WaPo has the transcript from a chat with Tea Party founder Judson Philips.
Some of the key issues revolve around the effect of the Reagan tax cuts. This is a source of constant mythology. Here is real GDP growth from Carter through Clinton on a log scale, where straight lines indicate constant growth rates.
Besides the recession notches do you see in major changes in the growth rate. There is a little bit of a slowdown since what seems to be the rapid growth of the 1970s but overall the slope during recoveries look pretty similar.
In fact, one the interesting facts about long run US economic growth is that it doesn’t seem to be overly affected by much at all. I’ll steal a graph from Ed Leamer’s Housing IS the Business Cycle as well as the fact that a lot of stuff happend between 1970 and 2006 but it none of it seems to do much to GDP.
Moreover there were some relatively bad things, from a growth perspective, going on in the 1950s: 90% marginal tax rates, heavy rates of unionization, educational and employment disenfranchisement of the majority of the population, etc. Yet, if anything growth seems to have slowed down since then.
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Monday ~ May 10th, 2010 at 7:27 pm
Rick Russell
Out of curiosity, not so much a direct response to this post, but is it meaningful to compute “real” growth over periods of 20+ years? “Real” assumes that there is some consumption basket that makes sense across that time frame*.
In a more direct response, how does this shake out as GDP per capita?
OK, forget it, I did my own graph from BEA and Census data. Turns out it’s almost exactly linear, although — interestingly — Real GDP per capita was nearly flat during the 1950s. Your graph is concealing the effects of the post-war baby boom.
* OK, found an article with more information that I can digest at this moment: http://www.klenow.com/QRC.pdf
Monday ~ May 10th, 2010 at 9:39 pm
Karl Smith
Short answer is that the best deflator (and I am pretty sure what the BEA uses) is a chain deflator.
So we do typical 2000 basket in 2001 then typical 2001 basket in 2002, etc. The compute total inflation as the product of all the indivdual years inflation.
Monday ~ May 10th, 2010 at 7:41 pm
Rick Russell
My own graph:
http://picasaweb.google.com/lh/photo/K03NSRqzxpcNJMLgyR7K-Q?feat=directlink
Black line is linear fit for 1950-2009, red line is 1970-2009.
Tuesday ~ May 11th, 2010 at 10:12 am
Jim
Just underscoring what Rick Russel said — without per capita numbers, the major effect you are showing is population growth. And indeed, the Reagan tax cuts did nothing to population growth.
In the second graph, the ‘narrow corridor’ you show is an artifact of the graph — if we were to look at the number normalized about the trendline, with the y-axis between -3%/+3%, you would be in danger of undermining your own point.
That isn’t to say that you’re necessarily wrong, just that those are bad and manipulative graphs.
Tuesday ~ May 11th, 2010 at 12:44 pm
Rick Russell
My wish is your whatever…
http://picasaweb.google.com/lh/photo/jurCk3zwSPEHZ1ZzoiO_wg?feat=directlink