The Little Book of Economics: How the Economy Works in the Real World, Revised and Updated

Chapter Nine

All the President’s Men

They Don’t Control the Economy but They Sure Do Try

Presidents live or die by the economy. If you tracked public disapproval of the president against the unemployment rate, you’d see they move closely together. Unfortunately, being held responsible for the economy isn’t the same as being able to do something about it. Economic growth is the product of countless unorchestrated actions by business, consumers, innovators, investors, and government at home and abroad. A president may get a change in taxes or spending through Congress, but the effect on growth is often fleeting and hard to detect. The government agency with the most immediate, tangible influence on the economy, the Federal Reserve, is also the one the president is least able to push around.

Even when a president’s policies do change the economy, they may not show results for years, and then, not the intended ones.

For instance, the inflation that Gerald Ford and Jimmy Carter struggled with began with mistakes by their predecessors, Lyndon Johnson and Richard Nixon. The deregulation often attributed to Ronald Reagan actually began under Carter. The Internet revolution that buoyed the economy in Bill Clinton’s last years in office could be traced to the Defense Department’s development of a dispersed communications network in the 1950s and 1960s that could survive battlefield conditions. And who’s to blame for the financial crisis that made the last years of George W. Bush’s presidency ...