This paper statistically examines the relationship between the incumbent president's political party and the US economy from 1949 to 2024. Compared with Democrats, Republicans have delivered significantly lower GDP growth and greater growth in unemployment. Democratic presidents have significantly lowered unemployment, but Republican presidents have had no significant effect. Neither party has had a significant effect on the debt-to-GDP ratio. Increases in national debt predict lower unemployment after one year. Increased unemployment predicts lower GDP growth after one year but higher GDP growth after four years. GDP growth predicts lower national debt growth after one year. Higher national debt reduces GDP growth after four years. S&P 500 returns predict GDP growth, while higher Dow Jones Industrial Average returns predict lower GDP growth and higher GDP growth predicts higher Dow Jones returns. Presidential party predicts higher federal debt under Republicans after one year.
Neoclassical economics, which forms the foundations of mainstream economic analysis, is institution-free. But the economy is not a group of people or a set of prices and quantities. It is an institutional framework within which people interact to improve their economic well-being. The institution-free framework of neoclassical economics engages in economic analysis while assuming away the economy. When teaching the neoclassical framework, it is worth emphasizing not only that the framework uses simplifying assumptions, as all models do, but that those assumptions hide the mechanisms that produce the neoclassical equilibrium outcomes. How much faith should one place in policies derived from economic models that do not take the economy into account?
Trade is generally good for economies. This finding permeates economics, though there are still attempts to undermine it. There are stylized game theoretic models that may indicate strategic benefits to tariffs, but even these models do not necessarily address the secondary effects of erratic tariff policies. When tariff policies are difficult to predict, the policy uncertainty creates its own negative pressure on production. This note speaks to the concept that there are more than two players in a trade war.
I identify two strains of neoliberalism. I designate the most common use as pejorative neoliberalism, a term of disparagement for marginalist and freemarket thinkers. This use traces its origins to interwar Germany as a pejorative for the Austrian school. Since the 1990s, a nearly identical usage has been adopted by the academic far-left. I designate as non-ironic neoliberalism a post-2010 attempt to reclaim the term to describe moderately pro-market, but technocratic, beliefs. This version has more in common with the market-failure economic theorists of the mid-twentieth century than with the critics of their theories. I conclude that neither usage of the term has meaningful explanatory value for classical liberal economic theory.
Hinzen, John, and Saleh (2022) argue that the design of the bitcoin protocol results in a negative network effect. In their view, additional users create network congestion and settlement delays that discourage adoption. This is an interesting theoretical result, but it rests on faulty assumptions about how bitcoin actually works. In particular, the authors fundamentally misunderstand how bitcoin achieves consensus and how the entry and exit of miners affect the timing of new transaction blocks. The authors also ignore existing, widely implemented scaling solutions.
