In the waning minutes of his only TV debate with Democratic incumbent Jimmy Carter in 1980, Ronald Reagan looked straight into the camera and asked, “Are you better off than you were four years ago?”
It was a defining question of the campaign ”” and of late 20th century American politics. It was also pretty easy to answer. The “misery index,” a then popular measure that added the unemployment rate to the inflation rate, had skyrocketed during Carter’s tenure. Taxes had risen sharply. There were other issues on voters’ minds, like the Iranian hostage crisis and those dang cardigans Carter used to wear. But the economy was crucial to Reagan’s victory. After taking office, he responded by ushering in a new era in economic policy ”” cutting tax rates, slashing regulation and tirelessly preaching the gospel that individual Americans were better suited to make economic decisions than bureaucrats in Washington were.
This election year, the economy is again at the forefront of voters’ minds. The misery index is no longer the problem; at 9% and change, it’s miles below the 20% of late 1980. But Americans have a new menu of economic woes ”” among them a real estate crash, a credit crisis, a broken health-care system and nagging job insecurity. Poll after poll shows a vast majority convinced that the economy and the country are headed in the wrong direction.
The first and most obvious thing to be said is that this represents a big stumbling block for Republican John McCain. He’s not the incumbent, so the “four years ago” line doesn’t apply directly to him. But history shows that slow economic growth is among the best predictors of a change in party control of the White House ”” and right now the economy is barely growing at all.
The inflation rate this year is about 4%, about what it was in late 2000-early 2001. In 1980, it was 13-14%. In 1947, it was pushing 20%. The unemployment rate in April was 5%. In Texas, it’s the lowest it’s been since 1979. But economic news, like educational news, is always bad. If one indicator is good, then find an indicator that serves your purpose. Here’s an interesting line:
[blockquote] A significantly new direction in economic policy seems much more likely if Barack Obama (or Hillary Clinton, on the off chance that she returns from the political dead yet again) prevails in November.[/blockquote]
I wouldn’t say that political advocacy is the purpose of the article, but is it an effect?
And if America is on the “wrong track,” why is the default assumption that the improvement will come from turning left? The European experience would certainly suggest otherwise.
Bart Hall – It is probably because the Republicans have ignored what were once tenets of the conservative movement; Energy Independence, Investment in American Ingenuity; National Security (by not importing oil from our enemies), etc.
So what has the left done? They have taken up the banner of Energy Independence for American Security and Jobs. They understand, apparently much better than the current Administration, that unleashing an Energy Policy directed towards energy entrepreneurialism with American fiscal and tax policy steered towards achieving Energy Independence will create jobs and raise everyone’s boats.
Then, of course we have Senator John McCain saying that he doesn’t really understand the economy. Fortunately, he has connected the dots with Energy and National Security. But after 8 years of George Bush’s inept leadership on energy as it relates to national security, does it really take a genius to see why many Americans are skeptical of the right’s ability to run this country?
Somehow, I think the situation is fr different that in Carter’s time. Something else has changed, something radical, something befitting a new century. I cannot help feeling that this particular crisis, if it be one, is different, some thresh hold has been passed, some critical mass reached, and the troubles we have now are the signatories to a major alteration in American life, not causative, nor symptomatic, but emblematic of a deeper shift in goals and undertakings, of a change in a deep tide. An intuition? I suppose so, but the feeling is strong in me that something tectonic is shifting. Do you not feel this?
Larry
Sadly we, as a nation, have shifted from American Independence to Foreign Dependence. What would the Founding Fathers think?
I believe the media (oft times including blogs) have truly convinced most people that we are in such bad shape financially, and almost anything will make it all better.
Any “improvement” whether by increasing taxes, increasing various “welfare” programs, and I don’t mean just for poor people, will convince folks that a turn to the “left” is the right thing to do.
Its sort of like fast food, why adhere to a diet of veggies most people don’t care much for, when such goodies as whale-size burgers, maximus fries, and loaded coffee and calorie laden shakes?
Just my opinion.
Gloria in SC
Actually, I remember that time – 1980 – I was in school studying the rates of unemployment and inflation — they were much worse than an aggregate 20%.
Inflation hit a high of 14.78 that year
http://tinyurl.com/6k74u5
Unemployment 7.5 to 7.8 during the campaign season
http://tinyurl.com/5p99uq
The most recent figures are inflation at about 4% [ http://tinyurl.com/5py342 ] and unemployment at about 5% [ http://tinyurl.com/5oow7c ].
But it’s all relative, right? Reagan’s best year was 1986- 8.91%. Clinton’s best year was 1998- 6.05 and when he left office it was 7.35%. Dubya’s best year was 2002 at 7.37% and it’s currently at 8.94%.
http://www.miseryindex.us/
Alas, I suspect that all three of the candidates will act out of political expediency and promise the very things that will return us to the glory of the Carter years.
Larry, I think that we have moved in the last twenty or perhaps thirty years to being a completely different kind of economy. We were once primarily producers and manufacturers. Now, the US is largely services — and financial services at that, with a penchant for creating ever more complex financial instruments that are castles built in the air. Worse, this has affected not only the US, but in this global age, the entire world. Financial services used to provide services for manufacturers as a support; now they are more and more things in themselves. The housing bubble largely came about, and then burst, because of mortgage lenders who lost sight of reality.
No. 9 – I think you are on to something.
Every eight to ten years the US goes through and economic adjustment and some jerks who flew something into the ground lose alonng with the american people. The stock market about eight years ago, about 15 to 20 years ago the savings and loan crises. The president has little control over readjustments. What really wories me is oil dependance. We have enought oil and coal to run America for over a thousand years (according to the democratic govenor of Montana). We have this NIMBY attidtude that is costing us our independance and ruining our economy.
What is the criteria for a good economy? If its happiness, Europe, Denmark and Norway do a pretty good job. But in terms of economic growth, Europe’s been doing fairly well over the last few years. And given that they just won a pretty big Military contract from the US, it seems like they’ve got some good products, as well.
I know that socialism is bad, but there seem to be lots of European companies who benefit from the state sharing the burden of caring for its workers.
Inflation is closer to 12 percent than 4. The inflation index has been reworked so that it no longer tracks food, and fuel (which it used to do).
Unemployment (using Carter methodologies is also closer to 12 percent. Back then, somebody who worked a part time job or who was “self employed” working as a consultant or locums for chickenfeed was considered unemployed not employed.
The misery index is as high as it was during the Carter years. What has changed is the accounting.
Times feel bad because times are bad. It is quite simple really.
http://www.shadowstats.com/article/56
The above website discusses how the CPI (inflation rate) has been manipulated, beginning during the Carter years and increasing thereafter.
http://www.radstats.org.uk/no072/article4.htm
The above discusses how unemployment rates are manipulated by counting only those receiving benefits and assuming that anybody who is no longer eligible for benefits is happily employed.
http://money.cnn.com/2008/05/13/news/economy/misery/index.htm?section=money_latest
This one puts it together
“Inflation is closer to 12 percent than 4. The inflation index has been reworked so that it no longer tracks food, and fuel” —Clueless, #13
“How the CPI (inflation rate) has been manipulated, beginning during the Carter years and increasing thereafter” —#14
The inflation rate is what it is. Any given “inflation index” is simply an attempt to gauge inflation through a sampling of products and services. Some indexes include food and fuel; some do not. Both types are available, in fairly consistent series going back decades. There is no conspiracy, no cover-up of rampant inflation.
Irenaeus: I think if you are going to refute the information provided by Clueless you should back it up with references. Personally, my experience suggest inflation much more significant than 4% has been occuring, because I cannot come near the standard of living my parents had, even though I’m in the private sector making nearly four times what they made 25 years ago as a priest’s family.
I make twice what my parents made, and while I consider myself well off, my standard of living is half that of my parents.
AldenJr [#18]: I didn’t think you’d pounce on the commenter who took issue with the conspiracy theories!
“The inflation rate is what it is. Any given ‘inflation index’ is simply an attempt to gauge inflation through a sampling of products and services. Some indexes include food and fuel; some do not.”
I trust that this part of my comment #17 is straightforward. Shari’s comments #13-14 implicitly assume that the pre-Carter CPI perfectly measured inflation—and that all subsequent indexes err insofar as they deviate from it. That sort of reasoning is patently mistaken. All indexes involve a sampling of prices—a sampling that is necessarily in some measure arbitrary. There is no reason to believe that inflation-gauging reached a peak of perfection 32 years ago.
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Comparing your standard of living with your parents gets complicated, particularly from this distance.
Note that our perceived “standard of living” involves (1) our income, (2) our expectations, and (3) the cost of goods and services.
Many Americans’ incomes have (after inflation) come close to stagnating over the past quarter-century. This idea causes some right-wing commenters to have conniptions but it’s true.
Our expectations have risen, often in ways we forget. If you sit in the driver’s seat of a 1950s car, you can think about getting skewered on the steering wheel or getting thrown through the not-so-safety-glass windshield. Not to speak of how many cars were uneconomical to keep for more than a few years.
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Here is the CPI website of the Bureau of Labor Statistics: http://www.bls.gov/CPI/
Note that the home page offers both “Old Series” data (with “pre-1998 weight and item structure”) and “New Series” data. Each series is designed to be consistent across time.
FAQ: http://www.bls.gov/cpi/cpifaq.htm
Here is the “inflation calculator”:
http://data.bls.gov/cgi-bin/cpicalc.pl
Try converting your parent’s income into 2008 dollars or your current income into 1975 dollars. The results can be jolting.
There is a neat site called “measuring worth” that is quite useful.
http://www.measuringworth.com/index.html
lots of different calculators.