Economic Demagoguery: The Limited Effects of Presidential Rhetoric

This is the abstract from my recently approved dissertation. It was defended on November 8, 2012 and approved for publication on the WVU’s ETD website on February 19, 2013.

At this time, chapters (3 and 4) are in the process of revision for publication in peer-reviewed journals. Simultaneously, I am drafting a book proposal for an academic, university press.

A link to the dissertation can be found here:

https://sites.google.com/site/damienarthurphd/publications

Abstract

Given that there exists considerable disagreement about whether the president has a direct and measurable influence over the economy, I decided to research this divergence of views further (Edwards, 2003; Edwards, 2009; Eshbaugh-Soha, 2005; Wood, 2007; Dolan, Frendreis, & Tatalovich, 2008; Cohen, 1995; Beck, 1982; Golden & Poterba, 1980). In my review of the literature, I found that there is research, improperly measured from my perspective, that claims the president is the most powerful economic leader in the United States and that his words have the power to move economic actors and indicators (Wood, 2007). To show these effects statistically, the literature measures the spending, borrowing, and investing of consumers and businesses—economic actors and their perceptions about the strength of the economy from 1981 through 2005. Consumers take cues from the president about their economic futures. If he is positive about the economy in his speeches, then consumers respond accordingly, thus reinforcing positive outcomes in the economic indicators. The literature claims that the optimism present in presidential speeches about the economy was able to influence consumer confidence, which affected macroeconomic performance (Wood, Owens, & Durham, 2005).

This literature and the data sources used raise more questions than answers and produce findings that require further inquiry. For instance, suggesting that optimism in the president’s rhetoric is the impetus in the changes to the Consumer Confidence Index is the wrong approach. Given the disconnect between a president’s optimism and this data source of the economy’s health, I maintain that this approach does not withstand scrutiny (Wood, 2007; Eshbaugh-Soha, 2006).

Therefore, the purpose of this dissertation was to utilize a better approach for analyzing the effectiveness of the president’s rhetoric and then employ a statistical methodology that would allow me to measure its effect on the economy. Through this exercise, I determined that presidents have little direct influence over economic indicators. Their influence comes only from externalities, such as party coalitions, and the connections they are able to create with economic actors. Determining presidential influence over the behaviors of economic actors and using the correct data sources allows for a better research operationalization than arguing that the president’s ability to change economic indicators comes from his position as the most important economic actor in the system (Wood, 2007; Wood, Owens, & Durham, 2005; Zarefsky, 2004; Cavalli, 2006).