By Jeffrey Dorfman | February 16, 2015 | www.realclearmarkets.com
President Jimmy Carter is generally considered the worst president since World War II (and perhaps for a much longer period of American history), so you might wonder what lessons candidates can learn from him. Yet, there are many lessons for the crop of candidates starting to jockey for position in these earliest stages of the 2016 presidential elections. Here are the most important.
First, while the economic stagnation of the Carter years is not quite the same as the slow growth experienced under President Obama, it is close enough to offer an important lesson to today’s candidates. The Reagan recovery was one of our country’s strongest and it was spurred on by a combination of lower taxes, fewer regulations, and simple optimism. Today’s tax rates are already fairly low by historical standards, so candidates might focus more on the last two conditions. Further, they should be bold in doing so.
If there is a lesson from American history that should not be forgotten it is the resiliency and basic inclination toward growth and prosperity that our national character and economic system engenders. Candidates should not assume that the “new normal” is normal or that it will continue. Rather, if an elected candidate would simply get the government out of the way and allow the economy to steer itself, strong economic growth will almost surely return and such a return will happen much faster than people expect.
It took about two years for Reagan to get things going full steam after Carter, but that was starting from high inflation that we do not have to worry about at the moment. With the more solid job growth of the past few months and GDP growth that is respectable if not spectacular, candidates would be mistaken to act like a major improvement would be difficult or slow to develop. We bounced back from Carter and we can bounce back from this.
Second, have a message of optimism and confidence. Never underestimate how much of the economic turnaround under Reagan was simply due to his convincing ordinary Americans to be confident again. People who are optimistic about the future see the expected returns to business investment as higher which means that they are more willing to undertake such investments. Expecting a brighter future means more business and job creation, two things which have been lacking for most of this recovery.