WSJ Op-Ed Busts an Old Media Meme: Current Economy Beats Comparable 1990s Period
It's a read-the-whole-thing piece. Too bad it's subscriber-only.
Brian Wesbury, whose previous writings have been blogged on many times by yours truly (including here, here, here, and here), is very tired of the dissing the current economy is taking, and especially how it is unfavorably compared to the economy of the 1990s:
While I find it hard to believe that every complaint is politically motivated, it is difficult to imagine another justification for those who assert that the Clinton economy was better than the Bush economy.
For most Americans, who aren't familiar with economic analysis, it's impossible to determine what's actually happening. But the debate over Bush versus Clinton would be silly, if it weren't potentially influencing policy.
President Clinton took office in January 1993, almost two years after the 1990-91 recession had ended. On the other hand, President Bush took office just two months before the 2001 recession began.
As a result, any economic comparison that uses four-year presidential terms is highly misleading. The Clinton years will always look better than the Bush years with that approach. A better analysis which compares the two business cycles from their previous trough, shows the opposite. The Bush economy is equal to or better than the Clinton economy in almost every area.
Wesbury also makes a great point about the first half of the 1990s that Old Media has collectively flushed down the memory hole. When Wesbury compares that era's economic performance to comparable current times, and the causes of the difference, you'll see why:
There have been periods of sub-par performance, and one of those periods was the first half of the 1990s -- partly thanks to the first President Bush's and President Clinton's tax hikes.
Many argue that President Clinton's 1993 tax hikes did not hurt the economy, and that this proves taxes don't matter as much as supply-siders think. But nothing could be further from the truth. During the first 64 months of the '90s recovery, real average hourly earnings fell 0.2%, while the unemployment rate fell to 5.5%.
For the current recovery, during its first 64 months, real average hourly earnings are up 1.8%, while the unemployment rate is down to 4.4%.
..... Civilian job growth in the past five years is not statistically different than it was in the early '90s, while wages, for every income level, have experienced better performance.
The big difference between the two periods was that tax rates were hiked in the early '90s, while tax rates were cut in the early 2000s. And, contrary to popular belief, tax cuts, because they lift incentives to invest, always lead to a better environment for the overall population.
Wesbury has definitively shown that the tax-hiking era of the early 1990s was one where the average worker made no headway, while during the current tax-cutting era, all boats are being lifted.
If it weren't for writers like Brian Wesbury, information like this would be a closely-guarded secret kept by the Formerly Mainstream Media, whose business-news readers have perhaps never been more poorly served.
Cross-posted at BizzyBlog.com.