The Mises Institute monthly, free with membership
Volume 13, Number 2
Is It "The Economy, Stupid"?
Murray N. Rothbard
One of the persistent Clintonian themes of the 1994 campaign still endures: if "it's the
stupid," then why hasn't President Clinton received the credit among the public for our glorious
economic recovery? Hence the Clintonian conclusion that the resounding Democratic defeat was
due to their failure to "get the message out" to the public, the message being the good news of
our current economic prosperity.
Some of the brighter Clintonians realized that the President and his minions had been
this very message endlessly all over America; so they fell back on the implausible alternative
explanation that the minds of the voting public had been temporarily addled by listening to Rush
Limbaugh and his colleagues.
So what went wrong with this popular line of reasoning? As usual, there are many layers of
fallacy contained in this political analysis. In the first place, it's crude economic determinism,
what is often called "vulgar Marxism." While the state of the economy is certainly important in
shaping the public's political attitudes, there are many non-economic reasons for public protest.
The public is particularly exercised, for example, about crime, gun control, the flood of
immigration, and the continuing wholesale assault by government and the culture upon religion
and upon "bourgeois" as well as traditional ethical principles.
Other non-economic reasons: a growing pervasive skepticism about politicians keeping their
pledges to the voters, a skepticism born of hard-won experience rather than of some infection by
a bacillus of "cynicism." A fortiori removed from economics is an intense revulsion
president, his wife, and their personal traits ("the character question"), a visceral response that
made a powerful impact on the election.
But even apart from the numerous non-economic motivations for political attitudes and
by the public, the common "it's the economy" argument even leaves out some of the important
features of economic-based motivation in politics. For the famous Clintonian slogan does not
even begin to focus on all the relevant features of the economy.
Instead, to capture the Clintonian meaning, the sentiment should be rephrased as "it's the
cycle, stupid." For what the Clintonians and the media are really advocating is "vulgar
business-cycle determinism": if the economy is booming, the ins will be reelected: if we're in
recession, the public will oust the ruling party.
"Business cycle" may at first appear to be equivalent to "the economy," but in fact it is not.
are vital aspects of the economy felt by the voters that are not cyclical, not part of a boom-bust
process, but that rather reflect "secular" (long-run) trends. What's happening to taxes and to
secular living standards, and among such standards the intangible, unmeasurable but vital
concept of the "quality of life," is extremely important, often more so than whether we are
technically in the expansion or contraction phase of the cycle.
Indeed, the major economic grievance agitating the public has little or nothing to do with the
cycle, with boom or recession: it is secular and seemingly permanent, specifically a slow,
inexorable, debilitating decline in the standard of living that grinds down the people's spirit as
well as their pocketbooks. Taxes, and the tax bite into their earnings, keep going up, on the
federal, state, county, and local levels of government. Semantic disguises don't work any more:
call them "fees," or "contributions," or "insurance premiums," they are taxes nevertheless, and
they are increasingly draining the people's substance.
And while Establishment economists, statisticians, and financial experts keep proclaiming
"inflation has been licked," that "structural economic factors preclude a return to inflation," and
all the rest of the blather, all consumers know in their hearts and wallets that the
prices they pay
at the supermarket, at the store, in tuition, in insurance, in magazine subscriptions, keep going up
and up, and that the dollar keeps being worth less and less.
The contemptuous charge by economic "scientists" that all this experience by consumers is
merely "anecdotal," that hard quantitative data and their statistical manipulations demonstrate
that economic growth is lively, that the economy is doing splendidly, that inflation is over, and
all the rest, doesn't cut any ice either. In the end, all this "science" has only succeeded in
convincing the public that economic and statistical experts rank up there with lawyers and
politicians as a bunch of--how shall we put it?--"disinformation specialists."
If everything is going so well, the public increasingly wants to know, how come young
couples today can no longer afford the standard of living enjoyed by their parents at that same
age? How come they can't afford to buy a home of their own? One of the glorious staples of the
American experience has always been that each generation expects its children to be better off
than they have been. This expectation was never the result of mindless "optimism"; it was rooted
in the experience of each preceding generation, which indeed had been more prosperous than
But now the reality is quite the opposite. People know they are worse off than their parents,
therefore they rationally expect their children to be in still worse shape. Everywhere you turn you
get a similar answer: "Why couldn't you construct a new building with the same sturdy qualities
as this (50-year old) house?" "Oh, we couldn't afford to build it that way today."
Even official statistics bear out this point, if you know where to look. For example, the
real income in dollars, (that is, corrected for inflation) of American families is lower than it was
in 1973. Then, if we disaggregate households, we get a far gloomier picture. Family income has
not only been slightly reduced; it has collapsed in the last twenty years because of the
phenomenal increase of the proportion of married women in the workforce.
This massive shift from motherhood and the domestic arts to the tedium of offices and time
clocks has been interpreted by our dominant liberal culture as a glorious triumph of feminism in
liberating women from the drudgery of being housewives so that they can develop their
personalities in a fulfilling career. While this may be true for some occupations, one still hears on
every side, once again, that the "reason I went to work is because we could no longer afford to
live on one salary."
Again, since there is no way to quantify subjective motivations, we can't measure this factor,
I suspect that the great bulk of working women, i.e. those in non-glamorous careers, are only
working to keep the family income from falling steeply. Given their druthers, I suspect they
would happily return to the much-maligned "Ozzie and Harriet" family of the Neanderthal era.
Of course, there are some sectors of the economy that are indeed growing rapidly, where
are falling instead of rising; notably the computer industry, and whatever emerges from the
much-hyped "information superhighway," when, at some wonderful point in the near or
mid-future, Americans can drown their increasing miseries in the glories of 500 interactive,
digital, cybernetic channels, each offering another subvariant of mindless pap.
This is a future that may satisfy techno-futurist gurus like Alvin Toffler and Newt Gingrich,
the rest of us, I bet, will become increasingly unhappy and ready to lash out at the political
system that--through massive taxation, cheap money and credit, social insurance schemes,
mandates, and government regulation--has brought us this secular deterioration, and has laid
waste to the American dream.
The late Murray N. Rothbard was head of academic affairs for the Mises Institute, contributed a prolific amount of work in various publications, and authored several books