Here’s a great question from Chuck in the comments:

Do you have a reply to those who might say that the rationality of
voters is largely irrelevant since election outcomes can be predicted
by macro factors like income and GDP growth?

Yes, I’ve got a bunch.

1. If democratic competition leads politicians to adopt a highly similar list of demagogic policies, variation in demagoguery won’t explain much about electoral outcomes.  But candidates will still need to demagogue to win.  If policy positions didn’t matter, why would politicians spend so much time trying to figure out what the public wants – and wants to hear?

Think about it this way: Even if unilateral free trade would be great for growth, no serious politician would propose it.   The popular backlash would be massive.  Since no one tries it, it doesn’t explain variation in vote share.

2. If short-run macro fluctuations are pretty random and largely beyond the control of political leaders, rational voters wouldn’t vote on the basis of them.  This is, of course, exactly how most economists see things – short-run growth is noisy, and if anyone can influence it, it’s the Fed, not the president.

3. The standard result in the literature Chuck references is that voters put massive weight on the last quarters of the election.  Even if politicians did have a lot of influence over short-run macro performance, rational voters would reward politicians for their overall performance, not just what happens right before the election.  The upshot: Politicians have little incentive to advance policies that promote long-run growth, and lots of great ideas sit on the shelves gathering dust.

Anyone else want to chime in?