Sunday, 21 October 2012

Do we get the economic policy we deserve?

A number of economic bloggers have in recent times commented on policy ideas coming from various politicians. Matt Nolan on QE, Eric Crampton on exchange rates, Seamus Hogan on local workers and me on the F&P takeover, to name just a few of the very recent ones. The one thing all these posts have in common is pointing out obvious problems with the policy concerned.

If spotting errors in the policies is so simple why then do politicians continue to put such ideas before the public? Doesn't it just make them look bad? It can't be because the politicians do not know the problems with their policy ideas. They all have access to economists who can find the errors just as well as bloggers. So politicians must know their policy suggestions are flawed but the enter them into the political arena anyway. Why?

Assuming that the politicians concerned are not completely stupid, and they are not, then there has to be a good reason for what they are doing. Are they signalling to supporters that they will get a payback when the government changes? So keep supporting us. Are they working on the "any publicity is good publicity" theorem? Are they just floating ideas to gain media attention with no real intention of putting the policies into action if given the chance? Or are the politicians in question trying to gain support from particular groups who they don't think support them now? Have they have calculated that the gain in support from whoever gains from their stated policy will outweigh the loss in support from those who lose from it.

Or is the calculation more Machiavellian  Is it simply that politicians assume most voters don't understand a lot about economics and thus may well think the policies sound good without understanding the true effects that would follow if a given policy was enacted? In short, do politicians think voters are just stupid? If they are right, and we do vote for politicians and their policies, then may be we do get the economic policy we deserve.


M Giberson said...

Without going into a lot of deep thought late on Saturday evening (in central North America), these are excellent questions. Economic bloggers, me included, often seem to take for granted that their targeted policies are idiotic and the politicians supporting them are idiots. The policies may well be, but the politicians in question have excelled in public arenas in which many economic bloggers would fail (if they dared to try), so the politicians must have some skills.

Is "public choice" the full explanation? That is the say, does the net present return of policy choices to politicians explain everything?

Mark Hubbard said...
This comment has been removed by the author.
Mark Hubbard said...

Frankly, I have argued with Cunliffe on Red Alert, a reasonably decent debate a couple of years ago, before I got a life time ban for arguing with Mallard over their moderation policy, and - albeit I'm not an economist - in some cases, at least, I'm not prepared to go beyond, quote: "Assuming that the politicians concerned are not completely stupid." I really don't think many are that bright. (Further proof, read them on Twitter - it's frightening).

Anonymous said...

A complicating factor is that economic policies are received through the lens of the MSM. I am not sure whether the MSM has a real left wing bias (a distinct possibility) or that the style pursued by the MSM, with a focus on "human interest" rather than general welfare, supports policies which are generally ruinous but simplistically help those subjects of the human interest stories. Thus politiciams can be very stupid, in public if not in private.