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Hard Economic Times And Big Government

Jonah Goldberg writes that recent events seem to be disproving the "rule" (by which I think he means conventional wisdom) that "hard economic times make big government more popular." Obama took over during an economic crisis and expanded the size and reach of government, but the idea of more and bigger government doesn't seem any more popular now than it did five years ago.  I think that the "rule" is mostly wrong and I suspect Goldberg does too.  I think it is closer to the truth to say that the popularity of the public philosophy of those in power when hard times strike, tends to decline and the popularity of the public philosophy of those in power when things get better tends to increase. The irony is that, depending on how events go, the idea that "hard economic times make big government more popular" may seem more plausible (without actually being more true) in 2012 than now. 

The historical record when it comes to "big government" and economic downturns seems pretty complicated even if you simplify by only looking at the downturns and who the public voted for in response to those downturns.  As Goldberg well knows the post-WWI economic downturn under Wilson was immediately followed by the election of the lower taxing and lower spending (and quite popular) Harding/Coolidge regime.  Now as Reihan Salam might say, there are causal density issues here.  There were lots of reasons for voters to repudiate the Wilson administration and liberals have their own self-serving narrative of pro-business stooges being elected by isolationist bumpkins, but the record is clear for those who want to see.  The voters, during a severe economic downturn, replaced a high spending and high taxing administration with one that sharply cut both taxes and spending. 

FDR would seem to prove the rule that people turn to big government in hard times, but it is more complicated than that.  The role of the actual performance of the economy and the assigning of praise and blame to public philosophies for economic events is important to understanding how FDR's administration made his expansion of government so popular and so enduring.  FDR's taking office coincided with the resumption of economic growth and increasing employment (though both from much reduced levels.)  This surely had something to do with his popularity and the popularity of his program.  Bigger government seemed to be making economic life better.  This is also a reason why liberal intellectuals worked so hard to portray the progressive Republican Herbert Hoover as a doctrinaire economic noninterventionist.  If limited government (personified in Herbert Hoover) could be tied to the Depression and big government (in the form of FDR) could be tied to the recovery, then liberals would have a rhetorical weapon whose usefulness would outlive both Hoover and FDR. 

Reagan broke the rules.  He was elected during economic hard times (stagflation) and in some ways, things got even tougher in his first year as President (inflation declined but the economy went into a deep recession and unemployment spiked.)  Reagan sharply cut taxes, slightly cut the growth of domestic discretionary spending, and supported the Federal Reserve's anti-inflation policies.  If you believed the theory that voters want big government during hard times, Reagan experience in 1982 would seem to prove you right.  Reagan's job approval rating fell to 36% by the end of 1982 (Source: "The Reagan Presidency and American Public Opinion" by James Ceaser in The Reagan Legacy: Promise and Performance.")  He fought the rules and the rules won - except they didn't.  The economy recovered, Reagan got a great deal of the credit and he won a huge reelection victory.  Once again, the perceptions of what seemed to fail and succeed mattered, which was why liberals in the late 80s and early 90s invested so much time and energy arguing that the Reagan recovery didn't really happen or that it was only a blip or that only greedy people noticed.  To the extent that the economic difficulties of the late 70 - to early 80s were blamed on high taxing, high spending, pro-inflation politics, and to the extent that the resolution of those difficulties were tied to lower taxes, lower spending (mostly notional here), anti-inflation politics, the terms of the debate shifted rightwards for decades.

Obama seems to be combining the experiences of both Reagan and FDR.  Taking over during the worst recession since the Great Depression, Obama got Congress to pass both a huge stimulus bill and the first step in the government takeover of the health care sector.  He took over two of the Big Three American auto companies.  He petitioned Congress to pass a combination of taxes and subsidies that would increase government power over the energy sector.  The result has been a slow and steady decline in his job approval rating.  Even though Obama has tried to act like a junior FDR, the labor market's performance has more closely resembled what happened in the first half of Reagan's first term.  Reagan's job approval rating in the July of his second year was 42%.  Obama's job approval in Real Clear Politics polling average has been between 46.3% and 48.0% for the July of his second year.  FDR's party gained seats in Congress during his first midterm elections.  Obama's party (like Reagan's in 1982) will almost certainly lose seat in 2010.

But that doesn't mean that Obama and the conventional wisdom that  "hard economic times make big government more popular" won't both make a big comeback.  If the labor market recovers even a little (down to the low 7s) by the summer of 2012, we can expect, absent some kind of unforeseen disaster, for Obama's job approval ratings to rise.  Perhaps more importantly, there will be a powerful narrative pushed by the Democrats and liberal-leaning media to ascribe the improvement in economic conditions to the stimulus, Obamacare, etc. and establish that big government is what people want during tough economic times, and that even bigger government will lead to even more growth and that the next economic downturn will require even bigger big government.     
Categories > Politics

Discussions - 7 Comments

Michael Barone argues that after 1937, Franklin Roosevelt's domestic policy was not so popular: "It is true that Roosevelt was re-elected in 1940 and that Democrats retained majorities in Congress. But polling suggests that if the 1940 election had been decided on domestic issues, the Republicans would have won. Roosevelt was nominated for a third term weeks after the fall of France, when Hitler and Stalin and Imperial Japan were allies in command of most of the land-mass of Eurasia—the closest the world has ever come to George Orwell’s vision in 1984. Roosevelt was an experienced and tested leader; the Republican candidate, though talented, was a former utility executive who had never held public office and had no experience in foreign or military affairs."
http://american.com/archive/2010/july/the-return-of-the-jeffersonian-vision-and-the-rejection-of-progressivism

When you are up in the air you probably don't want the to crash - correct? If true, you are a LIBERAL COWARD. Because, it is Big Government Regulation that allows you to make it to your destination safely.

his is Big Government at its worst. Bleeding heart Liberals create huge amounts of Red Tape and Regulate the Aviation Industry to death to make sure planes stay in the air. This Red Tape and Big Government cuts into profit margin and impedes free enterprise. I say out with Socialism and let the Planes fall from the sky. The Industry can regulate itself. If it does not, then they can be sued (however, settlements need to be capped to ensure continuation of industry).

I think a short term increase in crashes and deaths can only be good in the long term for the safety of the industry. Companies will not want to be sued. They will tighten standards on their own just enough so that planes can make it safely to their destination. Of course, there is the cost benefit factor to consider - i.e. acceptable deaths to profit etc.

Flying in a plane should be an adventure, and all risks should not be eliminated because that would involve BIG GOVERNMENT REGULATION and we all know that that is not a good thing.

Juicy Bruicy.

I should think by then that we will have conclusively proved that Big Government strangles innovation and growth, for it requires innovators to submit to patronage in order to maintain the power of those running Big Government. This reduces innovation--for human nature being what it will, some of the innovators will refuse to submit, their innovations will thus not be undertaken (or stolen and reassigned, to invariably lesser effect), and stagnation will result. Republics, Union of Soviet Socialist, see.

Obama took over the economy because people like you numbnuts blame the president when the economy tanks.

You can't have it both ways, but that's exactly how you want it. It's time business grew up and started taking responsibility for its failures.

All I hear is capitalism runs best when government is least involved. Then when the economy runs aground because of greed, corruption, orgasm, the snivelling snot nosed corporate wimps look to government to bail them out and blame the President if things don't turn around.

Like a bunch of sniveling spoiled rotten kids who want everything their own way.

Man up America. Or just stop snivelling.

Thanks, Juicy! The notion that planes stay in the air because of government regulation is one of the funniest things I've read on this blog in a long time!

Ken, I remember an old college prof. of mine saying something similar, but I'm not so sure. I don't know that th politics of 1937-1938 (with the huge recession who causes people still argue about - and those arguments have implications for present debates) translate to the politics of November 1940 when the economy was in recovery and unemployment was trending back down. The brute fact of WWII complicates any counterfactual. If there was no WWII does FDR manage to overcome the twoterm tradition to be renominated? How much of the 1940 recovery was linked to WWII and how much of it would have occurred, and what form might it have taken absent the war? There are certain conditions where my really wordy proposition might have been tested, namely IF the economy had not recovered and IF the Republicans (or dissenting Democrats) had been elected basd on an limited government politics. Which is to say that is is really tough to test this stuff and it doesn't even get into the complications of coalitional dynamics and the quirks and talents of leaders.

I don't think there is much to the conventional wisdom that there is a popular demand for big government in hard times. On the policy level howhever there is a huge amount of conventional wisdom(i.e. Keynesianism) that when Aggregate demand is down, government has to spend since at these levels of unemployment such government spending is not inflationary, and necessary.

There is thus no reason to search for an independent reason for this conventional wisdom. The proposition that "hard economic times make big government more popular."" Is true because during hard economic times politicians on both the right and left following the overwhelming policy recommendations of a majority of economists realize that increased government spending(tax cuts included) is necessary. When both republicans and democrats agree on something, the bills that are passed are spun as necessary, the american people agree and big spending is accepted.

Thus if policy says it is necessary and enough americans know and or accept this conventional wisdom then in hard economic times big government is more popular. Plus folks know folks who lost homes or jobs, so there is sympathy for the unemployed vs. 4% unemployment when jobs outnumber workers and lazyness and graft seems to be at the root of this type of welfare.

Recent events aren't really disproving the idea that in hard times big government is more popular, what is corroding any such corrolation is policy consensus and a sense of what is best for the nation, in part because 1) the teaparty voicing a decidely unkeynesian solution, with its dislike of deficit spending , but teaparty in the broadest sense including all those who are not demand side economists, running the gammut from David Brooks, to Paul Ryan, to Roubini. Thus I think the bears, republicans and stimulus doubters are having a greater impact in convincing folks for various reasons that more deficit spending(big government) is not needed or is unaffordable. Also CNN, Fox News and CNBC have 24 market/politics news which creates a market(demand) for dissenting opinions.

If you erode public confidence in the no brainer consensus that when private demand falls below the economy's productive capacity, government replaces the shortfall in demand by increasing its own, then you simultaneously erode public support for the slightly different but analogous proposition that hard economic times make big government more popular.(the slight difference is that it would technically be Keynesian to lower taxes 80% and government spending 40% as long as this resulted in deficit. big government=deficit.)


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