Economic indicators that best correlate with presidential election results

This was printed in the Boulder Daily Camera on February 25, 2012.

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.”

Obama’s State of the Union: You’re just part of his “blueprint”

This originally was published in the Boulder Daily Camera on Saturday, January 28, 2012.

For refutations of the President’s flawed claims and statist economic plans, see the Cato Institute‘s website, blog, and YouTube channel.  Regarding Obama’s “Buffett tax” on millionaires, the Associated Press explains that the wealthiest Americans already “pay a lot more taxes than the middle class,” including secretaries

To understand Obama’s statist fervor, ask yourself: Are you a machine cog?  Surely not. But like many politicians, Obama disagrees, at least tacitly. How? Linguist George Lakoff explains how metaphors are key to understanding political discourse.  In his speech, the President expressed his desire to “lay out a blueprint for an economy.”  At least twice he’s mentioned starting a health care “system” from “scratch.” This speaks volumes.

“The economy” refers to people producing and exchanging goods and services. In a freed economy, government respects people’s right to trade voluntarily. But Obama sees the economy as a machine to be manufactured, or a cake to be baked.

Obama has the same conceit that better economists have warned about for centuries. Describing the “man of system,” Adam Smith wrote: “He seems to imagine that he can arrange … members of a great society with as much ease as the hand arranges … pieces upon a chess-board.” “Socialists look upon people as raw material to be formed into social combinations,” wrote French economist Frederic Bastiat in 1853. Or, as 1974 Nobel laureate F.A. Hayek wrote, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

Education needs freedom, not phony “investments” in the government school cartel

Beware politicians’ “investment” con. People typically invest their own money for their personal gain.  But politicians “invest” by confiscating taxpayers’ money for their own political gain. The education “investments” in the 2011 State of the Union address take your money to strengthen the bloated government school cartel. In return, the President and his political allies receive campaign contributions from teachers’ unions.

President Obama praises the post-Sputnik “investment” in education. But subsequent PSAT math scores fell or stagnated for decades while school funding soared. Now he wants to “prepare 100,000 new teachers” in engineering, science, and math. Why? Since 1970, the number of teachers per student has increased by 50% and the cost of K-12 government schools has almost quadrupled. Meanwhile, national standardized test scores have not improved.

The president is no better with higher education.  He has increased tax-subsidies for higher education and says the United States should have the “highest proportion of college graduates in the world.”

But thanks to political meddling, there may be too many college students already.  ABC news just reported that “After four years, 36 percent of [college] students did not demonstrate significant improvement” in “key measures of critical thinking, complex reasoning and writing.” Economist Richard Vedder found that “30 percent of the working college graduates in the U.S. … have jobs that do not require a college degree.”

President Obama says “our free enterprise system … drives innovation.” Then instead of restricting parents’ school choice with monopolistic politically-controlled schools, he should promote free enterprise in education.

A version of this article was published in the Boulder Daily Camera on January 29, 2011.

Other responses to the state of the union:

• John Stossel his own address
• economist Don Boudreaux:
  

  My concern about the president’s cozying-up to business differs greatly from the concern that animates the political left. Contrary to popular presumption, being friendly to business is not the same as being pro-economic growth or pro-free-market.

• columnist David Harsanyi: “Obama says that ‘none of us can predict with certainty what the next big industry will be or where the new jobs will come from.’”  But then Obama goes and picks winners with your money.

The ObamaCare scam

The Daily Camera asked its editorial advisory board members their view of ObamaCare, formally HR 3590. My response was published in the March 27 edition:

ObamaCare is a scam. It further empowers politicians to dictate how you seek medical care and support charities. Politicians should protect, rather than violate, your right to make these choices. The bill is not reform. Rather, it spreads a disease that masquerades as its own cure: authoritarian politically-controlled medicine.

The alleged “right” to health care gives this phony reform a moral facade. In practice, the “right” to health care means government decides when it’s “right” for you to get it.

More fundamentally, health care is not a right. Rights are freedoms to act, not entitlements to what others produce. Say you break your arm and cannot afford treatment. It’s admirable for doctors to voluntarily donate their time or for charities to help you pay.

A government-fabricated “right” to health care is compulsory charity, which violates actual rights. Government would either force doctors to mend your arm, or force others to pay. ObamaCare’s compulsory charity includes explicit taxes and taxes hidden in legislation that inflates insurance premiums.

We need authentic reform. Political controls have wedged insurers between patients and doctors, and employers between patients and insurers.  Legislation shields insurers from competition and outlaws affordable insurance. Patients are rarely the paying customer, so no one has incentive to please them.

ObamaCare exacerbates these problems by expanding Massachusetts’ phony reform nationally. Expect similar outcomes as its controls pile on: higher insurance premiums and poor access to doctors. New taxes will also stifle medical innovation and economic growth.

For real, effective, and moral reform, see healthcare.cato.org.

* * *

Thanks to Ari Armstrong and Paul Hsieh for their edits and suggestions.

Contact your Congressmen: no on health “reform” & reconciliation

Tim Phillips at Americans for Prosperity summarizes the situation and has links to quick ways to contact your Senator and Representatives.  An excerpt:

President Obama finally made it official yesterday:  he wants Congress to ignore Senate rules – and the American people – and use a parliamentary trick called “reconciliation” to pass his health care takeover legislation.  Fortunately, there’s a catch: before the Senate can use reconciliation to force through Obama’s tweaks, the House would have to pass the Senate health care bill.  And we must stop them.

In his remarks the president demanded that Congress cave in and vote “in the next few weeks.”

The key vote will now occur in the House of Representatives – perhaps within 10 to 12 days – and we have to win it.  That’s because it’s impossible for the Senate to make changes via reconciliation until after the Senate bill has passed the House.  Of course, once the Senate bill passes the House, President Obama will sign it and it will become the law of the land – whether or not the reconciliation trick makes some changes around the edges. …

I’m asking you to take 3 steps.

1. Call and email your member of Congress in the next 24 hours.  CLICK HERE to email your member, and CLICK HERE to call your member; – based on your zip code we can provide the right information for your representative.  Tell them to vote NO on the corrupt, big government Senate health care takeover bill and tell them Americans do not want this parliamentary trick called “reconciliation.”

2.  Forward this email to your friends, family, co-workers, and fellow activists across the nation asking them to do the same thing.  They may not know how much the House vote matters. Your friends and family need to hear from someone they know and trust that now is a crucial time on health care and protecting our freedoms.

3.  Commit to being a part of the ”Honk Against the Health Care Takeover” event on March 16.  Here’s how it will work.  On March 16 at 12 noon your time, we’re asking you to drive to your nearest congressional district office CLICK HERE FOR THE OFFICE NEAREST YOU and drive around the office for at least 15 minutes occasionally honking your horn. Our goal is to have Americans across the nation telling the politicians to keep their hands off our health care through this “Honk Against the Health Care Takeover” effort.

Read the whole post: The biggest health care vote yet.

The State of the Union’s Fatal Conceit

A “speech from the throne.” That’s how Thomas Jefferson viewed public delivery of the annual speech. Starting with Jefferson’s presidency, and ending in 1913, a clerk read the president’s message to Congress.

How times have changed. Now the president reads the address, but others write it. Nor is the address to Congress. It’s an infomercial for the president and his party targeting the electorate. President Barack Obama said “we can’t wage a perpetual campaign.” Yet he just had to mention that he reads letters from children “each night.”

Mentioning “the children” has become typical of presidential addresses, as have other themes. As Ted DeHaven’s blog post titled “Bush’s Third Term” shows, Obama’s statements on jobs, energy, housing, and other topics sound so similar to Bush’s, you might think they have the same speechwriters.

Typical of modern State of the Union addresses, Obama’s made grand promises including special-interest tax breaks, tax “credits” for those who pay no income taxes, new government programs, and more government fixes to problems made worse by previous fixes.

To deliver the change he promised, the president should have shown Congress a rap video: “Fear the Boom and Bust” by EconStories.tv. With insight, wit, and rhyme, Friedrich Hayek explains how Keynesian fiscal policy fuels economic booms and busts. “It’s legit, it’s really good rapping,” Ke$ha told NPR.

Congressmen would see in themselves what Nobel Laureate Hayek calls the “fatal conceit.” Says Hayek: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

The Daily Camera (Boulder) published this article on January 30, 2010.

Obama icon: the power & danger

From Pajamas Media TV:

“Barack Obama ran an unprecedented Presidential campaign – utilizing the power of design to help secure the seat of the President of the United States of America. However, his iconic emblem, the ever present “O”, holds more power than even Obama knows. Bill Whittle points out the dangers of branding an ideology with an icon and how, perhaps, the powerful symbol will be used against the very man it built up.”

(via Reason.tv)

Tell Washington: Hands off your health care!

Yes, their grimy hands are already on it, and that’s the problem. From Patients First:

While millions of Americans spoke up during the summer against a government takeover of health care, Congress has retreated to its bubble and ignored your concerns. We need to remind them we still oppose a trillion dollar health care bill that will take away resources for senior citizens and devastate small businesses.
…
Can you spare one minute to prevent a government takeover of our health care? Patients First’s Facebook application makes calling Congress easier than ever. In one step you can identify your Congressman and his or her phone number. Call your Congressman at your own convenience (or even leave a voicemail after business hours). It’s never been easier to make your voice heard in Washington.

Obama: your parent, guidance counselor, principal, etc., etc.

Gene Healy of the Cato Institute says it quite well:

The president isn’t a benevolent father-protector, charged with the welfare of all creatures great and small — and educators do kids a great disservice if they help promote such a childish notion. Still less was he supposed to be the educator in chief, presiding over a centralized education bureaucracy, handing out Title X grants (with strings attached) and falsely promising that no child will be left behind. The framers thought of the president as a mere constitutional officer, whose main job is taking care that the laws are faithfully executed. Students — and presidents — could stand to learn a lot more about how far we’ve drifted from that ideal.

Read his whole op-ed, Hey, Mr. President, Leave Those Kids Alone, and check out more criticism side-by-side with Obama’s speech to kids in school.

The “public plan” will be the only plan

“The ‘public plan’ will be the only plan” says health care economist Scott Harrington of the proposed government-run health plan.  Be suspicious: “public plan” supporters want it to be the only plan.

President Obama uses rhetoric of “choice” and “competition” to push the “public plan.” But he has declared his ideal to be single-payer health care, where — by definition — a government monopoly prohibits both choice and competition.

If “public plan” supporters honestly wanted choice and competition, why do they oppose policies that would make Medicaid and Medicare compete?  For example, vouchers that Medicaid and Medicare recipients can use to buy commercial insurance. Or better yet, allow taxpayers to opt out of funding these programs by getting tax credits for donations to comparable charities.

A “public plan” would not even compete fairly with insurance companies. It would have access to tax dollars, and many other advantages.  As Professor Harrington concludes, “equal competition between a government health-insurance plan and private plans would be impossible.”

If a government health “program were to be stripped of any special advantages it would cease to be a government program. It would be just another private insurer,” writes Michael Cannon of the Cato Institute.

If politicians truly want more competitive insurance markets, they should remove the tax code’s bias for employer-provided insurance, which shields insurers from competing directly for patients’ business. But politicians covet votes most. Since the biased tax code empowers unions, Democrats are not likely to touch it without giving unions special treatment.

This was published in the Boulder Daily Camera on July 4, 2009.