Why Democratic Presidencies Have Created 100,000 More Jobs Per Month Than Republican Presidencies Since 1939

Since Nixon - who quipped, "We're all Keynesians now" - the simplest distinction between Republicans and Democrats has been the belief in Keynesian economics.

Keynes was a savvy investor who died wealthy. He didn't just manage his own investments but also managed the portfolios of institutions like King's College at Cambridge.

Keynes - like modern Republicans - was a big fan of capital markets and their ability to create wealth. He also knew that capital markets sometimes need intervention - something most Republicans still don't admit.

A simple example of when markets need intervention is when there is a recession. When spending and hiring is down, the rational investor will abstain from making investments. This - of course - means that the downturn could be prolonged or even worsened. Everyone is doing what is best for them as individuals and as a result doing what is worst for them as a group. The simplest understanding of Keynes is that he argued that government should stimulate overall markets (with spending or tax cuts or both) during downturns in order to return the economy to full employment and entice rational investors to again expand, hire, or start new businesses.

Republicans are more likely to see downturns as good for the economy and are reluctant to intervene. A Republican president will happily sign a budget that results in deficits but is less inclined to do that simply because unemployment is up. One of the big differences between Romney and Obama in 2012 is that Romney advocated for letting the car companies in Detroit go bankrupt rather than intervening to save the companies and the jobs they represented.

So the simple question is, do presidents more sympathetic to Keynes preside over periods of higher rates of job creation? The answer is yes. Since 1939, 3X as many jobs have been created under Democrat presidents than Republican presidents. And this is not simply because Democratic presidents have been in office more years. Since 1939, the economy has produced about 100,000 more jobs per month under Democratic rather than Republican presidents.

Lincoln's huge breakthrough was to make the creation of capital even more important to economic progress than conquering new land. FDR's huge breakthrough was to make labor markets the simplest measure of economic health and tailor policies towards full employment and wage growth (and all the R&D and education policies that suggested in addition to stimulus programs).

There are plenty of Republicans who still haven't updated their ideas about the policies that make for a healthy economy since the time of Coolidge roughly a century ago. The difference in the rate of job creation is a simple consequence of their resistance to that update.

[Numbers updated through December of 2023, as of 5 Jan 2024]