Lott has teamed up with Kevin Hassett to study whether economic reporting is biased. The paper, Is Newspaper Coverage of Economic Events Politically Biased?, concludes, surprise, surprise that the newspapers are biased against Republicans.
The trouble with their study is that the economy was stronger under Clinton than under either Bush, so of course the reporting of the economy under Clinton was more positive. Lott and Hassett claim to have controlled for this with a multivariate analysis but you should only find this persuasive if you have complete confidence in the competence and integrity of the authors. When building such models there are so many choices you can make that it easy to get the results that you want to see. In this case it is particularly easy, since all you have to do is leave out a relevant variable so that the state of the economy is not fully controlled for and you will get results like Lott and Hassett report.
We probably should not have complete confidence in Lott and Hassett. Lott's previous attempt to show that the media was biased seems to have involved cherry picking of models, and careful selection of models and data to get a desired result seems to be a constant characteristic of his work. As for Hassett, I'll let Lott tell you about him. This is Lott's anonymous review of Hassett's Bubbleology:
Despite Mr. Hassett's track record with his previous book "Dow 36,000," I saw him appear on CNBC during the early morning show and thought that he did well enough that I should buy the book. He promised that you could use his book to figure out what stocks were overvalued and which ones weren't. A pretty important topic given the current market environment. However, after reading this short book I have no idea of how to actually rank stocks on the 1 to 6 scale that he uses. He doesn't actually provide concrete examples, only that he says that he put together this ranking and it worked really well. My other problem is that if this approach works so well how come he didn't use it when his "Dow 36,000" book came out when the stock market was at its peak. Some explanation would have been useful for why Hassett, who is marketing this book as a full proof approach to spotting bubbles, wasn't able to use this approach himself over just the last couple of years to warn people and predict which stocks were going to crash, a period when he was supposedly writing this book. Claiming that you use a not clearly stated formula to identify overvalued stocks after they have already crashed seems like a scam to me.
"seems like a scam", indeed.
The New York Times has published what Lott calls a "hit piece" on their study. The Times gives their study more credence than it deserves (Atrios is disgusted that they even did a story on him), but they do eventually mention Mary Rosh and the 36,000 Dow prediction and finish with an apposite quote from Brad DeLong:
To even base a story on Lott's work at this point in time is to demonstrate a pronounced bias toward right-wing hacks
Update: The AEI is holding an event to promote the study and the official George W Bush blog is also pushing the study. The gang at Lawyers, Guns and Money get stuck into Lott and Hassett here and here.
Update 2: Brad DeLong points out that the NY Times reporter dropped the ball by letting Lott's deceitful statement that "the things he had said in the guise of Ms. Rosh were, indeed, truthful" stand. You can see them here and count how many are plainly untrue.
It's trivial, but the NYT let Lott get away with this "Mr. Lott said that the things he had said in the guise of Ms. Rosh were, indeed, truthful."
I always thought the most damning thing about Dow 36,000 was the glaring conceptual error made by effectively double counting corporate earnings. To recall this, I did a google search on "Hassett Glassman double counting" and got a Slate article as my first hit. Relevant quote:
The fact that the Washington Post still employs Glassman as a business columnist is IMHO a shocking embarassment...
Define "stronger." Today's unemployment rate is identical to that of 1996.
The unemployment rate decreased under Clinton and increased under Bush.
I'll go with fewer people are working under George Bush today then when he came into office.
Oooh. Ooooh. Let me add the $1500 drop in median income. Hmmm. What about the quality of jobs? Oops, turns out that jobs being created pay less and offer fewer bennies than the jobs that are being lost. Perhaps the deficit might come into play as well, I think they called it a surplus when Clinton was around.
Xrlq wrote, Today's unemployment rate is identical to that of 1996.
But IIRC employment is far below the trend established in the late 1990s.
Remember---the unemployment rate most often quoted in the US doesn't count people "not in the labor force"---people who are so discouraged that they've given up looking for work.
Of course, one could argue that the employment numbers themselves are subject to dispute, because of the recent divergence between the payroll and household surveys. Or that the excellent employment numbers in the later Clinton years stemmed from the tech boom, which was actually a bubble and thus not something to be lauded overall.
bigring55t wrote, Perhaps the deficit might come into play as well, I think they called it a surplus when Clinton was around.
This is an excellent point. Given how loose the Fed's policy has become, in conjunction with a highly stimulative "float-debt-and-spend" Republican fiscal policy, it's amazing how tepid the economy is.
Doesn't mean that it's Bush's fault, though---it's silly to view ups and downs of the business cycle as the immediate effect of presidential policies. (Of course, in the long run Bush's fiscal policies will have highly negative effects, IMHO.)
Xriq asked
OK. A working definition of "stronger" might be something like "undergoing a higher sustained rate of GDP growth with lower inflation, lower unemployment, and lower deficits (or even surpluses)."
By any measure you care to name, the US economy was stronger under Bill Clinton than under GHW or GW Bush.
Tim is right about unemployment; in fact he could have put it much more forcefully.
Have a look at the numbers.
During Clinton's two terms ('93 to '01), unemployment
declined monotonically, while it rose monotonically under Bush I and II. (If you go to the BLS, get the PDF file. It's an eye-opener.)
Or check
the figures for GDP.
Average annual GDP increase over the four years of Bush I was 1.9%. For the eight years of Clinton, it was 3.6%, and for the first three years of Bush II, it has been 2.8%.
And as for the deficit -- aaargh, don't get me started.
This case is clear-cut: the US economy did extremely well during the eight years of the Clinton presidency, so much so that when someone argues otherwise I have to wonder if that person is searching for any old stick, even a feeble twig, to beat Bill Clinton with.
All right then, this picture shows exactly what is wrong with Xrlq's comparison.
But what about those hundereds of thousands of uncounted people who make their living off Ebay?
I never saw the phrase before. I first thought Lott meant to say "foolproof approach", but he is a resident scholar at the American Enterprise Institute and I am not. A quick Google search only increases my suspicions:
"full proof approach" -hassett 7 hits
"fool proof approach" -hassett 282 hits
"foolproof approach" -hassett 629 hits
I never saw the phrase before. I first thought Lott meant to say "foolproof approach", but he is a resident scholar at the American Enterprise Institute and I am not. A quick Google search only increases my suspicions:
"full proof approach" -hassett 7 hits
"fool proof approach" -hassett 282 hits
"foolproof approach" -hassett 629 hits
I had to follow the link and read the original, just to convince myself that the celebrated AEI resident scholar was, in fact, that dumb.
I only learned about John Lott's views on guns, media bias and the economy recently. But he had caught my notice with an op-ed piece in the Wall Street Journal. Now, the WSJ frequently publishes some fairly wacky op-ed pieces -- even, occasionally, one from the left end of the spectrum.
But this one was just, well ... stupid. In it, one "John R. Lott Jr." argued that our criminal justice system was fundamentally unfair because Martha Stewart was fined $250,000, gave up a $1.5M salary and personally lost $203M from her company's stock tanking. And the same penalties would not be imposed on the average drug dealer.
My jaw dropped. "Who is this moron?" I asked. Now I know.
For those who doubt that I've fairly summarized Lott's position, on the general principle that no vertebrate could be so clueless, I note that Lott has
proudly posted the piece on his website.
To be honest, I'd be amazed if this effect wasn't there. The Clinton years, as Tim's chart shows, were "Go-Go" years. Economic journalists were explaining away any bad news out of a general spirit of mindless optimism. But this wasn't because the Democrats were in power; it was just the spirit of the times. A fairer study would have included Carter.