Evaluating Obama's First Term—It's All Relative

Moneybox
A blog about business and economics.
Oct. 31 2012 11:46 AM

Evaluating Obama's First Term—It's All Relative

My closing pre-election article on the Obama administration is about the president's forward-looking agenda which has more content than I think people realize.

Jon Chait's is dedicated to making the case for Obama's greatness based on his record, and here I think the key argumentative move is to say to Obama's critics "compared to what?"

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If you look at domestic policy, Franklin Roosevelt and LBJ stand out as the two candidates for having done more than Obama as progressive reformers. And whatever you think of the sins of Obama's national security measures, he easily clears the LBJ bar. So suddenly if you compare Obama not to an abstract idea of perfection but to actual historical American presidents he looks pretty great. I've always found this line of argument persuasive. When criticizing individual policies you should hold politicians to a high bar—you really ought to do the right thing all of the time and do it well. But when evaluating a politician on the whole you need some evaluative context, and the other people who've held the office is a very reasonable choice.

On macroeconomic management, Chait tries to pull the same move noting the Reinhardt-Rogoff research on recoveries from financial crisis and noting that America's doing pretty well by that standard.

I think this is less persuasive. For one thing, one reading of the RR result is simply that politicians usually adopt bad policies in the wake of financial crisis. Another is that to a substantial extent I think the right thing to say is that prolonged downturns cause financial crises and not the other way around. Banks are still failing at elevated rates precisely because the weak economy is turning a lot of loans bad. A better comparison class might be to ask "how's Obama doing compared to other leaders steering their country through the Great Crash of 2007-2008"?

Here I think he looks pretty good but not great. The United States is doing better than Japan or the eurozone or the United Kingdom. On the other hand, we've done worse than Israel or Sweden or Australia or Canada. You can say maybe that small countries just have it easier, and maybe that's right but I think it's hard to test. Certainly Japan and the UK don't seem to have it much easier than the US in virtue of being smaller. The comparative approach leads you, I think, to what's more or less the intuitive conclusion that under Obama the American economy has done okay considering the circumstances but not nearly as well as it might have done. And so since swing voters mostly vote retrospectively based on macroeconomic performance, you wind up with a close election.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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