Which economic indicators best correlate with presidential election results?  Last year New York Times statistician Nate Silver presented an elegant answer to this question.  For the sixteen presidential elections since World War II, he computed the correlation between the incumbent party’s margin of victory and the value of 43 indicators in the first nine months of the election year. The results? Change in employment rates matter. Market indexes and oil prices don’t.

The Institute of Supply Management’s manufacturing index best correlates with incumbent party victories, with a 46 percent correlation. Close behind are changes in non-farm payrolls and changes in the unemployment rate – both above 40 percent correlation.  Since World War II, incumbent presidents ran for reelection seven times. Only Jimmy Carter and George H.W. Bush lost – both when the unemployment rate increased.

Note that the change in unemployment rates matter, not the rate itself, which had zero correlation.  Meanwhile, gain of the Dow Jones index had only a six percent correlation. Silver also found a 15 percent correlation between lower gas prices and an incumbent victory.

While the unemployment rate has been decreasing for about a year, it’s not necessarily a good sign for Obama.  The rate has decreased partly because many have stopped looking for work. Classifying these people as unemployed would increase the unemployment rate by 1.25 percentage points, reports the Congressional Budget Office.  Worse for Obama, economist James Sherk shows that despite job growth, this is the “weakest recovery in more than half a century.”

“Unlike the incumbent, I won’t make the economy worse, I won’t keep spending us to the brink of fiscal catastrophe, and I won’t lie to you.” That’s what a Republican candidate should declare to defeat Barack Obama, writes Reason magazine’s editor-in-chief.  Can the GOP front-runner Mitt Romney assert this credibly?

Like a typical Republican politician, Romney talks a good game about effectively reforming costly fraud-ridden government dependency programs. But he opposes cuts to the military’s bloated budget. He claims to support repealing ObamaCare, but still defends the failing state-level version of Obamacare that he signed into law in Massachusetts. Worse yet, in 2007, Romney said that for national health care policy, “What you have to do is what we did in Massachusetts.”

Compare Romney’s proposals to the bold fiscal plan of candidate Ron Paul, who tied Romney for first in a Reason-Rupe survey of young Republicans. Paul’s plan would eliminate the budget deficit in three years by cutting government jobs, spending, and taxes, while eliminating foreign “aid,” corporate subsidies, burdensome regulations, five unconstitutional federal departments, and the dollar’s money monopoly.

More than Ron Paul, many young voters might prefer former New Mexico Governor Gary Johnson. His fiscal policy resembles Paul’s, while he is more pro-liberty on gay marriage and immigration. But TV networks have unjustly excluded Johnson from polls and debates despite his strong polling relative to invited candidates. The “Gary Johnson rule,” says the campaign website, is to continuously shift debate eligibility criteria to exclude candidates named Gary Johnson.

For why this is good news, see my article in the Denver Post: Colorado Proposition 103: More tax dollars for school helps unions & Dem. party, but not students.  For a version with more Colorado data and contributions from education policy analyst Ben DeGrow, see: Proposition 103: More Tax Dollars for Schools Makes No Sense.

In terms of cost to taxpayers, see this Summit Daily op-ed by economists Barry W. Poulson and John D. Merrifield : Prop 103: What Is The Cost To Colorado Taxpayers?, based on this analysis.

Note that Prop 103′s supporters raised more than $600,000 to promote it, while the opposition raised around $25,000. That’s a ratio of 24:1. (This doesn’t count Compass Colorado’s contributions.)

Thanks to this People’s Press Collective post for the Denver Post declaration and link to the funding info.

Term limits are one step toward this goal. Term-limited legislators tend to seek office to address issues rather than personal goals, and are more independent of party politics and rent-seeking interest groups. Term limits would create a legislature of, by, and for the people rather than ruling class of career politicians detached from the private sector.  Several states limit legislators’ terms. The 22nd Amendment term-limited the President. U.S. Senators and Representatives should have similar term limits.

Another step is to restrain federal power by restoring state legislators’ influence on the federal government.  For example, repealing the 17th Amendment would allow state legislatures to once again elect Senators.

James Madison noted that having different constituencies electing the House and Senate provides an “additional impediment … against improper acts of legislation.”  As law professor Todd Zywicki notes, the 17th Amendment ushered in the era of legislation benefiting national special-interests at the expense of the people. For example, ObamaCare’s Medicaid expansion threatens to bankrupt states.

Law professor Randy Barnett‘s “Repeal Amendment” is another way to restore checks and balances. It would empower two-thirds of states to repeal any federal law or regulation.

This originally was printed in the Boulder Daily Camera on August 13, 2011.

* * *

Thanks to Amanda Teresi of Liberty on the Rocks for bringing the Friedman quote to my attention. Check out their video, above.

If I had a higher word limit, I would have mentioned making elections more competitive by removing ballot access restrictions and using a type of range or approval voting system.

1. In 1802, Why did the owners of newly built water-powered textile plants that support child labor laws in England?
2. Why did “American Telephone and Telegraph Company chairman Theodore Vail successfully called for federal regulation of long-distance telephone”?
3. Who benefited when the Magna Carta specified a “standard width for all cloth sold in the kingdom”?
4. “In hearings before passage of the 1972 federal Water Pollution Control Act, industrialists located along the Ohio River argued for the law.” Why?
5. Why did “the coal interests in Ohio and West Virginia … [lobby] for the 1990 Clean Air Act amendments requiring scrubbers on newly built and modified coal-fired electric utilities.”?
6. Why did John Deere petition the Environmental Protection Agency to increase pollution controls on small gasoline engines?
7. Why did Chicago meat packers lobby Congress to pass the 1906 Meat Inspection Act?

And today, why do certain power companies favor legislation like cap & trade & pollution controls?

The answer to all of these questions is that companies support political controls (regulations) that shield them from competition. Often the legislation is defended on moral grounds, like protecting children or the environment (whether it does or not), but the large drive is rent-seeking – to gain unfair advantage over others, or to to mooch off of them.  The classic example is alcohol prohibition, supported by both bootleggers and Baptists.  “Bootleggers and Baptists” now refers to the concurrence of unsavory business interests and (often questionable) ethical crusading for political controls.

Read the whole article in The Freeman: We Want to be Regulated.

“You oppose Medicaid and government-run schools? You’re heartless and lack compassion.”  If you have ever made this accusation, even tacitly, I invite you to reconsider the government policies you support.

Why does being compassionate mean supporting government-run schools and health plans? This makes little sense if you view these programs as government-run charities. Would you agree to perpetually donate a portion of your monthly income to the same charity -  regardless of its effectiveness?  If the charity is doing a lousy job, wouldn’t you want the freedom to find a better one?

Read the whole article: <a id="title_permalink" title="Permalink" href="http://www.huffingtonpost.com/brian-t-schwartz/questioning-your-compassi_b_574030.html”>Questioning Your “Compassionate” Politics. (Update, the Denver Daily News also published the article.)

Thanks to Ari Armstrong, Paul Hsieh, Dave Kopel, and my wife for their comments. Thanks to Jessica Corry for putting me in touch with HuffPo.  I acknowledge many others in links within the article.  One person I did not link was Michael Cloud, whose book Secrets of Libertarian Persuasion was quite helpful, especially for this sentence, which is basically his:

If you support mandatory charity, what do you authorize government to do to those who peacefully refuse to cooperate?

I also recommend Cloud’s CDs on this topic. Great material, and not much overlap with the book.

Peter Saint Andre also inspired some of my ideas for this article. Many years ago I read his essay, On the Road to Voluntary Government Financing.

1. Republicans aren’t always your friends.
2. Some tea partiers like big government.*
3. Democrats aren’t always your enemies.
4. Smaller government demands restraint abroad.
5. Leave social issues to the states.

(Via Reason.tv)

*See, for example,  Leviathan on the Right, by Michael Tanner, and The Republican Spending Explosion by Veronique de Rugy

See also this New York Times article, Poll Finds Tea Party Backers Wealthier and More Educated, April 14 2010.

Dick Morris has a post about “swing votes,” i.e., Congressmen who are also on the fence, and their phone #’s.  Feel free to contact representatives outside of your district.

For opinion on the latest bills, see Cato’s coverage & National Review’s Critical Condition.

New York’s 1895 Bakeshop Act … banned bakery employees from working more than 10 hours per day or 60 hours per week. In its 5-4 decision [Lochner v. New York (1905)], the Court nullified this provision for violating the liberty of contract secured by the Due Process Clause of the 14th Amendment. …

George Mason University legal scholar David Bernstein has thoroughly documented, the mainstream version of the Lochner story, which pits evil bosses against viciously exploited workers, bears zero resemblance to the historical evidence. The real origins of the Bakeshop Act lie in an economic conflict between unionized New York bakers, who labored in large shops, and their non-unionized, mostly immigrant competitors, who tended to work longer hours in small, old-fashioned bakeries. As Bernstein observed, “a ten-hour day law would not only aid those unionized workers who had not successfully demanded that their hours be reduced, but would also help reduce competition from nonunionized workers.”

To put it another way, Lochner v. New York secured a fundamental right against arbitrary government interference while undercutting an act of naked economic protectionism.

This is an example of what economist Bruce Yandle calls “Bootleggers and Baptists”:

Here is the essence of the theory: durable social regulation evolves when it is demanded by both of two distinctly different groups. “Baptists” point to the moral high ground and give vital and vocal endorsement of laudable public benefits promised by a desired regulation. Baptists flourish when their moral message forms a visible foundation for political action. “Bootleggers” are much less visible but no less vital. Bootleggers, who expect to profit from the very regulatory restrictions desired by Baptists, grease the political machinery with some of their expected proceeds. They are simply in it for the money.

Examples I can think of include:

• How Mattel benefits from new requirements for testing toys.  It gives them a competitive advantage over small toy manufacturers.
• Judge Jim Gray on The Six Groups Who Benefit From Drug Prohibition (Reason.tv video): drug lords, juvenile gangs, law enforcement, tough-talking politicians, prison industry, terrorist organizations.
• Anti-trust laws to squash competition. See Antitrust Policy: the case for repeal, by Dominick T. Armentano. For example, page 10 of Armentano’s book on Google and his 2009 op-ed in the Christian Science Monitor.
• Medical licensing.

They are critical votes., as the March 5 Denver Post relates

President Barack Obama has laid out the path for Democrats’ last-ditch effort to save health care reform, and despite some relief among lawmakers that a final strategy is set, it’s almost certainly headed for a white-knuckle finish.

The sticky choices faced by Democratic Reps. Betsy Markey of Fort Collins and Diana DeGette of Denver show the hurdles confronting House leaders as they try to wrangle the votes to approve the Senate version of the bill, then fix key elements through a maneuver known as reconciliation. …

As co-chair of the Pro Choice Caucus and a fierce abortion-rights advocate, DeGette is facing strong pressure from national groups not to approve a health care bill with the current language restricting insurance coverage of abortion contained in the Senate bill — but the reconciliation process allows no clear way to change it. …

Markey, who declined requests to be interviewed for this story, is a vulnerable Democrat who last year voted against a reform bill viewed skeptically by moderates and conservatives in her Republican-leaning district.

But that vote has cost her dearly with party loyalists back home, and she’s now squeezed between the unpleasant prospect of alienating either her base Democratic voters or the independents she’ll need in a tough 2010 fight.

Read the rest of the article: Markey, DeGette in middle of health care reform quagmire.

Contact Betsy Markey here.  Contact Diana DeGette here.