Ezra takes Mitt Romney to task:

I’d focus instead on Romney’s comment that “We have seen the most anti-investment, antigrowth, antijob strategy in America since Jimmy Carter. The result has been it’s harder and harder for people to find work.” By any measure, this is absurd. Taxes are at a 50-year low. The Dow has staged a roaring recovery. Business profits are near record levels. And the economy has gone from losing 780,000 jobs a month to gaining about 160,000 jobs a month. That is to say, it’s getting easier and easier for people to find work, even if it’s not nearly easy enough.

Ezra makes a good point: it is easier to find a job now than it was in, say, June of 2009. That is, Romney is wrong to make the blanket statement that it has proven harder and harder to find a job, though one would have to take into account the long-term unemployed, young workers, the marginally attached, etc. It could be true that the most vulnerable workers are finding it harder and harder to find work as the cost of taking on new workers increases, if it is indeed increasing. (This will vary from state to state and across industries, though there are federal initiatives that will cut in one direction or the other.)

So how about Romney’s first sentence? My sense is that Romney is making a fairly modest claim, having limited himself to the period since January of 1981. There are a few ways that we can evaluate Romney’s claim. For example, one could argue that the investment climate might have been objectively worse circa 1982 or 1992, yet that the strategy pursued during those periods nevertheless proved more conducive to investment, job creation, etc., than under the current president.

Tax revenues are low as a share of GDP. To some extent, this reflects temporary tax provisions. Yet it is also a reflection of the weak recovery. As my Economics 21 colleague Chris Papagianis observed in 2010, taxes as a share of GDP are expected to increase:

[T]he progressivity of the current tax system means revenue grows faster than the economy over the long term. From 1946-2008, revenues averaged 17.8% of GDP.
Under CBO’s extended baseline scenario, federal tax revenues will rise from 14.9% of GDP in 2010 to 20.7% in 2020 and 23.3% in 2035 (assuming current law remains in place). In other words, if no tax relief is enacted, taxation will increase by more than 30% as a share of the economy (compared to the historical average) in less than 25 years. If you look at the change relative to today’s very low share (14.9%), the jump is more than 50%.

It is far from obvious that the unusually low tax share of GDP reflects a broad strategic decision to maintain revenue at historically low levels. The temporary tax provisions actively pursued by the White House have generally been designed to increase the purchasing power of less-affluent households, with the possible exception of the extension of low tax rates on capital income. The extension of the 2001 high-income rate reductions was agreed to only reluctantly, and so one can debate whether it reflects a White House strategy. If it does, the fact these the extension was temporary rather than permanent can reasonably be interpreted as a strategic deficiency.

I am of the view that the health of the stock market is not a particularly helpful guide to the health of the broader economy, though it does tend to correspond with business profits for publicly-traded firms. I share Zachary Karabell’s view on what he calls the stock-economy connection:

Stocks represent ownership stakes – tiny ones – of companies, and companies increasingly exist in a universe only marginally related to any one national economy. They can, in fact, avoid many of the things that drag down national economies – labor, health care, taxes, old people, young people. And they can take advantage of things like cheap and plentiful global capital, easy mobility of goods, and increasingly helpful information technology systems that allow them to increase efficiency and productivity. They exist in their own transnational economic system, and the value of their stocks has little to do with whether the U.S. economy or any economy is ailing.
Of course, investors still believe in that correlation, and so trade the economic news, which in the short term means that stocks can track the economic data for that reason. But that doesn’t mean that a company such as Microsoft or Caterpillar is nearly as tethered to or dependent on the health of the economy in order to make colossal profits. And the sooner we collectively recognize the degree to which corporate land has broken free of national economies, the more we will be able to have the right discussion about national economic policy and about how and where to invest.

Indeed, one could argue that high corporate profits reflect markets that are not sufficiently competitive. This was the source of my objection to a recent column by Steven Pearlstein:

Good Capitalism, Bad Capitalism, by William Baumol, Robert Litan, and Carl Schramm, divides capitalist economies into several categories, including oligarchic, state-guided, managerial, and, finally, entrepreneurial capitalism, which could serve as a proxy for a “free-market economy.” One could fret that we’re shifting from entrepreneurial capitalism to, say, state-guided or managerial capitalism without claiming that the Bolsheviks are taking over.
Stock markets have fared well in many state-guided economies and economies dominated by large firms. Private-sector profits can be quite high in these economies as well. Indeed, high profits might actually be an indication of the strength of incumbents, as Ashwin Parameswaran’s mico-fragility/macro-stability thesis would suggest.

This is not to say that President Obama’s economic strategy as it relates to investment, job creation, and growth really has been worse than that of Presidents Ronald Reagan, George H.W. Bush, Bill Clinton, and George W. Bush. But I don’t think the idea is obviously absurd, nor do I think that it is disproven by reference to corporate profits, a low tax share of GDP, or the relative health of the stock market.

I have a bigger problem with the idea that we can talk meaningfully of a presidential economic strategy. I actually do think that the president’s approach to economic policy is misguided, yet it has proven very difficult for this president, and indeed any president, to translate his policy preferences into policy. Had the president succeeded in passing cap-and-trade legislation and had he only extended the middle-class component of the 2001 and 2003 tax cuts, thus adhering more closely to his preferred strategy, I tend to think that the economy would be in somewhat worse rather than better shape.

Part of the underlying premise of the Romney campaign is that the former governor’s preferred economic strategy, in which fiscal stimulus would have placed a far heavier emphasis on direct government purchases, leaning heavily on replenishing the military’s capital stock, would have proven more effective than the president’s. This is a separate from the claim that President Obama has advanced a lackluster economic strategy when compared to those pursued by previous presidents, but it also merits scrutiny.