The Wall Street Journal offers some sage advice today:
For investors worried about how the stock market will fare in the event of a divided government or a sweep by either party in next month’s elections, history offers an important lesson. Stocks tend to go up regardless of which party controls Washington.
This is true. But it’s incomplete, since you might wonder how much the stock market goes up under Democratic and Republican presidents. I’ve got you covered, with the two-term presidencies labeled:
This, of course, is just one of many mysteries of the business community: In general they support Republicans even though Democrats tend to turn in better economic performance. It’s true, however, that Democrats also tend to favor stronger corporate regulation than Republicans, and this produces an interesting exercise in revealed preference: Corporate CEOs are apparently more concerned about regulation than they are about their shareholders.
There’s no question that regulations are annoying, and they can produce a lot of tedious, blood-pressure-raising meetings for CEOs and the rest of the executive suite. They’re also highly salient, whereas economic growth is diffuse and long-term—sort of like climate change. Besides, if CEOs read the Wall Street Journal’s editorial page regularly—and they probably do—they’re most likely convinced that Democrats are routinely disastrous for the economy.
So which is it? Are corporate CEOs shafting their shareholders in order to make their own lives more pleasant? Or do they imbibe too much conservative muck that falsely tells them Democrats are terrible for growth? Or both?
