The Conversation

By Adam Lockyer

Today in Florida, Mitt Romney formally accepted the Republican nomination for President of the United States. In and of itself, this changes nothing. Since May we have known that Romney had the nomination stitched up. What it changes is the level of scrutiny that Romney will now come under. Traditionally, it has not been until after the official nomination that people (as opposed to academics, journalists and political junkies) begin to pay attention to the challenger for president.

For clues about how the proceeding months are likely to play out, we can take a look at how Romney’s campaign has gone so far.

It has become clear that Mitt Romney does not intend on winning the presidency. He hopes President Barack Obama will lose it. This expectation is based on the state of the economy. The central message at the heart of the Romney campaign is a simple two-step logic: that under Obama’s stewardship the economy has been growing too slowly and too many people remain out of work and that Romney is an extremely successful businessman who can help the “job creators” create jobs. However, each step might be a miscalculation.

Unemployment and presidential elections

A fact that has already been repeated so often it has become cliché is that no incumbent since Franklin D. Roosevelt has won a second term while the unemployment figure has had an eight in front of it. According to the Bureau of Labor Statistics, the July 2012 unemployment rate was 8.3%, practically unchanged from the month before, but down from 9.1% a year earlier. According to this rendering, Obama’s time is numbered.

This, however, is a simplistic interpretation of the link between unemployment and presidential elections. A closer look at the relationship reveals a weak link between unemployment and election outcome. Incumbent presidents Dwight D. Eisenhower, Richard Nixon and George W. Bush all presided over increasing unemployment rates and all won re-election. Ronald Reagan won in 1984 while unemployment was at 7.5% with a huge margin of 18.2%, which suggests that the unemployment rate could have been up in the dreaded “eights” and Reagan still could have comfortably won. FDR was facing an unemployment rate of 16.6% when he won re-election in 1936 and a rate of 14.6% when he won again in 1940.

The pattern also seems muddled in the opposite direction. During Bill Clinton’s second term, unemployment dropped from 5.3% to 3.9% but his high profile vice-president, Al Gore, couldn’t defeat George W. Bush in 2000.

The crucial “swing states” that will decide November’s result cast no more light on the situation. Nevada (12%), Florida (8.8%) and Colorado (8.3%) have unemployment rates higher than the national average. Indeed, Nevada has the worst figure in the country. Wisconsin (7.3%) and Ohio (7.2%) have rates under the average, while Iowa (5.3%) has the sixth best rate, New Hampshire (5.9%) has the seventh best, and Virginia (5.9%) is tenth in line.

Although the correlation between unemployment and a president’s re-election prospects is close to zero, this does not mean that unemployment is completely unimportant. Voters are fickle and place greater value on what a candidate will offer in the future than what they have delivered in the past. So, probably more important than the hard unemployment figure is whether voters believe that it is heading in the right direction.

In sum, it is probably a poor campaign strategy to sit back and allow the poor economic performance to decide the election. Unemployment, and economic data more generally, is only one of many factors that people hold in their minds as they cast their votes. People interpret macro data in very personal and localised ways and cast their votes accordingly.

Romney the businessman

Is a businessman what America needs or wants? Clearly, the Republican campaign views Romney’s business experience as his greatest asset. At a fundraiser in July, Romney remarked: “I’m not going to apologise for being a successful businessman.” He told donors: “Those that take risks sometimes succeed brilliantly, wonderfully; and that makes us a stronger economy.” He has repeated the same basic idea at most public appearances.

Running mates: Romney and vice presidential nominee Paul Ryan at a campaign stop in Commerce, Michigan EPA/Jeff KowalskyThere are two problems with running for president as a businessman. The first is political. Although businessmen hire people when times are good, they are also the ones that fire them when things turn sour. So, the Romney campaign is trying to remind people that economic times are bad and many people have lost their jobs. The problem is that Romney looks just like the guy who recently sacked them.

We quickly arrive at the situation where both the Republican and Democratic political strategists believe that Romney’s business experience works in their favour. Democrat attack ads come at Romney’s experience in one of two ways. First, by painting Romney as an uncaring, uber-rich, out of touch business elite who outsourced American jobs to China. Second, by clumping Bain Capital (Romney’s financial business) in with Wall Street, which many Americans perceive was responsible for the GFC and escaped relatively unscathed, while the rest of the country is now paying the price.

Besides the politics, there is also the question of whether businessmen actually do make good presidents. In a 2009 C-Span survey, six of the ten best presidents had no business experience, including Ronald Reagan (actor), John F. Kennedy (war hero), Franklin D. Roosevelt (government) and Teddy Roosevelt (all-round action hero). The two presidents of the 20th century with the most extensive business records – Herbert Hoover and George W. Bush – were ranked among the all time worst.

Romney’s strategy from Tampa

Even if the Romney campaign viewed the economy and his business experience differently, it probably would not drastically affect their strategy. From Tampa, it is fairly simple: a) raise a lot of money, b) spend it overwhelming in the eight swing states, and c) hope structural features – like the economy – turn in their favour.

It isn’t necessarily a bad strategy; indeed, it’s about the only one available. Yet it might not be enough.