Articles:
Does the economy determine elections?

It has become conventional to say that most general elections are won or lost on economic issues, for those are the day-to-day matters that affect more voters than any other. In America’s 1992 presidential election, when Bill Clinton beat the incumbent President George Bush (senior), he even gave us a slogan to summarise the point: “It’s the economy, stupid.”.

            According to legend, that slogan was put in large letters in Bill Clinton’s campaign offices, to remind staff that every day they must talk to voters and the media about the economy, not about intellectual distractions such as foreign policy or the reform of health care. America was in recession as the election year began, but by the time President Bush lost the vote in November, the economy was, it later turned out, recovering. But he failed to convince the electorate that things were getting better.

            That legend should be kept in mind by anyone who is following the election campaign that is under way in America this year. The economy is again slipping into a recession, or at least severe slowdown, thanks to the subprime mortgage crisis, falling house prices, and the huge losses announced by major American banks. Unemployment has begun to rise. In the many TV debates held during the party primaries, economic policy has become one of the most important issues.

            So will the 2008 election again be one determined by “the economy, stupid”? If America does get into quite bad economic difficulties, with unemployment rising sharply and incomes falling, the economy is bound to be important. The question, though, is quite how voters will be able to make a choice between the candidates on the basis of economic policy.

            Normally, this can be done quite simply, for it the economy is doing badly voters will be inclined to blame whoever has been in government. That is presumably what happened in Japan’s Upper House elections in 2007, when Shinzo Abe was punished for disappointing economic growth and rising inequality, along with the pensions scandal. But in the United States, 2008 is a strange election year: there is no incumbent candidate, as Vice-president Cheney is not trying to succeed his retiring boss, as most vice-presidents have done. Since 2006 Congress has been controlled by the Democrats, not George W. Bush’s Republicans, so even there it is hard to cast your vote simply in order to punish an incumbent party for a bad economy.

            Moreover, there has been something quite surprising about the way in which the American election campaign has proceeded so far. A year ago, if you had asked economic pundits what economic issues would feature during the primaries, especially the Democratic primary, they would immediately have said two words: trade and China. Everyone expected America’s huge trade deficit with China to become an election issue, just as deficits with Japan did in 1984 and 1988, and for populist candidates to bash China as hard as they could. But it hasn’t happened. China has barely been mentioned.

            The reason why China has so far escaped attacks during the campaign is probably the fact that the subprime mortgage crisis has made it clear that America’s economic troubles are home-made. They cannot easily be blamed on foreigners. But also, another reason may well be that in 2008 economic issues are not proving to be quite as dominant as the conventional wisdom about elections would expect.

            The conventional wisdom, that it is always “the economy, stupid” may well not in fact be correct. In 1992 Bill Clinton won only 43% of the national vote despite his famous slogan; he beat George Bush mainly because, unusually for America, a third candidate took a large number of votes. That was Ross Perot, a Texan businessman who stood as a right-wing, isolationist, anti-trade candidate and took 19% of the vote, most of which would otherwise have gone to President Bush.

            Something similar could still happen in 2008 as another businessman, Michael Bloomberg who is currently mayor of New York, is considering running as an independent. He would not be isolationist, but could seriously disrupt calculations for the November vote.

            Also, however, it may well be that even between Bill Clinton and George Bush, it was not simply economic recession that caused voters to support Mr Clinton. The big difference between those candidates was not their economic-policy ideas but rather the way in which Mr Clinton seemed to be in close touch with the concerns of ordinary people while President Bush did not. Famously, President Bush suffered embarrassment in a photo-opportunity at a supermarket check-out where it appeared that he had never used a supermarket before. He looked remote and out-of-touch, just as Shinzo Abe seemed in 2007 to be out of touch with the lives of ordinary Japanese.

            This year in America the candidates in November will have to convince voters about two related questions. The first is that they must convince voters that they are a person around which the whole country can rally and unite. The disaster in Iraq and the deeply polarised nature of politics in America over the past decade or more, have left the nation both divided and demoralised. The second is that they must convince voters that they are in touch with ordinary people’s lives and concerns: that means not just recession but issues such as health care, pensions and inequality.

            These tasks are related because it won’t be possible to unite the nation if you are not in touch with the nation’s day-to-day concerns. To succeed, it may not be necessary to be populist, nor to claim to “feel the pain” of ordinary voters, as Bill Clinton did in 1992 and throughout his eight-year presidency. What will be desirable is a sense of credibility, a sense that a candidate is open to new ideas and to change, and open to the interests and worries of a wide range of Americans rather than just a core group of supporters.

            Thus, my prediction for the true slogan for 2008 is not “It’s the economy, stupid”. Rather, this year’s slogan should be: “It’s the credibility, stupid.”