Brad DeLong directed me to a tweet that contained this intriguing graph:

If you polled 51 million Americans and found that 50 million supported X, whereas 1 million opposed X, that would be a highly significant survey. So what should we make of the fact that over the past 35 years, Democratic presidents have “created” (been associated with) 50 million net new jobs and GOP presidents have been associated with 1 million net new jobs? Isn’t 51 million a statistically significant sample size?

Of course what’s really going on here is that we have only 6 observations, six administrations. Is it unusual that the three Democratic administrations were associated with fast job growth, or just luck? That’s actually not an easy question to answer. It’s at least partly luck, as no one seriously believes that the poor Trump performance is due to anything other than being in office when Covid hit. (Trump did mishandle Covid in some respects, but that wasn’t the deciding factor. Even though I’m a Trump hater, I don’t blame him for the poor jobs numbers or the poor crime statistics when he was in office)

If I were a Democratic partisan, I’d make a different argument. Ten of the past eleven recessions (since 1952) have occurred under GOP presidents. I mention this because the graph above is largely explained by the fact that each GOP president happened to finish his term in office during a recession or the early stages of recovery. It’s a business cycle issue. Republicans have been either very unlucky, or have been less adept at macroeconomic stabilization policy than Democrats.

So is this 10-1 ratio statistically significant? That’s not really the right way to think about these things. We wouldn’t be discussing the issue at all unless the ratio looked odd. We select usual patterns when deciding what to write blog posts on. A better approach would be to ask if there are policy differences between the GOP and the Democrats that can explain this pattern.

I imagine no one will like this answer, but I suspect that the 10-1 ratio is largely but not totally random. During much of this period, the GOP had more of an anti-inflation bias, whereas the Dems had more of a pro-jobs bias. As a result, some of the GOP recessions were plausibly caused by earlier Democratic over-stimulus. But not all. I’d say 1970 and 1981 are the two clearest cases of recessions that occurred under GOP presidents that were caused by previous Democratic over-stimulus. Maybe 1953, but that was probably more of a post-Korea War thing.

So the GOP is probably not as bad as the 10-1 ratio would suggest. Even so, there are some other data points that are hard to explain away. Why did Eisenhower have 3 recessions? Again, all of the Democratic presidents since 1952 have only generated one recession (in 1980.) And that was the mildest of the 11 recessions.

To summarize, the 50 million to 1 million ratio is a great talking point for Dems, but largely coincidence. On the other hand, a careful look at the factors causing recessions suggests that the Dems might really have been somewhat better on the jobs front.

Of course today’s GOP is nothing like the Eisenhower GOP. In addition, the Fed has gotten gradually better in lengthening the business cycle. I strongly doubt that we will see 3 recessions in the next 8 years, regardless of which party is in power.

PS. Don’t take this post as me dumping on Eisenhower, who was vastly better than recent GOP presidents.

Here’s Richard Hanania:

We can already see Republican candidates and institutions shifting over to Gribble messaging. The Heritage Foundation, once believed to represent elite conservative thought, goes to Twitter and implies that the Secret Service tried to assassinate Trump. JD Vance has praised Alex Jones as a truth teller. Meanwhile, Ted Cruz and Vivek Ramaswamy went around earlier this year predicting that the Democrats would make Michelle Obama their presidential nominee. Recall that Trump’s original rise to prominence within Republican politics was through his embrace of Birtherism. . . .

I’ve always said that if Trump loses this election, he’s got a very good chance of being the 2028 Republican nominee. But if he’s not in the running for whatever reason, then the Gribbles will be up for grabs. They won’t get anywhere in a Democratic primary given that the party is now composed of more educated and high trust voters. But on the Republican side, a candidate who consolidates Joe Rogan and Tucker types can be a force in a divided primary where it may take no more than a third of the vote to win. He may not be a conventional conservative, but it would be fitting if the Trump era culminated in Republicans becoming more moderate on policy while getting crazier and more paranoid.

Could this figure be RFK himself? Note that the Low Human Capital types who make up the Republican base love celebrities. There’s a reason that some conservative papers that sometimes do serious journalism like The Daily Mail and The New York Post double as gossip mags. The Kennedy family itself has a large role to play in QAnon cosmology. RFK has a history of holding liberal positions, but Trump showed that one can easily flip-flop, and even if you don’t, Republican voters can be very forgiving if you’re a celebrity who hates elites enough and endorses conspiracy theories. Kennedy has already started walking back some of his prior beliefs, like his previous views on gun control, that would be unpalatable to a conservative electorate.

I doubt that either Trump or Kennedy will be the 2028 nominee (partly because I expect Trump to win in 2024.) But Hanania’s entire post is well worth reading, if you like politics. Or should I say if you hate politics? And when you think about it, is there any difference?

The TLDR is “Yeah, we’re definitely a banana republic.”

PS. NYT headline of the day: “Trump Can Win on Character”

The FT has a good article that might be seen as being tangentially related to my earlier post on lab leak vs. zoonosis:

If a screenwriter were to come up with a storyline in which a tech tycoon drowns when his luxury yacht is hit by a freak storm just two days after his co-defendant in a multibillion dollar fraud trial — for which both men were recently acquitted — is fatally hit by a car in another set of ostensibly unsuspicious circumstances, they might very well be told this was rather too implausible for viewers to buy.

And yet this was the tragic real-life series of events over the past week or so. . . .

It didn’t take long for the conspiracy theories to start. Pro-Russia personality Chay Bowes posted on X a clip of himself speaking on the Russian state-owned RT channel in which he pointed out the low probability of being acquitted in a federal criminal trial in the US — about 0.4 per cent, according to Pew. “How could two of the statistically most charmed men alive both meet tragic ends within days of each other in the most improbable ways?” asked Bowes.

The article also mentioned that back in 2009, two identical numbers came up back to back in Bulgaria’s national lottery, at odds of four million to one.

PS. The name of Mike Lynch’s yacht? Bayesian.

No, I’m not making that up.

As I wrap up this blog, it’s worth asking ChatTMI about my central claim—that the Fed caused the 2008 recession with a tight money policy. First I asked it to summarize my view, and then critique it.

Me: Why does Scott Sumner believe the Fed caused the 2008 recession?

The response:

Scott Sumner, an economist known for his work on monetary policy and the NGDP (nominal GDP) targeting theory, argues that the Federal Reserve played a significant role in causing the 2008 recession. His view is rooted in his broader critique of how monetary policy was conducted during the period leading up to and including the Great Recession. Here are the key elements of his argument:

1. Monetary Policy Missteps: Sumner believes that the Federal Reserve’s monetary policy was too tight leading up to the crisis. He argues that the Fed failed to provide adequate monetary stimulus during the early 2000s when the economy was slowing down, and continued to apply tight monetary policy even as the housing bubble was bursting and the financial system was under severe stress.

2. Nominal GDP Targeting: Sumner advocates for a monetary policy framework where the central bank targets the level of nominal GDP rather than focusing solely on inflation or interest rates. He argues that had the Fed been targeting nominal GDP, it would have been more responsive to the changing economic conditions and could have potentially mitigated the severity of the recession.

3. Policy Response to the Crisis: During the financial crisis, Sumner criticizes the Fed for not acting aggressively enough to combat the downturn. He contends that the Fed’s response was insufficient to offset the dramatic drop in nominal GDP, which was a key factor in the depth of the recession.

4. Expectations and Forward Guidance: Sumner also emphasizes the role of expectations in economic performance. He argues that the Fed’s communication and forward guidance were inadequate in shaping expectations and stabilizing the economy during the crisis. Improved expectations management could have helped reduce the severity of the downturn.

In summary, Scott Sumner’s argument is that the Federal Reserve’s policies before and during the early stages of the 2008 recession were too restrictive and that a different approach, such as targeting nominal GDP, could have lessened the impact of the recession.

Point #1 is wrong, I don’t think the Fed policy of 2000-07 played any role in causing the 2008 recession. The rest is OK, perhaps at a sort of “very good undergraduate student or beginning grad student” level.

Me: Why do most economists disagree with Scott Sumner’s view that the Fed caused the 2008 recession?

The response:

Most economists disagree with Scott Sumner’s view that the Federal Reserve caused the 2008 recession for several reasons, reflecting differing interpretations of the causes and nature of the crisis. Here are some key points of contention:

1. Complexity of the Crisis: Many economists argue that the 2008 recession was the result of a complex interplay of factors beyond just monetary policy. They highlight issues such as the housing bubble, subprime mortgage crisis, financial market failures, excessive risk-taking by financial institutions, and regulatory lapses. These factors contributed to the economic downturn and were not solely the result of the Fed’s actions.

2. Monetary Policy Stance: Some economists contend that the Fed’s monetary policy prior to the recession was appropriate given the economic conditions of the time. They argue that while the Fed may have been cautious, it was responding to concerns about inflation and asset bubbles. They also point out that the Fed did eventually take aggressive actions to counteract the downturn, such as lowering interest rates and implementing quantitative easing.

3. Focus on Inflation and Employment: The Fed’s dual mandate is to promote maximum employment and stable prices. Critics of Sumner’s view argue that the Fed’s actions were consistent with this mandate. While Sumner advocates for nominal GDP targeting, others believe that focusing on inflation and employment directly is a more practical approach given the tools and data available to policymakers.

4. Alternative Explanations: Some economists believe that focusing too narrowly on monetary policy overlooks other significant causes of the recession. For instance, the role of financial deregulation, the global financial imbalances, and the crisis of confidence in financial institutions are seen as central factors that contributed to the economic downturn.

5. Post-Crisis Analysis: After the recession, many economists have examined the impact of the Fed’s policies and argue that the central bank’s response, including unconventional monetary policies, helped stabilize the economy and prevent a deeper depression. They assert that the aggressive monetary easing during and after the crisis was crucial in mitigating further economic damage.

6. Differences in Monetary Policy Theories: Economists differ on the efficacy of monetary policy frameworks. While Sumner supports nominal GDP targeting, many economists believe in other approaches, such as inflation targeting or Taylor rules, which have been the basis of much of modern monetary policy. They argue that these frameworks have their own merits and have guided policy effectively.

In essence, the disagreement with Sumner’s view reflects broader debates about the causes of the Great Recession, the effectiveness of various monetary policy frameworks, and the role of the Federal Reserve in managing economic stability.

Except for point #3, these are pretty good. Clearly I don’t agree with this critique, but ChatTMI has a done a pretty good job of describing why conventional economists reject my claims. I say “pretty good” because an outstanding critique would have mentioned the zero bound problem, and would have refrained from claiming the Fed satisfied the employment part of its mandate (point #3.)

I don’t want to be too hard on ChatTMI, because this is a much more difficult problem than other questions it might be asked. Even people who have a very low opinion of the “science” of macroeconomics would have to concede that the field is very complex, and is the sort of thing you’d expect a machine intelligence to struggle with analyzing. So answers that are “pretty good” could be viewed as a major achievement. Indeed, if you’d shown me this exchange 3 years ago, my jaw would have dropped to the floor.

PS. ChatTMI is in the right column, if you scroll way down.

Here’s Reason magazine:

Still, Kennedy’s endorsement of the Republican candidate wasn’t inevitable.

Just last week, Kennedy was reportedly angling for a position in the Harris administration in return for an endorsement. A few months before that, Kennedy was (somewhat half-heartedly) seeking the Libertarian Party’s nomination for president.

At his Phoenix rally today, Kennedy said he had several meetings with Trump, in which the former president committed to giving him a role in his administration. Kennedy said he’d use that role to clear out the influence of big food and pharmaceutical companies in government.

Harris, he said, had refused to speak with him.

You can certainly count on Trump to honor that promise.

PS. Kennedy hates Trump even more than do Tucker Carlson and JD Vance: