Contributing Editors

Jerome Lyle Rappaport

Jerome Lyle Rappaport
Founder and Board Member
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Edward Glaeser

Edward Glaeser
Professor of Economics at Harvard University
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Stephen P. Johnson

Stephen P. Johnson
Executive Director of Phyllis and Jerome Lyle Rappaport Foundation
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Greg Massing

Greg Massing
Executive Director for the Rappaport Center for Law and Public Service
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Alasdair Roberts

Alasdair Roberts
Professor of Law and Public Policy at Suffolk University Law School
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Joseph Curtatone

Joseph Curtatone
Mayor, City of Somerville
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Tim H. Davis

Tim H. Davis
Independent Research Consultant
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Scott Harshbarger

Scott Harshbarger
Senior Counsel, Proskauer Rose LLP
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Vivien Li

Vivien Li
Executive Director of The Boston Harbor Association
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Guest contributors

Monika Bandyopadhyay
Suffolk University Law Student

David Barron
Harvard Law School and former Deputy Counsel for the Office of Legal Counsel in the US Department of Justice

Linda Bilmes
Senior lecturer in public policy at the Harvard Kennedy School. Assistant Secretary of Commerce during the Clinton Administration.

Brandy H.M. Brooks
Director, Rudy Bruner Award for Urban Excellence, Bruner Foundation

Felicia Cote
Rappaport Fellow, Harvard Law School/Harvard Kennedy School.

Amanda Eden
Suffolk University Law School student

Sara Farnum
Student, Suffolk Univ. Law School

Kristin Faucette
Student at Suffolk University Law School

Benjamin Forman
Research Director, MassINC

Arthur Hardy-Doubleday
JD/MBA student at Suffolk University Law School and the Sawyer School of Business

Theodore Kalivas
Boston Green Blog, Dukakis Center for Urban & Regional Policy

David Linhart
Student, Boston University School of Law

Antoniya Owens
Research Analyst, Mathematica Policy Research, Inc.

Susan Prosnitz
Senior Advisor, TSA, Washington, DC

Ben Thomas
Boston Green Blog, Dukakis Center for Urban & Regional Policy

Matthew Todaro
Student at Boston College Law School

Alexander von Hoffman
Senior Researcher, Joint Center for Housing Studies

Brett Walker
Student, Boston College Law School

Margarita Warren
Student at Suffolk University Law School

Holding Elected Officials Responsible for Unemployment

Tuesday, September 21st, 2010
By Edward Glaeser

We approach the midterm elections, and the unemployment rate is 9.6 percent. Inevitably, economic policy will play a major role in voting decisions, but wise voting and wise policy require us to recognize two central, almost contradictory, truths about the government and the economy: economic policy does affect people’s lives and the economy, and, less obviously, most of what happens in the economy has little to do with government policy.

A company’s chief executive typically enjoys plenty of control over employees and operations, which makes it natural to judge that executive on the company’s performance. Our president doesn’t really control the government, much less the vast private sector that really determines national economic performance. It is unwise to assign either President Obama, or President Bush, too much responsibility for our current economic troubles.

Elected officials have a strong incentive to overstate the great things that they will accomplish or the bad things that will follow their enemy’s election; they’ve got to persuade people to show up at the voting booth. Listening to the Democrats, you’d think that a Republican-controlled House of Representatives would plunge us into a new Great Depression. Listening to the Republicans, you’d think that their victory would save us from a continuing Obama-exacerbated recession.

Voters certainly seem to have been persuaded by these sorts of arguments. The groundbreaking work by Ray Fair of Yale on predicting elections overwhelmingly documents the link between economic growth and the share of votes received by an incumbent president. At the state level, governors are also re-elected when the state economy is doing well, both in absolute terms and relative to the nation.

But research by Justin Wolfers of Wharton on state-level elections also finds that voters respond to economic shocks that clearly had nothing to do with their governor. No matter how wonderful the governor of Texas or Louisiana may be, it is implausible to think that their actions boosted the international price of oil. Yet when an increase in oil prices causes the economies of oil-producing states to boom, voters are more likely to re-elect their governors; when oil prices plummet, voters in oil states are more likely to oust their incumbents.

Is it any more rational for national voters to believe that presidents can determine the unemployment rate? Monetary policy is the one public activity that is routinely found to affect the economy, but even its ability to explain the business cycle is modestRecent work by Christina Romer, former chairwoman of the Council of Economic Advisers, and her husband David Romer finds that unexpected, apparently exogenous increases in tax rates reduce the growth rate of gross domestic product — but these tax changes are able to explain less than one-tenth of the variation in G.D.P. growth.

Government policy does matter. Wise investment in education can set the stage for successful long-run economic success. Well-designed regulations and tax systems can reduce waste and lower the barriers to entrepreneurship. Social insurance can make the world more just. The benefits of good policy are real, but they are unlikely to strongly affect next month’s unemployment rate.

The unemployment rate remains at 9.6 percent, which proves, depending on your ideological viewpoint, either that (a) the stimulus was a big mistake or that (b) the stimulus wasn’t big enough. I can’t see that the current high rate of unemployment makes either case. We only know that the stimulus didn’t end the recession – but it was always a mistake to state confidently that it would. A perfectly reasonable view is that external forces are enormously strong, and that public spending has – in comparison – a very moderate impact.

Does this moderate impact mean that stimulus spending was too small or too large? It implies neither. It is impossible to look at the current unemployment rate and determine whether the benefits of stimulus outweighed its costs. Each stimulus program needs to be evaluated independently to determine the relationship between its costs and benefits, and that argues against using current unemployment as a metric of success.

On the day of President Obama’s inauguration, I wrote, “Today, Americans enjoy the luxury of thinking that President Barack Obama will make everything better, that he will fix the economy, improve America’s standing in the world, keep us safe, right longstanding wrongs and renew our nation,” but that we should have “a narrower, and more reasonable, set of job expectations.”

We still need to have more reasonable expectations. There are plenty of good reasons to dislike (and like) the administrations of President Bush and President Obama without blaming either one for the current unemployment rate.



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Gov. Deval Patrick speaking at the Rappaport Center's Gubernatorial Speakers Series
HKS Professor Jeffrey Liebman (left) spoke about new ways to spur policy innovation at a State House briefing sponsored by State Representative (and former Rappaport Urban Scholar) Charles Murphy (right).
Triumph of the City: Ed Glaeser talks about his new book on The Daily Show with Jon Stewart
Former Lt. Governor Kerry Healey speaks about political parity at the Rappaport Center
Arianna Huffington and Alan Khazei speaking at the Rappaport Center
Mayor Menino attends Marshall-Brennan Constitutional Literacy Course for high school students
Statnet panel of current and former heads of local performance management programs including Stephanie Hirsch (far right), former head of SomerStat and Devin Lyons-Quirk, third from right.
 MA Attorney General Martha Coakley Hearing on Sexual Exploitation Online
U.S. Representative Barney Frank speaking at the Harvard Kennedy School, cosponsored by the Rappaport Institute.

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