Winning Elections With Bad Economics

Paul KrugmanYesterday, Paul Krugman wrote something that allows me to discuss a long held theory of mine. He was writing about how the United Kingdom’s economy is finally starting to improve, The Three Stooges Do Westminster. This is in reference to a Three Stooges routine where Moe asks Curly why he is banging his head against the wall and Curly replies, “Because it feels so good when I stop!” Krugman’s argument is that the Cameron government for the last two years have imposed harsh austerity and now that they’ve pulled back, the economy is doing better. But rather than think that economies simply mend themselves if allowed, they think like Curly: their modest growth was due to the austerity (head banging).

Then Krugman gets to something that has greatly concerned me for years:

Politically, this may well work. We’ve long known from US evidence that elections depend on the recent growth rate, not longer-term performance; in fact, an “optimal control” strategy if a president wants to win reelection is to push the economy into a pointless slump during his first two years, then engineer a fast recovery going into the next election. Cameron may have lucked into pursuing effectively the same strategy.

He is no doubt right. But the most important point is that this happens in the United States all the time and it works to the advantage of conservatives.

Here is the mechanism. Conservative economic policies are bad—or at least they have been for the last 30 years. Presidents have their greatest power in the first two years of their administrations. So they get to enact their bad economic policies early on. These are usually squeezing the poor (taking money away from them that they would spend) and gifting the rich (giving them tax cuts that they mostly will not spend). Thus, for the first two years we get Curly banging his head against the wall. But over time, the economy heals. So by the time that the Republican is up for re-election, the economy is finally starting to improve as it adjusts to the new bad conservative economic policies.

It is the opposite for liberals (or moderates as the case has been for the last 30 years). They actually have good economic policy ideas. In general, things get better when they enter office. But by the time they come around to re-election, the economy is stagnant or at least not improving as much as it adjusts to the new good liberal economic policies. Under Obama, it didn’t even take that long. It’s all complicated by other factors, but the overall framework is correct.

So our system benefits presidents who have bad economic policy ideas. Think about that. What can we do about it? Well, for one thing, we could have a better informed public. But it’s hard. I work very hard in my personal relationships to get people to stop fretting over little things (eg welfare fraud) and start focusing on big things (eg corporate fraud). But they don’t want to, because it is easier to despise that stuff they hear about every night on the news than the systemic corruption that the wealthy benefit from every day and that costs all of us poor people far more. Because if corporate fraud (and much else) is with us always, it ain’t news.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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