More Romney Charts

It's been argued to me that the Reagan Zone of Economic Freedom isn't even the dumbest Reagan-related slide in that Romney slide show. Here we have a chart of the historical determinants of economic progress in America. There turn out to have been only three of them -- the Smoot-Hawley Tariff, the GATT agreement, and the election of Ronald Reagan.

There's so much wrong with this chart that I hardly know where to begin, but for starters though Smoot-Hawley was surely a mistake are we really supposed to believe it was the sole cause of the Great Depression?

Comments

Not that the primary cause, poor decisions by central bankers, gets much play in the popular press.

Posted by Will Allen | October 24, 2007 11:57 AM

Hilarious. One can simply line up whichever factor or event you prefer, starting in 1972 or thereabouts, and add it as another determinant of prosperity. Jimmy Carter's election, first episode of Battlestar Galactica, Star Wars premiers, Reggie Jackson hits three homers in WS game, porn makes transition to video, Vietnam War, etc.

I think Romney may actually be just as crazy as the others.

Posted by tinisoli | October 24, 2007 11:58 AM

Well, the slide doesn't say that Ronald Reagan's election caused the increased prosperity from trade. He's simply content to allow his audience to make the inference on their own.

Posted by Tyro | October 24, 2007 12:09 PM

The Smoot-Hawley thing is weird, but not as weird as highlighting Reagan's election. From the data, that appears to have no impact on the growth trends whatsoever. At least the Smoot-Hawley line marks some sort of economic event.

Posted by Judah | October 24, 2007 12:13 PM

According to that chart, tariffs were flat or went up in the Sixties when the economy was strong, went down a lot in the Seventies when the economy was weak and then were flat in the Eighties when the economy was fairly strong. The secret to prosperity: Raise tariffs on foreign goods.

Posted by Jose Padilla | October 24, 2007 12:17 PM

I can not read the chart.

But here is the data from BEA on net trade's contribution to real gdp growth:
1950-59...-1.7%
1960-69...0.02%
1970-79...1.31%
1980-89..-1.21%
1990-99..-2.46%

What this says is that before 1980 trade made a significant positive contribution to US economic growth.

But since 1980 trade has significantly hurt growth.

this is just the opposite of the point he is trying to make.

Posted by spencer | October 24, 2007 12:18 PM

Are we really supposed to believe it was the sole cause of the Great Depression?

Yes, supply siders often make this argument. I think it's baloney, but if Romney wants to pander to the voodoo-econ crowd...

Posted by Matt Stevens | October 24, 2007 12:32 PM

I just like that the chart cuts of in 2000. Why would that be, I wonder?

Posted by Jeff Fecke | October 24, 2007 12:36 PM

Perhaps the 80 million teenagers who lost their virginity in 1980 should get some credit for the economic boom as well.

Someone should run on the platform of allowing those people to lose their virginity every year for the sake of economic growth.

Posted by gregor | October 24, 2007 12:38 PM

Spencer: thanks for the numbers. People often don't realize what a small percentage of our GDP is derived from trade. We are a huge market. Huge.

Also, Matt Stevens: Are you sure about that? In my experience, half intelligent conservatives go straight to the monetarist argument on the depression. Even really dumb one like Rush Limbaugh argue some version of the monetarist argument (I am pretty sure I have heard him argue this.) From what I can tell, the only people who exclusively mention Smoot-Hawley are people who have never read even one history or argument about the Great Depression. Everyone else debates, Friedman, Keynes (or some variant thereof), Kindelberger, or Eichengreen.

Posted by d | October 24, 2007 12:41 PM

d: The supply-siders are not monetarists (although they'll use Friedmanite arguments when it suits them, just as they'll quote Keynes from time to time). You're right, the people who make the Smoot-Hawley case are largely amateur economists, but with a couple of exceptions, supply-side economics was created by journalists, not economists.

Posted by Matt Stevens | October 24, 2007 12:53 PM

In fact, it would be as intellectually responsible, and perhaps even more accurate even if still hugely distorted, to graph growth in GDP alongside growth in government spending (G). But that would raise akward questions to a Republican audience. More interesting, in fact, would be a graph showing the amount of GDP filtered through the government and the decrease in economic volatility as ratio of G/GDP rises.

Posted by d | October 24, 2007 12:55 PM

Romney's just a Dave Barry fan. Barry argues in his Dave Barry Slept Here: A Sort-of History of the United States that the Hawley-Smoot Tariff has such a great name that it should be understand as the driving force behind most of American history.

For example, homesteaders were driven off their lands in the '30s by the giant clouds of dust kicked up by... The Hawley-Smoot Tariff.

Posted by DivGuy | October 24, 2007 1:03 PM

Didn't he also name a band in the 1950s called Bill Hawley and the Smoots or something? It really was a pretty good running gag, as running gags go.

Posted by jhupp | October 24, 2007 1:35 PM

Well, d, I quite frequently encounter people who do put forth the notion that greater government spending is a primary cause of gdp growth since the Depression. They tend to not be as prominent as some of those who most ardently sing the praises of strong supply side nonsense.

Posted by Will Allen | October 24, 2007 1:42 PM

Ironically, you can insert the year Bill Clinton was elected into that graph and use the correlating spikes to rationalize the economic brilliance of Clinton. Notice how the graph spkies down right after Reagan was elected? Must be because he stimied the economy, right?

Posted by freddiemac | October 24, 2007 1:43 PM

I'm pretty sure Ben Stein attributed the Great Depression to the Smooth-Hawley tariff in Ferris Bueller's Day Off; hence the Romney chart.

Posted by Neil | October 24, 2007 2:07 PM

Just draw a straight line through the chart, and it looks like nothing we've done has had any significant impact on GDP at all. Hmm...

Posted by mickslam | October 24, 2007 3:16 PM

Ah, no, Ben Stein directly refuted this chart in Ferris Bueller's Day Off. "Did it work? Anyone? It did not work, and the country sank further into the Great Depression."

We can infer quite clearly that a) the Depression had already begun, and b) the SHT simply failed to do what leaders at the time thought it would do, which is reverse the trend. Now, he may have been wrong about what the leaders at the time believed, but that is the only contentious point in his history lesson of that day.

Posted by jhupp | October 24, 2007 3:19 PM

Its oil that drives that there chart

Posted by George | October 24, 2007 3:29 PM

Jude Wanniski devotes a chapter ("The Stock Market and the Wedge") of "The Way the World Works" to outlining day-by-day how the downward bumps of the stock market in 1929 were the results of increased expectations of the likelihood of Smoot-Hawley passing Congress.

Of course, the view that the competitive protectionism *after* Smoot-Hawley was passed was responsible for turning a stock market crash into a worldwide depression, is a much more mainstream and broadly accepted view.

Posted by Chris | October 24, 2007 3:39 PM

reading this chart is like understanding climate change from 150 years worth of temperature data -- you have a bit of end-point bias. Monetary, trade, and tax policy certainly fits the facts with much fewer assumptions. I would certainly not argue that free trade is the most important element but the free-er flow of capital has allowed more higher-value services to be done here while offshoring lesser-valued manufacturing -- before I am flamed: we're talking GDP here not ethics. Decreased inflation and more importantly expectations of lower inflation have allowed foreign capital to flow here to build bigger businesses. Tax policy has also stabilized so that expectations of the current rates are steady -- again allowing businesses opportunities to plan capital investment in a stable environment.

Posted by mike c | October 24, 2007 5:42 PM

Just draw a straight line through the chart, and it looks like nothing we've done has had any significant impact on GDP at all. Hmm...

Mickslam pretty much nails it. The line is actually pretty nearly straight from 1948 to 2000, much more so than I'd ever have guessed. Like Jeff Fecke, the 2000 cutoff does strike me as a bit suspicious, but I'm too lazy to look up the numbers so I'll just have to wonder.

I think the funniest thing on the chart may be starting this long, continuous, fairly even growth with a marker denoting the 1948 creation of GATT rather than, say, the end of a global-scale enormously destructive world war a couple of years previously.

P.S. On a purely technical note, why does Mitt bother to have these slides online if they're so hard to read even on his own site?

Posted by Warren Terra | October 24, 2007 7:30 PM

It's terrifying to me that Romney was a successful management consultant for years. Maybe this sort of "analysis" actually passes muster in board-rooms around the country.

Posted by TW Andrews | October 25, 2007 1:03 PM