Search the Site

Episode Transcript

I’ve got a question for you but you’re not going to like it. Most people, if you ask them this question, their heads explode, they sputter, they swear, they tell you you’re a moron for even thinking this question must less asking it. Let’s ask it anyway. Here goes. How much does the President of the United States really matter? I mean, we know the rhetoric: the president is the leader of the free world, the most powerful human being on the face of the earth. Let’s back off from the rhetoric, try to break it down. Let me introduce you to some people whose heads don’t explode when we ask the question, people who take the question seriously. We’ll start with that gamblers and stock markets have to say about the power of the Oval Office. Then we’ll visit a baseball manager and then a baseball scholar to look for parallels between the American pastime and the American presidency. Finally, we talk about the actual job and whether the president is more like a puppet master pulling every string that makes us dance or the Wizard of Oz, the symbol of power. We’ll start with an economist who’s also fixated on American politics, even though he’s an Australian.

Justin WOLFERS: I’m an associate professor of business and public policy at the Wharton School. This year I’m a visiting scholar at the Brookings Institution.   

Stephen J. DUBNER: Justin, you’re a betting man, yes? 

WOLFERS: You bet.  

DUBNER: You come from a country, Australia, where betting is not frowned upon so much as it is in this country, yes?   

WOLFERS: We’ll bet on two flies crawling up a wall.   

DUBNER: When two flies are crawling up a wall, how do you personally pick your favorite? 

WOLFERS: I go for the one in the lead. 

DUBNER: Tell me about betting on the outcome of a presidential election or an election similar. What’s the most you’ve ever bet? What’s the most you’ve ever won or lost? 

WOLFERS: I think the legal status of betting on U.S. presidential elections is actually quite unclear, so I’d be rather foolish to go on the radio saying if I won or lost a large amount of money.  

DUBNER: I was giving you the fig leaf of pretending that you were voting on an Australian election. 

WOLFERS: Betting on an Australian election. I did do that.  I won a couple hundred dollars when Paul Keating became Prime Minister back in 90-93.  He won what was called ‘the unwinnable election.’ I was about the only person in Australia to say that he would win that. I won a few hundred dollars. 

DUBNER: You pay a lot of attention to what are called prediction markets where people can lay bets on everything from sporting events to natural disasters to political elections. Explain how they work and what they can tell us about the Presidency. 

WOLFERS: You can actually go to a fairly sophisticated websites.  My favorite is where there’s a large amount of trading on what’s going to happen on the next U.S. election. The brilliant thing about it is there’s so many clever people out there who want to win money that all these clever people are getting in this market. Therefore, the price is getting moved around by their information. The price ends up reflecting the wisdom of the crowds. All of these different sources of information — from formal models to water cooler conversations  — end up getting reflected in how people bet. Therefore, they end up getting aggregated into this market prize.   

One of the things we can do is we can look at how each candidate in each presidential election was doing in the political prediction markets. Therefore, we know which candidates were a really big surprise but no one expected it to happen. If you’re a candidate where no one expected you to win and then you win — if people think that that’s going to have a big effect on the economy, then at the same time we should see stock prices move either up if they think you’re good for the economy or down if they think your bad for the economy. What we’re actually able to do is take these historic data back from 1880 through to the present.  We’re able to say how surprising was it that this candidate won and how much did financial markets move as a result and from that get some sense of just how important it is that we elect one candidate rather than the other.  

DUBNER: What we’re here to talk about today is a much broader and I think really hard question. Let me just ask it to you straight. The question we’re asking is this:  How much does the President of the United States really matter?   

WOLFERS: That’s a really hard question to answer. We could just look in data and see where the economy went well under certain presidents and poorly under others. But we’ve actually had so few presidents it’s going to be pretty uninformative. The truth is it could be reverse causation.  People tend to vote Democrat when they’re worried about unemployment and they tend to vote Republican when they’re worried about the budget or when they’re worried about inflation. Sorting this out is very difficult.   

A different thing we could do is try and think about the different ways in which the president effects the economy. The president effects fiscal policy but over the past century the truth is we haven’t used fiscal policy particularly aggressively. Even then, when we say, “How important was the stimulus?” We don’t know what would have happened without the stimulus.  It makes it, again, incredibly difficult.  

DUBNER: You studied the 2004 election between George W. Bush and John Kerry and its effect on the markets. What did you learn from that? 

WOLFERS: 2004 was a social scientists dream. If you want to study the effects of the Presidency on anything — in my case, on the economy — then, if you’re a doctor, what you ‘d do is you’d run a big randomized trial. Half the time, you’d randomly make it a Republican president, half the time you’d randomly make it a Democrat president. You’d see how those two treatments did in terms of effects on the economy. The problem is we’re not allowed to do that in the social sciences.  I can’t randomly make someone president. 


WOLFERS: Yet. But if you remember the 2004 race, around about 3:00 on Election Day the exit polls got leaked and the exit polls said that John Kerry had won on a landslide. Now, around about 7:00 at night, they counted enough votes that it had become quite clear that, in fact, Bush was going to win. But what you have is this 4 hours — I’m a Democrat, so I’ll say 4 beautiful hours — in which we basically had a Kerry presidency. It was random because the only reason we thought John Kerry was president was because of a misinterpretation of the early exit polls. So what we can do is we can look at how the financial markets perform during those 4 hours of the Kerry presidency and compare that to either the 4 hours prior when it was clearly a Bush presidency or the 4 hours after when we learned it was actually going to be the second George W. Bush presidency. When we do that you see that stocks fell a little bit during the 4 hours of the Kerry presidency. Then, they rose a bit when it became the Bush presidency so that tells us that the stock market preferred George Bush [to] John Kerry. It sounds like good news for Republicans. Now, let me give the Democrats’ response which is, in fact, [that] it didn’t move very much. It looks like the difference between having a Bush presidency and a Kerry presidency for the value of U.S. stocks was maybe 1 and a half or 2 percent; which is really a pretty small thing.   

DUBNER: How much can the president put his or her thumb on the scale of the economy and move things, especially in the fairly short term, i.e., a 2 or 4 year election cycle. 

WOLFERS: If I look at what a president does and how they spend their day and then I try and translate each of their actions into an effect on the economy, it’s hard to see how they have much effect at all. Under this president the fiscal stimulus was a useful thing. The unemployment rate might be a percentage point — or even a little bit more — lower as a result of what he did. But right now, I think a majority of economists — it’s not unanimous — but a majority would say that more fiscal stimulus is a good thing. Even if you were to convince the president of that, there’s no way on earth he could make it happen. Because the president has to work so closely with the legislative branch, that’s an enormous discipline and also prevents them from really having a big effect on the economy.   

DUBNER: Talk to me about that for a moment. When the president and the congressional majority are of the same party, how much does that influence the president’s power? Can we tell?   

WOLFERS: It’s a little bit too simplistic to look at the U.S. Congress and think of it in terms of parties. It turns out that right-wing Democrats and left-wing Republicans are similar. There’s not a lot of party unity in this country the way there is in other political systems, particularly parliamentary systems. Obama can get anything passed the Maine senator Olympia Snow wants to see pass. Calling it a majority one way or the other is less helpful. It really is who the key pivotal plan is in the House and the Senate.   

DUBNER:  Have you ever lost a considerable sum betting on a political outcome? 

WOLFERS: Yeah. I sometimes bet with my heart.  I’m the sort of fool who will bet the Red Sox are going to win. And when I lose tonight, I’ll do it again tomorrow. And when I lose tomorrow, I’ll do it again the next day.   

DUBNER: Which politician has lost you the most money? 

WOLFERS: John Kerry.   

DUBNER: John Kerry? 

WOLFERS: Not that I was betting on the US election.  

DUBNER: Of course not. Did you try to claw back any of your losings from him? 

WOLFERS: I decided to double down because if I had lost in the era, I’m sure he’s going to bounce back in the second era. We economists have our behavioral failings too. 

The sunk cost fallacy lives and breathes within even an economist as esteemed as Justin Wolfers   It’s terrifying isn’t it?

The esteemed and terrifying Justin Wolfers is an associate professor of business and public policy at the Wharton School and a visiting scholar at the Brookings Institution.

In a minute we’re going to get to the work of measuring power.  Since that’s hard to do for a president we’ll start smaller.  We’ll also hear from Lyndon Johnson’s dog and former Attorney General John Ashcroft who explains how a president can lead convincingly even he doesn’t govern so well.

*      *      *

I’ll be you a hundred dollars you can’t name this pianist. He was from the state of Missouri, town of Independence, he loved the piano, sometimes thought about a career in music. Instead he opened a haberdashery shop.  Later he became president of the United States. That right; Harry S. Truman.

Truman had an eventful Presidency: deciding to drop the atomic bomb on Hiroshima and Nagasaki; the end of W.W.II; a tough post-war economy at home; the founding of the United Nations; also the Taft-Hartley Act, which, it turns out, was passed despite the most powerful object the president can wield: the Veto. So how do you isolate the president’s power from the forces that shape history, society, the economy? Justin Wolfers, as clever as he is, admits it’s pretty much impossible to do so because the president’s playing field is so vast. So let’s get small.  Let’s try to measure the power in a realm where as with the Presidency there’s an authority figure with whom the buck stops. I’m talking about the baseball dugout. A baseball manager on field and off is the teams boss but he doesn’t throw a single pitch, you can’t even argue too hard without getting tossed out of the game.

Here’s Joe Madden, manager of the Tampa Bay Rays which won the American League East Title this year with 96 victories, the second-most in all of baseball.

DUBNER: Tell me this Joe: what does a manager actually do?

Joe MADDEN: Um …

DUBNER: Let’s put it this way: there are two groups of people, let’s say. People who follow baseball and people who don’t. The people who don’t, they see a grown man in a little League uniform sitting in the dugout spitting out sunflower seeds and say, “What the heck is going on?”

MADDEN: I stopped doing the sunflower seed things and I stopped chewing tobacco. But what does a manager do? For me, here’s what I think: we intellectualize the day. That’s what I try to do. I start playing the game in the morning and that’s just part of it. The other part is, obviously, dealing with the personalities: the conversations I may have to have during the course of that day, whether it’s players, whether it’s front office, whether it’s dealing with the press. There’s so many different components to being a manager.

DUBNER: How much do you think the manager actually matters when it comes to a teams win/loss record?

MADDEN: It can depend, honestly. When you’re talking of a more veteran-laden team, the manager may have less of an impact, because you’re really going to permit these guys to just go out there and play and try to stay out of the way as much as possible. They don’t really need as much guidance in game. They may need some prior to the game. Don’t be deceived because there are lot of baseball players that are always seeking advice, counsel with managers or coaches etc. But in-game, veterans pretty much like to be left on their own.  The team that doesn’t have as much veteranship among it is going to require more of an impactful manager. 

DUBNER: But wouldn’t you like to just go to your stat guys upstairs and say, “Hey guys, feed into this computer everything you can to try to isolate how many games I won for us.”

MADDEN: How about how many games I’ve lost? I would be concerned about that too.

DUBNER: If you were looking for a parallel job to describe it, what would that be? How does the job of baseball manager compare to, say, the president of the United States?  In other words, you’re in charge but you can’t necessarily affect the outcome as much as you’d like.

MADDEN: Right. There’s a lot of other people involved in this and it’s like you’re the overseer of what’s going on.  You look at what the president does and obviously it’s a complex … at least it looks that way from a distance. Ours is too, but it’s definitely more limited, I would think. We’re not dealing with the Middle East and Afghanistan, etc. We’re just dealing with Tampa vs. the Yankees.

Joe Madden is a baseball practitioner.  Now, here’s a theorist. J.C. Bradbury is known as the “Baseball Economist.”  That’s the title of one his books and he’s a professor at Kennesaw State University in Georgia.  Bradbury and some other baseball economists have crunched the numbers to try measuring how much impact a baseball manager has on the outcome of games.

J. C. BRADBURY: What we found when we look at managers is that while some might be slightly better than the others, it’s not a big difference between one manager to the next in terms of the decisions that they make. What I’ve tried to do was look at players who played for many different managers and coaches and see how they perform differently under different managers.  Many years ago, I did a study on pitching coach Leo Mazzone, looking at how his pitchers performed with him as the pitching coach and without. I found that whenever he got a pitcher, that pitcher pitched a lot better and I found some similar effects for Bobby Cox, whom Leo Mazzone worked with. But in terms of looking at overall managers, I have not found much differentiation at all between how well players perform with different managers. As they move from team to team, they tend to perform about as well as they always have. Some managers do seem to have a little bit better performance than others ,but it’s not statistically different from any other manager so it’s hard to separate that from noise.  

Most managers, when it comes to on the field behavior, are pretty much the same. So why do you even need that guy?

BRADBURY: The reason you have to have a guy in the dugout is because, if you’ve ever played intramural sports in college, you know that when there’s no coach, people aren’t on the same page. People disagree. It’s just nice to have one person to say, “This is what we’re going to do. This is the plan to move forward.” The manager has to be there even though he may not be doing anything that much different than any other manager might do. 

DUBNER: You need dad in the house.

BRADBURY: Exactly. You need that final arbitrate to say, “This is the decision we’ve made and we’re going with it.”

DUBNER: Sounds a little bit like what the President of the United States does.

BRADBURY: Absolutely. The president is just a third of our government. We have the legislative and executive branches and if the two Houses of Congress agree and the president agree, we can get policy. But it’s very complicated for them all to agree and so it’s very hard for the president to even have an impact on the economy directly, especially when much of what goes on in the economy is determined outside by market forces. The president serves as a focal point to say, “How are we doing? Are we doing good or are we doing bad[ly]?” Voters sometimes look to blame the president when things aren’t going well, even if though there’s not much he or she could have done about it. Or they may try [to] reward them when things are going well, [when they] just happened to riding good times.  

DUBNER: Every baseball manager who’s ever managed will tell you some version of the same thing: when the team loses, the manager gets blamed and when they win the players get the credit. Do you see a parallel between that and the President of the United States as well?

BRADBURY: Absolutely. We’re often stronger with negative emotions. When things are going well, we like to attribute it to things that I did.  “I’ve kept my job, I must be doing a good job at work.” But when I lose that job, it’s got to be someone else’s fault. Our self-perception is certainly going to foster that notion of giving credit to ourselves but giving blame to people who are making other decisions.

DUBNER: How vast do you believe the gap to be between the president’s actual influence on our daily lives and what American citizens think is that influence?

BRADBURY: I think an extremely wide gap. People think the president is almost like a benevolent despot determining our fortune. The president is really just someone who’s sitting in the co-pilot seat in a plane that’s already on autopilot. Certainly, there are some things that they can do and we always have pilots in planes just like we need a president. The president serves in that role. 

DUBNER: Let me go back to when you talked about the manager being the decider. “Do we bunt or do we not bunt? Do we steal or do we not steal?” Is the president in that role as well?  Is there so much going on in the White House and the Federal Government that sometimes that’s the role of the president, just to be the dad, the traffic cop?

BRADBURY: The president tries to be the dad, but the manager really is someone in charge who can actually do these things. The manager doesn’t have to go to both houses of Congress to get approval before he does what he does. But the president does serve as a cheerleader to say, “This is where the policy debate needs to be.” So that all the members of Congress can get together and say, “Here’s where we’re going to argue and here’s where we’re going to reach our decision.” Rather than setting the line for determining exactly what we’re going to do, the president is about, “Let’s determine which problem we’re going to focus on.” Because the media is so focused on him, it gives him that agenda setting power.

DUBNER: Why do you think so many voters seem to ascribe so much power or influence or hopes and dreams or nightmares to the president?  It seems as though he really can become the sponge to absorb every emotion from every voter. Why do we think that’s so when it plainly isn’t so?

BRADBURY: We’ve got to vent, right? If things aren’t going well, let’s go ahead. I’m going to go out, I’m going to vote for the President. I’m going to put a bumper sticker on my car. Economists are well aware of the value of the vote isn’t all that much anyway. For expressive purposes, we often like voting and paying attention to politics.

DUBNER: Maybe we should be grateful for all this complaining. As you put it, it’s venting which takes real emotion, potentially real anger. People have a means by which to express it. Instead of having to go beat up somebody or, God forbid, assassinate somebody you can just shout and scream about how the president is an idiot. And everything is alright.

BRADBURY: Right. Voting and bumper stickers are much cheaper than therapists. I definitely think that’s a good idea.

So sometimes the president is the manager making the decisions and sometimes it’s just the guy leading the cheers. As J. C. Bradbury and Justin Wolfers say, measuring what the president does is hard enough. But measuring leadership, well, that’s even harder. What makes a leader? A lot of people would say it’s converting hard presidential power into the power of persuasion.

Lyndon Johnson, our 36th President, was a master of persuasion. This is a man who could even get his dog to sing.

That last voice might also sound familiar. It’s John Ashcroft with a song he wrote himself. Ashcroft was U.S. Attorney General for 5 years under George W. Bush.  After 9/11, he helped shape the power of the presidency through law enforcement. He’s also a student of history.

John ASHCROFT: The president is by far and away the most important person from a governance point of view in the country. Most of the time, through American history, he’s been the most important person from a leadership point of view. He sets not only a governmental agenda but he sets a leadership tone. When we think of our earliest presidents and the great heroes that we have as presidents, most of them are remembered not so much for their governance as they are for their leadership. If you think about George Washington, few people can mention any of the laws that were passed under his time as president. But they know what he stood for and the moral tone that he brought to America.  When you think about Abraham Lincoln, it was his devotion to the value and human dignity of individuals, things that may not have been so much governance-related although they were eventually translated into governance with the freedom of individuals who had been enslaved. There are different categories of leadership and responsibility. The leadership in a moral and cultural sense may be even more important that what a person does in a governmental sense. A leader calls people to their highest and best. The process of governance is really a way of setting thresholds over which people must go in order to stay out of jail.  No one ever achieves greatness merely by obeying the law. People who do much more higher and better and above what the law requires, they become really valuable to a culture. A president can set a tone that inspires people to do that.

Here’s someone who knows exactly what the law requires of a president. Bernadette Meyler is a professor at Cornell Law School who specializes in the Constitution and executive power.

DUBNER: It’s a cliché, but the president of the United States is regularly called the most powerful person on earth. What say you?  Yes, no, maybe so?

Bernadette Meyler: No. Basically, the President of the United States is not the most powerful person. The president’s power is  constrained in a lot of different ways. The president can do some things but is not by any stretch the most powerful person. 

DUBNER:  Let me ask you about the areas in which a president does have a lot of power. Can you name the top five areas in which a president can act almost unilaterally, if not unilaterally?

MEYLER:  Yes. There are five principle areas. One is as Commander and Chief of the Army and Navy. The President has significant power to order military actions and even to convene military commissions during time of war or to stop a war of his own accord. For example, stopping the war in Afghanistan is the President’s decision. A second area is not of unilateral power, but is a very significant power and that’s the power to decide whom to appoint, especially with judicial nomination. Of course, the Senate then has to confirm those nominees and the Senate has not been that forthcoming in confirming Obama’s judicial nominees. But the President does have the power to select, in the first place, who is nominated. Then a third power, that is often under-reflected-upon, is the power not to enforce laws. The president has the executive power, which means he can execute the laws. But it also means he can decide not to execute the laws. This was very salient under the second Bush, George W., because he decided not to enforce certain kinds of environmental laws and that had significant consequences.  Then, the fourth power is the power to persuade Congress.  I’ve been saying that one of the really important things that the president can do is to persuade Congress to take certain kinds of action.  F.D.R. was incredibly successful at doing that during the New Deal. He was able to get Congress to act in certain ways and to help get out of the Depression by doing that.  Then a final area is a power in relation to negotiating with foreign countries, of power over foreign affairs. One example that comes to mind is when Obama sent Clinton to North Korea to get the journalist released. That power to engage in negotiations with foreign countries and foreign leaders is a very significant presidential power.

DUBNER: We’re here today to ask an incredibly simple question which is: how much does the President of United States really matter?  Now, given your constitutional law perspective, how do you answer that question?

MEYLER: The president isn’t as significant as we imagine him or her to be. We think of the president as having great power to fix the economy, for example, or fix international conflicts. To some extent, the president has persuasive authority to do things like that. But the president  can’t just turn around and fix the economy within 2 years, for example. It really depends a lot more on Congress because Congress has the power to under the spending clause to decide how to raise revenue and allocate those funds. Most federal statutes actually are passed now using the spending power. That’s a really important power. We think the president can do more with regard to that than he can.

DUBNER: Is it a question of not fulfilling campaign promises out of intent or is it a question of having every intention of doing so, but once assuming office, realizing that the power doesn’t exist?

MEYLER: From all of the rhetoric around the presidency, I think that candidates do think they can just get in there and change everything all at once. Then pretty soon, they realize about all of the other things that are constraining their ability.  I don’t think it’s a bad thing that they think, initially, that they can get in there and change everything because that, at least, provides some motivation for trying to change things.  

DUBNER: When you think of the role of the president in relation to Congress, in relation to the States, in relation to the public and so on, what’s the best metaphor for the president?  Is he or she a puppet master pulling every string or is he or she more like the Wizard of Oz, this very mortal man behind the curtain? How do you see it?

MEYLER: The Wizard of Oz is a better analogy, or would be of the two that you suggested, partly because so much of what is important about the president is an image. That is why the president is so important in the foreign affairs context because the president is the figure head for the U.S. abroad and the figure that galvanizes public support or public disapproval.

DUBNER: What happens if tomorrow, whether by miracle or by disaster, depending on your point of view, we wake up without an president or a vice president or a speaker of the House, nobody to fill that throne. What happens to this republic of ours?

MEYLER:  We would continue functioning in almost the same way.  I don’t think that the day to day experience would change all that much.  How we wound up without a president would probably dictate certain kinds of responses or change public opinion or change the ways in which people were responding. But just not having a president — I’m not sure would change the way things happen every day all that much.  

So, there you have it.  If you believe the economists, the president has a lot less power than most people think, especially when it comes to the economy.  If you listen to a politician like John Ashcroft, the president’s most important job is to call people to their highest and best. And if you listen to a constitutional scholar, every president comes into office thinking he’s got the keys to the kingdom only to discover that every door is double locked with a deadbolt. But that’s how we wanted it in this country. We got rid of a king and built a democracy that works a lot like a market. Now like any market it’s a dynamic ecosystem, lots of inputs, lots of outputs. Are some people much, much more powerful than others? Of course they are and the president is a very powerful individual but he’s an individual. It’s easy to overvalue his influence. That’s not to say the job doesn’t have its moments. If you’re the president and you happen to be on a diplomatic visit to Prague, the Czech president might invite you to a cool jazz club and give you a free saxophone because he knows how much you love saxophones and then you get to hop on stage with the band and play some Gershwin. That’s what Bill Clinton got to do back in 1994. Well to the Chief.

Read full Transcript