Tuesday, June 3, 2008

Parties should think counter-cyclically

That's the message from Andrew Gelman. This may be too high a bar to set for party centered-ness, but it's worth thinking about. Strong party machines in the 19th century often shifted officeholders around from job to job without real regards for what those officeholders wanted.

Anyway, I paste this very thought-provoking message below in its entirety (c/o The Monkey Cage):
One thing I learned in econ class in 11th grade was that government policy should be counter-cyclical (spending more in recessions and cutting back in boom times), but that there’s a lot of pressure to be pro-cyclical, which will tend to exacerbate business cycles. (Except I suppose they didn’t say “exacerbate” in 11th grade.) At a personal level, too, it’s natural to spend more when we have more and cut back when we aren’t doing so well. Every now and then you hear about a “rainy day fund” but my general impression is that these are never big enough to counter the business cycle.

Political parties seem to apply a similar pro-cyclical behavior in their congressional election campaigns. Consider 2008. It’s expected to be a good year for the Democrats, and so now should be the time for them to make some investments in new, young candidates. They should encourage lots of their incumbents to retire, because in 2008, they can win a lot of these districts without needing the incumbency advantage (estimated to be about 10% of the vote, i.e., enough to take you from 50% to 60%). Conversely, this is the time for the Republican Party to hold on to what it has, and to keep all their incumbents in, trying to hold out until 2010 when the pendulum might swing back in their favor. But we don’t see that—actually, something like 30 Republican House members are retiring this year. Republicans retiring, Democrats sticking around—that’s a recipe for big Democratic gains this year. But then in 2010, or 2014, or whatever year it is when the Democrats get wiped out—then a bunch of their incumbents will probably retire, and boy will the Democrats wished they had put in younger incumbents back in 2008 when they had a chance!

One of the difficulties here is that I’m talking about the long-term goals of the parties, but “the parties” are, to a large extent, simply their officeholders. And congressmembers’ incentives can be much different from those of the party as a whole. In particular, it makes sense that an incumbent congressmember will want to quit in a year when he or she would be facing a tough reelection battle, and when the prize for winning is to remain in the minority. Conversely, why step down when you’re facing an easy reelection and the prospect of some juicy committee assignments? So the individual officeholders have an incentive for pro-cyclical behavior, even if it harms their party’s long-term interest.

Beyond the benefits or lack thereof to the individual parties, pro-cyclical behavior would seem to increase the size of political changes, making the swings in congressional representation larger than would be expected simply based on swings in public opinion. Actually, many political scientists would consider this a good thing (an increased “swing ratio”); my point here is that some of this swing is “endogenous” in the sense of arising from pro-cyclical decisions of individual congressmembers deciding whether to run for reelection. It would be interesting to see if this happens with state legislatures as well.

We also see this in the Senate. For example, 84-year-old Frank Lautenberg is running for reelection in New Jersey. This is a Democratic year when the Democrats might do well with just about anybody. (Or maybe not; I don’t really follow New Jersey politics and am just extrapolating from national polls.) In 6 years, they’re going to need to find someone new, and at that point they might wish they had an incumbent already in the slot.

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