administration the economy is still operating under the policies of the previous administration. You find that Kennedy — whose economic policies were similar to Reagan’s — looks outstanding (3.31%), Johnson looks ordinary (1.46%), and Carter looks even more atrocious (-0.51%).
POST-POSTSCRIPT: I also found that the BLS chart is labeled incorrectly. The years are off by one, so the Krugman’s 1973-1990 period is actually 1974-1991. I wonder why they do that.
(Via the Corner.)