Tag Archives: reagan

Unemployment is not as important as we think, when it comes to predicting the next President

Make no mistake: the higher the unemployment rate in November 2012, the less likely President Obama is to win a second term.

But we should be careful about asserting that there is any particular threshold at which Mr. Obama would go from favorite to underdog, or any magic number at which his re-election would either become impossible or a fait accompli. Historically, the relationship between the unemployment rate and a president’s performance on Election Day is complicated and tenuous.

…historically, the correlation between the unemployment rate and a president’s electoral performance has been essentially zero.

Unemployment increased by 1.9 percentage points over the course of Richard M. Nixon’s first term, but he won re-election easily. It also increased in George W. Bush’s and Dwight D. Eisenhower’s first terms, and their re-election bids were also successful. The unemployment rate fell to 3.9 percent from 5.3 percent, meanwhile, in Bill Clinton’s second term — but his vice president, Al Gore, could not beat Mr. Bush in the Electoral College.

There are also cases in which the data behaved more intuitively: Jimmy Carter and the elder George Bush all faced high unemployment rates when they lost their re-election bids, as did Gerald R. Ford in 1976, and that was surely a factor in their defeats.

 

Keep reading: On the Maddeningly Inexact Relationship Between Unemployment and Re-Election

 

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California has lost its Republicans – not one holds office in our most populous state

Fading into irrelevance
The party of Nixon and Reagan holds not one statewide office in America’s most populous state

California gave America two of its five most recent Republican presidents. But the state party has fallen on hard times since the days of Nixon and Reagan. After having fallen for decades, the number of registered Republican voters in California now stands at just 30% (see chart). With the number of voters expressing no party preference rising fast, the party is in danger of slipping into third place in the state. No Republican holds statewide office in California, and the Democrats enjoy wide majorities in both chambers.

The picture is no prettier when it comes to elections for national offices. Republicans have not won a Senate election in California since 1988. The party now accounts for just 19 of the state’s 53 congressmen. The last Republican presidential candidate to take California was George Bush senior. As the most populous state, California holds over one in ten electoral-college votes. But neither Mitt Romney, the presumptive Republican nominee, nor Barack Obama will bother to campaign here—although both regularly drop by to raise funds.

Keep readingThe Economist

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Reagan National Airport expands flights to West Coast (Portland, SF, LA, Austin)

The Department of Transportation has approved four more long-distance flights from Reagan National Airport.

- Alaska Airlines will fly to Portland, JetBlue Airways will fly to San Juan, Southwest will fly to Austin and Virgin America will fly to San Francisco.

- Four dominant carriers were granted permission earlier to extend long-distance flights. United now flies from National to San Francisco. Delta was given approval for service to Salt Lake City, American to Los Angeles and U.S. Airways to San Diego.

via Washington Business Journal

 

// Photo – Nicola since 1972

Capitalism 4.0

I try to live my life like an old college professor waiting out the vagaries of youth in favor of the bigger picture. Which means I am just now getting around to pondering our “Great Recession” and the state of our economy.

My thoughts neatly fit into two parts from two authors. The first, discussed here, is from London macro-economist Anatole Kaletsky in his book Capitalism 4.0. The second, discussed in a follow-up piece is from financial journalist Andrew Ross Sorkin in his micro-economic tale, Too Big To Fail.

At first I felt silly to present my deepest thoughts as a book report. Then I realized that the world of economics is in disarray. Many of our leaders, for example Alan Greenspan, are left muttering oopsies while the rest of them are callously hiding, ashamed of their inability to “see this coming.”

It leaves just a few left standing and Anatole is one of them. As a writer for The Times, he has long predicted these troubles. His book shows a broad understanding of the context, reasons for occurrence, and even presents a blueprint for what will happen next:

“The world did not end. Despite all the forebodings of disaster in the 2007-09 financial crisis, the first decade of the twenty-first century passed rather uneventfully into the second. The riots, soup kitchens, and bankruptcies predicted…did not materialize – and no one any longer expects the global capitalist system to collapse.

That “does not mean that the system will ever again be what is was before the bankruptcy of Lehman Brothers on September 15, 2008. A return to decent economic growth is likely by the middle of 2010…but the traumatic effects of 2007-09 will not be quickly forgotten. And the economic costs will linger for decades.”

“For what collapsed was not just a bank or a financial system. What fell apart was an entire political philosophy and economic system, a way of thinking about and living in the world.”

That text pulled from the introduction neatly elucidates what I have been thinking for a while. It’s not that anyone was wrong, indeed everyone was an independent market actor working on behalf of their own interests. He continues:

“Rather than blaming the meltdown of the global financial system on greedy bankers, incompetent regulators, gullible homeowners, or foolish Chinese bureaucrats, this book puts what happened into historical and ideological perspective. It reinterprets the crisis in the context of the…upheavals that have repeatedly transformed the nature of capitalism since the late 18th century.”

It is comforting that amidst the chaos of now we can look back to history to make sense out of all this. Anatole breaks up our past into four distinct periods:

  1. The beginning of the industrial revolution coincided with “social and economic upheaval that started with political revolutions in America and France and the industrial revolution in England.” They created the first era of modern capitalism running from 1815 to the First World War.
  2. A new era began with World War I, the Russian Revolution, and most importantly the Great Depression. A time when “unprecedented political and economic traumas destroyed the classical laissez-faire capitalism of the 19th century and created a different version of the capitalist system, embracing FDR’s New Deal, Lyndon Johnson’s Great Society, and the British and European welfare states.”
  3. The next period came about not through vast societal problems as before, but instead through an acute problem in our financial system. “The global inflation of the late 1960s and 1970s – inspired the free-market revolution of Margaret Thatcher and Ronald Reagan.”
  4. This leads us to the crisis of today and a new tomorrow.

If we view our problems in this context it may be possible to see a pattern:

  1. “From the early 19th century until 1930, politics and economics were distinct spheres.”
  2. “Then, from 1932 onward, came an almost romantic faith in benign, all-knowing governments and an instinctive distrust of markets, especially financial markets.”
  3. “The political revolution of 1979-80, took the opposite view. This version romanticized markets and distrusted government.”

This means our great capitalist experiment is embarking on Capitalism 4.0, where we will no longer focus on keeping markets and government separate, or even favoring one over the other. We will instead try to blend them together smartly. Such is our next great hope, but, first a little more on our present:

“The Thatcher-Reagan revolution of the early 1980s was widely proclaimed as a rediscovery of true capitalism, and this worldview is still held by most conservative politicians and business leaders. In the great scheme of things, however, the dominance of free market fundamentalism from 1980 until 2009 was just one thirty-year phase in the long history of modern capitalism.

“Many politicians and business leaders consider, for example, that any government interference with free market forces is inimical to the free-market system. They oppose all such interventions on principle as the thin end of a socialist wedge. Given the long and triumphant history of capitalism before anyone heard of Reagan and Thatcher, this is an absurdly narrow-minded view. The changing relationship between government and private enterprise, between political and economic forces, has been the clear feature of capitalism.

A simple lesson from history that seems lost in today’s leaders, a group whose focus on the now ignores the lessons of our past. I hope a few more people read this book, even the introduction where all this is pulled from.

In doing so it may teach the lesson that:

“Capitalism has never been a static system..it is an adaptive social system that mutates and evolves…(and when) threatened by a systemic crisis, a new version emerges that is better suited to the changing environment and replaces the previously dominant form.”