Passing the Recession Graveyard

Passing the Recession Graveyard
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Here’s a fun question: in the years since the current global economic recession struck in late 2008, how many western world leaders have been able to win re-election? Our own Stephen Harper would be one, as would Angela Merkel in Germany. But beyond that…

With the defeat of incumbent French President Nicholas Sarkozy to Socialist Party challenger Francois Hollande on Sunday, the papers have made much fuss over the fact that Sarko is the supposed the “11th consecutive” political casualty of a continent in crisis. I’ve been trying in vain to find an article that actually names names instead of just citing that number, but near as I can tell, the list is as follows:

  1. Geir Harde of Iceland (resigned January, 2009)
  2. Gordon Brown of the United Kingdom (voted out May, 2010)
  3. Robert Fico of Slovakia (voted out June, 2010)
  4. Brian Cowen of Ireland (voted out February, 2011)
  5. Mari Kiviniemi of Finland (voted out April, 2011)
  6. Jose Socrates of Portugal (voted out June, 2011)
  7. Lars Rasmussen of Denmark (voted out September, 2011)
  8. George Papandreou of Greece (resigned November, 2011)
  9. Silvio Berlusconi of Italy (resigned November, 2011)
  10. Jose Luis Rodriguez Zapatero of Spain (voted out November, 2011)
  11. Nicholas Sarkozy of France (voted out May, 2012)

Then there are a couple of more “iffy” ones, like the recently non-confidence’d voted government of Dutch Minister-President Mark Rutte, who may or may not be able to cling to office in his nation’s upcoming parliamentary elections,or former Slovakian prime minister Iveta Radicova, who resigned preemptively in October of 2011 rather than face certain defeat at the polls.

Outside of Europe, we can also look to Japan’s Taro Aso, who, in August of 2009 became only the second Liberal-Democratic Party prime minister since World War II to be unseated by voters, as well as Australia’s Kevin Rudd, who was forcibly removed by his own party in June of 2010.

It’s obviously a bit simplistic to generalize all these all of these unsuccessful incumbents under a so-broad-to-be-meaningless umbrella term like “political victims of the recession.” They may have been primarily unseated over economic concerns, certainly, but in the modern era, the vast majority of ruling party swaps are rarely provoked by anything else. Similarly, the broad “message” being sent by suffering western voters has hardly been consistent; in some cases, as in France and Denmark, anger over conservative debt-fighting austerity measures yielded a swing from right to left, but just as common was the reverse, as in Britain and Spain, where big-government Keynesianism was the target.

Still, the fact that the “recession” — whatever we interpret it to be at the moment — has overlapped with the end of the careers of a number of the democratic world’s most high-profile and previously successful heads of state does reinforce a kind of narrative, and it’s not a narrative that bodes well for President Obama. Unlike Harper and Merkel, who pre-date the crash of 2008 by a couple of years, Obama does fit the archetype of some of the shorter-reigning European prime ministers of late who openly carried themselves as post-’08 “fixers.” As opposed to being a man who merely had economic turmoil thrust upon him, Barack Obama chose to be president knowing full well the specific scope of the challenges that awaited, and, as books like Ron Suskind’s Confidence Men ably document, came to office with a determined strategy for a new style of economic leadership.

It’s for this reason that I’ve often thought Obama is best analogized to Herbert Hoover, instead of the the Jimmy Carter comparisons he usually gets. Fairly or not, Obama is seen by his critics as being an extremely ideological president, necessitating an equally ideological counter-attack. Should he fall, Mitt Romney will be under considerable pressure to lead with an administration as robustly anti-regulation and pro-market as FDR’s post-Hoover government was aggressively statist. A fixer to fix the fixes of the fixer, offering a stark, visible alternative in strategy.

I’m not sure if there are any campaign tips or tricks to be gleaned from any of this. Barring a universally-acknowledged economic miracle in the next five months, those who want to vote strictly on the basis of reactionary opposition to the “economic situation” will have no shortage of statistics to hand-pick to justify their anxieties. Likewise, if America swaps a Democratic White House for a Republican one, it will be easy to avoid reading too much into it, since it will be so easy to simply stamp Obama as “recession victim number 12,” shrug, and move on.

Do you guys see any lessons for Obama from the recession-era fall of other western leaders? If “the economy” kills this President, will it be because voters legitimately see flaws in his ideology and benefits to Mitt Romney’s, or because they’re simply engaging in the time-honored reactionary tradition of “trying the other way” when the incumbent doesn’t seem to be fixing everything fast enough?




^ 32 Comments...

  1. drs

    The latter.

    Obama has little visible ideology and Romney’s avowed economic policies would make things much worse, much as Hoover’s did.

    “as in Britain and Spain, where big-government Keynesianism was the target.”

    Was it? I don’t remember anything like that that. At any rate, both of the replacement governments have overseen worsening in their economies. The UK doesn’t even have the excuse of having to cater to eurozone bond markets.

  2. ThePsudo

    The conservative-favored narrative that the USA is wholly different from Europe will take a hit if Obama is unseated, but of the two election possibilities that one will remain most conservatives' favorite.

    I do think, however, that it's more likely for Obama to remain than to be unseated. While Obama clearly has an ideology (drs forgets his council of behavioral (read: left-wing) economists, his apology speech to the Muslim World, and most significantly the health care mandate), it is a moderate one when compared to the Democratic Senate. Remember the debt talks, how Harry Reid's Senate was calling for massive tax increases, the Republican House was rejecting all taxes, and Obama was calling for a moderate middle-ground? I think most people are left with that impression of Obama. The fact that he had little success in his push for moderation will be overlooked by marginal voters in favor of his good intentions, and conservative campaigners will expend much money and sweat in vain attempts to remind voters of that ineffectiveness. The fact that Obama has an ideology will pale in comparison to the deep dispute over whether he is capable of expressing that ideology in policy. And unless the Supreme Court declares the health insurance mandate unconstitutional (a real possibility), Obama supporters have an obvious counterpoint to that argument.

    Also, I really believe that America is different than Europe. I can't see the European pattern having enough force to cross the Atlantic and remain decisive. In my view, Republican gains in the Senate are both more important and more achievable.

  3. @kfuchko

    Recession hasn't hurt Harper any!

  4. Jake

    Democrats have been in power for what will be 6 years and Obama for what is 4 years. More than enough time to fix the economy. People will not put up with nearly a decade of a recession. At least not now a days.

  5. Ben

    Oh, of course, because trying to recover from bad policies that costed trillions with a political system that allows an opposing party to throw a hissy like a spoiled child over anything because they didn't get their way is so simple it should take X amount of years. I mean it's not like at the same time the populace in the US alone has to deal with smaller and smaller work opportunities because jobs are being eliminated or sent to other countries to try and save a buck. I guess everyone can go work at McDonald's, huh?

    Let's not forget that one in '29 (that we supposedly are worse off than then) lasted through the thirties, into the forties and was only ended because of WWII.

  6. A. Apolis

    "in some cases, as in France and Denmark, anger over conservative debt-fighting austerity measures yielded a swing from left to right"

    Wishful thinking J.J. my love – those two are swings from right to left.

  7. Jake

    Probably just a typo.

  8. drs

    “Democrats have been in power for what will be 6 years and Obama for what is 4 years”

    If you count dishonestly, yes.

    Democrats got Congress in 2007, but Republicans had the Presidency until 2009. And the force of the crisis didn’t become clear until 2008.

    Then in 2011 Republicans took the House. Democrats have been “in power” for only 2 years, 2009 and 2010; the rest of the time the GOP was in power as much as the Democrats were.

    Actually worse than that, given Senate filibuster abuse; Republicans have had the ability to veto policy for all but maybe 8 months out of the past 6 years. (Senator Franken took his seat late due to recounts, and then Senator Kennedy died.)

    The debt ceiling crisis? Caused by Republicans. Deficits? Laid down by budget-busting Republican tax cuts.

    “People will not put up with nearly a decade of a recession”

    If they elect Romney they’ll get a decade of recession. He advocates contractionary policies.

  9. ThePsudo

    Jake went too far, but that's no excuse for you to do so as well.

    "Republicans have had the ability to veto policy for all but maybe 8 months out of the past 6 years."
    Democrats had that power over most of the Bush Administration (55:45 in 2005-2006, 52:48 in 2003-2004, 51:49 in 2001-2002; in all three cases, Republicans lacked the 60 Senators to override a filibuster), yet they take no credit for letting Bush policies pass. You can't have it both ways, and it makes far more sense to call the simple majority "in power."

    "The debt ceiling crisis? Caused by Republicans." That's only true if you ignore Harry Reid's craziness at the other end of the spectrum. "Deficits? Laid down by budget-busting Republican tax cuts." They were not accompanied by the spending cuts Republicans have been calling for since 1981 and have never gotten. These two complaints of yours are subjective ideology, not objective reality. It takes two to fight.

    "If they elect Romney they'll get a decade of recession. He advocates contractionary policies."
    1) He might advocate them, but no US President has ever gotten them, and 2) economists do not agree that reduced government spending would prolong or deepen a recession. They don't even agree about the definition of "recession." You can't take a select few schools of economic thought and portray them as the indisputable entirety of economics. Even if you could, given the accuracy to which the financial crisis was predicted (ie, it wasn't), how can you expect accurate projection of it's cure? Your guess is not fact.

  10. Jake

    Just because Republicans can filibuster doesn't mean Democrats don't control the Senate. A true leader would negotiate and lead. Republicans under Bush didn't have 60 votes in the Senate and still managed to get things passed.

    Even Bill Clinton and Gingrich ended up after months agreeing. Reagan and the Democrats did the same. So it is possible to work with the opposite party for better or for worst and get a job done.

    The deficit under Bush was nowhere near what it is now under Obama. The spending under Obama has caused a debt crisis. Even if one is to believe that tax cuts loose money in the long run. The US collects on average 20-22% of GDP in taxes. The US is spending more as a percentage of GDP than the US is collecting less as a percentage of GDP. Spending is what like 26/28% or so? Collection has been 16/18 or so. Either way the lack of tax revenue is due to unemployment not so much the tax rate it self. Spending is well spending. Good or bad economy the spending is what it is. Even if we collect more money in revenue there will still be a truckload of overspending.

    Contractionary policies? As in controlling the supply of money? We print money like its a photocopier. And actually having a tax cut wouldn't be contractionary. As it would increase the supply of money in the market place. Obama is the one wanting to raise taxes which would actually take money out of the economy and end up in some government program.

    The simple situation is this: Obama has had 4 years as President. Still haven't recovered. This is America, the American people demand more. Bill Clinton and Reagan worked with other parties and got things done one way or another. Oh and by the way the economy under HW Bush was a lot better than now and he still lost to Bill Clinton because of it.

  11. Guest

    "just as common was the reverse, as in Britain and Spain, where big-government Keynesianism was the target."
    Like drs, I take issue with this. While the message promoted by the Tories in 2010 was that Labour had spent too much, it was really the only one they could run with that would justify what they wanted to use the recession to do (cut without increasing taxes).

    Labour did not have a Keynesian policy, it had a "cut slightly slower than the Tories" policy (and in fact, now they're starting to mention Keynes, they've been doing well in the polls). Prior to the recession, they had a few years of overdue investment followed by a much longer-term squeeze on the public sector; the reason for a lot of the debt is their insistence on keeping taxes so low even the opposition were happy. Labour had alienated a lot of their core support, so most of it failed to turn out, or in some cases, went with the Lib Dems, who at least had some left-wing talking points.

    In Spain, PSOE edged into power as a minority government after 8 years of PP rule capped off with Aznar trying to blame Atocha on Eta. When the markets went awry, PSOE quickly became the austerity party. PSOE fell because the people who wanted a progressive government weren't going to get one from Zapatero, so they didn't bother.

    The two right-wing victories, Harper and Merkel aren't great signposts either, as Minority Harper had been forced to run liberal-friendly budgets, and the BQ-NDP-Liberal battles dominated a lot of the Canadian election anyway; in Germany 2009 the SPD were compromised by being in coalition with Merkel and lost over 6 million votes (while Merkel lost only 2m).

    Rutte also formally didn't get no-confidenced, actually. The Dutch situation is a bit weird, it has 9-10 parties at the moment. Rutte's right-wing Liberal party VVD is doing fine in the polls (he represents the 20% of voters who want austerity whatever the weather), but his coalition partners, CDA and PVV aren't, and they fell out over the budget. Rutte resigned and got a budget through with a caretaker government (and is still PM). The left is likely to win a narrow majority in the polls (rare in the Netherlands!), but a left government might need all 6 left parties, and Rutte will almost certainly have the first attempt at forming a government, and he might be able to cobble together a coalition.

    If any of these are a lesson for Obama, then the answer is that running as the austerity party doesn't work.

  12. ThePsudo

    I think your facts (and the greater pool of facts to choose from) don't match your narrative.

    Take Canada: sure, Harper is not so strong a supporter of austerity as the true believers want, but he is still the most austere candidate in Canada. He also gained 600,000 votes over the previous election, twice the 290,000 combined gain of the left-wing parties. His 2011 victory wasn't just a strategic split of the left-wing parties, but a gain relative to their sum.

    By your own admission, Merkel gained 4 million votes relative to the SDP (losing only 2 million while they lost 6 million). While it is understandable for voters to loose faith in government generally when the economy goes bad, he seems to have weathered the storm far better his opposition. How is that anything but a relative vote of confidence? Did the sum of Keynesian parties gain votes that the sum of austerity parties lost? You provided no reason to believe they did.

    I shouldn't delve into the others; I am remarkably ignorant of those nations' party systems. But, overall, your narrative of austerity parties' election failure seems not to be entirely in line with the facts.

  13. Guest

    Sorry, that came out not quite right. I'm not trying to suggest Canada and Germany are evidence for Keynesianism as the best route to the White House, I'm simply suggesting that claiming they're evidence the other way is problematic.

    A Keynesian vs Austerity votecount is not going to be universally relevant in every election. That was essentially the dynamic in France, but not in Spain.

    Many centre-left parties had turned to monetarism in the 90s so were either not Keynesian or opportunistic Keynesians. Many anti-austerity parties in Europe which gained are not Keynesian but anticapitalist (or in some cases, fascists). Even where PR or STV allows you to vote for them these parties are still taboo for many voters, particularly in West Germany.

    And there are also significant complicating eurozone dynamics in creditor countries like Germany and the Netherlands where the goal is not necessarily austerity at home, but abroad.

  14. Jake

    Will this election be a referendum on Keynesian economics? Probably not as all the government has done is spend spend spend. It has not pulled a Nixon shock or the first New Deal kind of plans. Its just been big old spending plus the TARP. Which considering all the money spent should of put the US back on the right track in theory but hasn't. Keynesian is more policy, ie: organs of the government like the Federal Reserve pushing what "buttons" it can. Obama's plan maybe include that but it clearly relies heavily on spending.

    Bush tried a bit of Keynesian with the Federal Reserve although every time they opened their mouth the stock market went down and ultimately just spent money. In the end the questions will be: Did the Bush and Obama spending of billions bring the economy back? Did it save it? Should the economy have recovered by now despite w/e plan has been used?

  15. Ben

    The Hoover comparison doesn't fit the bill. While I don't intend to be comparing Obama directly to FDR and despite what the punditry says, I think most American's are still fully aware that the proverbial excrement hit the fan because of and DURING the Bush administration

  16. ThePsudo

    During, yes. Because of?

    Even if that's true, it is a little like blaming the Great Depression on Calvin Coolidge. I don't think a year difference in timing undermines the metaphor.

  17. Jake

    It depends how you view things. Hoover's economic plans made the recession worst. He raised taxes and made new taxes and started to increase spending in useless programs. Thus taking money out of the economy. Even FDR called him socialist. FDR then did exactly what he accused Hoover of doing but he did it even more so. Thus he made the recession into a depression. An unemployment rate around 15% for about a decade is a failure of the government to work. It only went down after we shipped millions of unemployed men to war.

  18. Lancelot

    You clearly have a very poor understanding of history.

  19. Jake

    I was talking about how it is viewed. Never said the views were facts.

  20. Ben

    How strange, I hadn't seen this comment but I'm the Ben below this. And not this person. Just to be clear.

  21. ThePsudo

    I invite you to sign up for an official IntenseDebate account so your posts belong more clearly to the same person (and your reputation is tracked). It's pretty neat, and doesn't take long

    It also lets you edit your posts for typo correction and such. That comes in handy. Zulu's complaint about that reminded me.

  22. Ben

    The eleven are the eleven members of the European Council to fall. You have most of them right:
    1. Brian Cowen, Prime Minister of Ireland: 7 May 2008 – 9 March 2011, succeeded by Enda Kenny
    2. José Sócrates, Prime Minister of Portugal: 12 March 2005 – 21 June 2011, succeeded by Pedro Passos Coelho
    3. Mari Kiviniemi, Prime Minister of Finland: 22 June 2010 – 22 June 2011, succeeded by Jyrki Katainen
    4. Lars Løkke Rasmussen, Prime Minister of Denmark: 5 April 2009 – 3 October 2011, succeeded by Helle Thorning-Schmidt
    5. George Papandreou, Prime Minister of Greece: 6 October 2009 – 11 November 2011, succeeded by Lucas Papademos
    6. Silvio Berlusconi, Prime Minister of Italy: 8 May 2008 – 16 November 2011, succeeded by Mario Monti
    7. José Luis Rodríguez Zapatero, Prime Minister of Spain: 17 April 2004 – 21 December 2011, succeeded by Mariano Rajoy
    8. Jadranka Kosor, Prime Minister of Croatia: 6 July 2009 – 23 December 2011, succeeded by Zoran Milanović
    9. Borut Pahor, Prime Minister of Slovenia: 21 November 2008 – 10 February 2012, succeeded by Janez Janša
    10. Iveta Radičová, Prime Minister of Slovakia: 8 July 2010 – 4 April 2012, succeeded by Robert Fico
    11. Nicolas Sarkozy, President of France: 16 May 2007 – 15 May 2012, succeeded by François Hollande

    Croatia's place is somewhat iffy as an observer state and non-euro user. There are three candidates for its position. The other ten are on lock though.
    1. Mark Rutte, Prime Minister of the Netherlands: 14 October 2010 – present, whose government fell in a vote of no confidence on 23 April 2012. A new election is to be held on 12 September 2012 and will likely emerge with Diederik Samsom as Prime Minister in a coalition.
    2. Yves Leterme, Prime Minister of Belgium: 25 November 2009 – 6 December 2011, succeeded by Elio Di Rupo who was actually voted out in June 2010 by a government wasn't formed for a year and a half, under the impetus of the debt crisis.
    3. Emil Boc, Prime Minister of Romania: 22 December 2008 – 6 February 2012 AND Mihai-Răzvan Ungureanu, Prime Minister of Romania: 9 February 2012 – 7 May 2012, succeeded by Victor Ponta who are another non-euro state but a full member of the European Council. It should be noted that though Romania is represented in Brussels by President Traian Băsescu, the Prime Minister is indisputably the head of the government.

    It's honestly most likely Denmark. Interestingly, the same day as Romania's vote of no confidence, one was held in the Czech Republic against Prime Minister Petr Nečas: 28 June 2010 – present which was rebuffed by an eight seat majority. One of the junior coalition parties had recently split and enough members decided to continue supporting the government to survive. It's narrow though and is very likely to fall soon. Though as they aren't a member of the Eurozone, like Romania, it's unclear if they fall under this countdown. They certainly figure from a EU-wide count though.

  23. nickswift

    I've always held that our current economic problems are as seemingly intractable as they are in part because of the fact that politics ensures that both sides get half of what they want. Liberal entitlement expansions coupled with conservative tax cutting result in a fiscal singularity which sucks us all into a black hole of deficit. In addition, both parties in Congress are intent on sticking the blame squarely on each other rather than owning up to their own schizophrenic public policy.

  24. Jake

    Very true. Problem can also be the opposite. In the UK the government is cutting government spending but increasing taxes. Thus the little growth that comes from government spending is gone and the free market has less money meaning it cannot grow nor absorb any individuals coming out of the gov't payrolls.

    All in all, the deficits in many of these countries are simply too big to be taxed out of. The economies might control spending heavily and hope to grow out of the recession sooner rather than later. Even if the tax rate is untouched but spending is cut, just the revenue collected from an increase in employment will result in a ton of cash to pay off any debt.

    If countries are not willing to cut taxes then they MUST be willing to cut regulations in order for business to grow. Gov't spending has shown to give very little economic growth PER CREDIT (dollar, euro, pound, etc.) spent. While the private sector grows either with a tax rate cut (which will be recovered once the economy grows) or cut in regulations (which are hidden costs that gov't never see a dime of most of the time).

    Something has to give so the economy grows. Countries simply cannot afford more government spending. Iceland just told the banks to go screw themselves and got their house and order and the economy pretty much fixed itself when compared to what other countries have tried.

  25. Guest

    "Gov't spending has shown to give very little economic growth PER CREDIT (dollar, euro, pound, etc.) spent."
    I'd be interested to see that sourced, to look more closely at why that might be.

    The multiplier for any fiscal measure – whether it's a tax cut or a spending item – depends on various factors, including the economic context (government spending is less effective when businesses have better investment opportunities), the degree of operational independence the government has (e.g. if it's totally reliant on private suppliers, much of the spending is captured by that market rather than by the intended recipients), and the nature of the measure itself (some measures are there for reasons which can't be measured in GDP). It also depends on the value you place on the work done – e.g. if the government is just enacting a transfer, then you could argue the value is roughly the difference in marginal propensity to spend between taxpayer and recipient minus the cost of administration, but that would ignore other more subtle effects. But some (many, you might hope!) programmes deliver actual GDP gains close to or greater than the cost of administering them, e.g. interventions by social services early on can save much more money on social care, healthcare, police, etc. down the line. These are difficult figures to arrive at, though, so sometimes economists decide to assume arbitrary values like zero or one.

  26. ThePsudo

    Half a car and half a plane do not make a flying car. Uniting two halves of two mutually exclusive programs into one law is the easiest road to incompetence. It's more important that the ideas work together in the same policy than that both parties work together in the same legislation.

  27. Pat Gunn

    I would be surprised if the voters are thinking that way, or are unified enough to be easily characterised; the struggle between America's urban and rural centres, and the mostly-separate institutions and ways of life affiliated with each now dominate our politics; we're about as cohesive a nation as Belgium, except without the handy zipper that would let the mostly-northern-mostly-city folk and the mostly-southern-mostly-rural folk divorce. There are enough swing voters to keep it interesting, but it'd be very hard to say that the voters do anything decisive given how solid most of the voting blocs are for both sides in most elections.

  28. ThePsudo

    I think you exaggerate our division a little, but not a lot. In any controversial decision, in politics or otherwise, there are always people who will always say A and people who will always say B regardless of the specific circumstances. In economics, everyone else is called marginal, meaning that they are open to persuasion. Political change doesn't often come about from changes in that polarity, but from changes in what they are being asked to believe.

  29. Zulu

    The lesson I see is how much stress due to economic recessions closes people's minds and embitters them to clinging to ideologies and drawing battle lines.

    It's depressing to see how easily weak people are.

  30. Zulu

    ^Pardon me for my typos up there

  31. drs

    It takes two to compromise. Democrats under Bush were willing to work with him. Obama’s Republicans have used the filibuster far more than ever in history, and their leaders stated that bringing down Obama was their number one goal. The Democrats also tend to be more diverse these days, Blue Dogs and all.

    The failure of austerity/contractionary policies is evident if you read the business pages. There are *no* success stories. And hell, the policies are called contractionary because they’re what you do in a boom, when you’re worried about inflation. They bring down, contract, inflation, employment, and GDP growth. Doing them now, when the problems are deflation, high unemployment, and flat or shrinking GDP, is stupid.

    The Depression was already a Depression by the time FDR was elected, four years into the Depression. The New Deal, which wasn’t all that Keynesian on net, made things somewhat better. Trying to balance the budget in 1937 made things worse. Massive spending in WWII pulled the US out for good.

    “The US collects on average 20-22% of GDP in taxes”

    More like 18-20% in good years, and 15% at the moment. Most of Obama’s deficits are because taxes are down due to recession, and mandatory safety net spending is up because of recession and employment. Food stamps, unemployment insurance, stuff like that.

  32. @elrechiste

    This is such a great cartoon… Confratulations!!!!! :)