In recent months, I have spent more time than I would have
liked on political issues which appear only to have a tangential connection
with the economic issues I originally wanted to write about. There is, of
course, a good reason for this. The big economic issues of the moment are being
driven more by politics than the underlying economics – indeed, we would not
have seen a vote for Brexit otherwise. The causality also runs in the opposite
direction, of course, with many political decisions influenced by the underlying
economics, notably fiscal policy. In any case, economics does not exist in a
vacuum: Economic decisions are taken against the backdrop of the prevailing
institutional circumstances.
But there is an increasing divergence between the way economists and politicians view the world. We saw that during the Brexit and Trump election campaigns. In a very thoughtful piece, Tim Harford (here) outlines the reasons why post-truth currently has the upper hand. In short, a simple lie is easier to distil than a complicated truth. Moreover, facts are often boring – this is why “newspapers” such as The Sport are able to get away with ludicrous stories like ‘World War II bomber found on the moon.’ It’s clearly nonsense, and 99% of readers know it, but it is enjoyable nonsense rather than the prosaic realities which make up our everyday lives. Finally, Harford points out that the truth can feel threatening, and threatening people tends to backfire: remember Project Fear?
Given where we are today, it is easier to sell a story that if we follow a simple course of action we will find a way back to the path of economic righteousness, rather than tell one of two truths: (i) that the pre-2008 model is not going to be resurrected anytime soon and (ii) it will take a lot of time, effort and sacrifice to get our economies back on an even keel. Indeed, the failure of governments to level with the electorate from around 2012 onwards, and the fact that they have tried to use the old repair kit to fix a system which is broken beyond repair, has played into the hands of the populists. After all, their view is that if the status quo is not producing the desired results it is time to overthrow it.
Yet when we think about it rationally, it may seem strange that people in the western world are quite as angry as they seem to be. After all, most of us enjoy a decent standard of living, even if it is not improving at the rate that it once was; we are reasonably well off, comfortable and secure. Instead we worry about immigration, terrorism and the future of our society at a time of unprecedented change. Ultimately, perhaps what we are worried about is the effect of globalisation, and we are assailed on a regular basis about how people will be better off if the barriers go up. That is, after all, how Trump won the US election. Raising the barriers is also the way that the current Scottish government intends to push for its objective of independence, by highlighting the differences between Scotland and England rather than admitting there is more that unites than divides them. Marine Le Pen is employing exactly these tactics in a bid to win the French presidency, though as this week’s Dutch election showed, playing the insider-outsider card is not a guaranteed vote winner.
However, politicians do themselves no favours with some of their own actions (and I am not going to even go near the subject of Jeremy Corbyn’s performance, which is worthy of a post of its own). Francois Fillon is battling to preserve his campaign to be the next French president following revelations that he accepted state aid to fund his wife’s employment as a political assistant, despite no evidence that she has actually done any work. Not so very long ago, such a revelation would have ended his political career but he is still on the ballot paper.
In another demonstration of his tin ear for public opinion, it was announced on Friday that former UK Chancellor George Osborne is to become editor of the London Evening Standard, despite the fact that (i) he is still a sitting MP (so no conflict of interest there); (ii) he has no journalistic experience – the closest he got was an interview with The Economist in 1997 (he didn’t get the job) and (iii) he already earns £650k per year from the hedge fund BlackRock by working just four days a month. This from a Chancellor who imposed the most draconian public sector squeeze since the wielding of the Geddes Axe in the 1920s.
Nothing would please me more than getting back to some good old fashioned economics (and I will). But so long as politicians fail to live up to the economic standards which they demand of others, and so long as their actions continue to conflict with the way in which economists think about many of today’s big issues, politics will always provide a lot of source material for economists. But if you think that I am too harsh on politicians’ actions, I would recommend you take a look at the blog at Another Angry Voice and you will realise what a model of restraint I am.
But there is an increasing divergence between the way economists and politicians view the world. We saw that during the Brexit and Trump election campaigns. In a very thoughtful piece, Tim Harford (here) outlines the reasons why post-truth currently has the upper hand. In short, a simple lie is easier to distil than a complicated truth. Moreover, facts are often boring – this is why “newspapers” such as The Sport are able to get away with ludicrous stories like ‘World War II bomber found on the moon.’ It’s clearly nonsense, and 99% of readers know it, but it is enjoyable nonsense rather than the prosaic realities which make up our everyday lives. Finally, Harford points out that the truth can feel threatening, and threatening people tends to backfire: remember Project Fear?
Given where we are today, it is easier to sell a story that if we follow a simple course of action we will find a way back to the path of economic righteousness, rather than tell one of two truths: (i) that the pre-2008 model is not going to be resurrected anytime soon and (ii) it will take a lot of time, effort and sacrifice to get our economies back on an even keel. Indeed, the failure of governments to level with the electorate from around 2012 onwards, and the fact that they have tried to use the old repair kit to fix a system which is broken beyond repair, has played into the hands of the populists. After all, their view is that if the status quo is not producing the desired results it is time to overthrow it.
Yet when we think about it rationally, it may seem strange that people in the western world are quite as angry as they seem to be. After all, most of us enjoy a decent standard of living, even if it is not improving at the rate that it once was; we are reasonably well off, comfortable and secure. Instead we worry about immigration, terrorism and the future of our society at a time of unprecedented change. Ultimately, perhaps what we are worried about is the effect of globalisation, and we are assailed on a regular basis about how people will be better off if the barriers go up. That is, after all, how Trump won the US election. Raising the barriers is also the way that the current Scottish government intends to push for its objective of independence, by highlighting the differences between Scotland and England rather than admitting there is more that unites than divides them. Marine Le Pen is employing exactly these tactics in a bid to win the French presidency, though as this week’s Dutch election showed, playing the insider-outsider card is not a guaranteed vote winner.
However, politicians do themselves no favours with some of their own actions (and I am not going to even go near the subject of Jeremy Corbyn’s performance, which is worthy of a post of its own). Francois Fillon is battling to preserve his campaign to be the next French president following revelations that he accepted state aid to fund his wife’s employment as a political assistant, despite no evidence that she has actually done any work. Not so very long ago, such a revelation would have ended his political career but he is still on the ballot paper.
In another demonstration of his tin ear for public opinion, it was announced on Friday that former UK Chancellor George Osborne is to become editor of the London Evening Standard, despite the fact that (i) he is still a sitting MP (so no conflict of interest there); (ii) he has no journalistic experience – the closest he got was an interview with The Economist in 1997 (he didn’t get the job) and (iii) he already earns £650k per year from the hedge fund BlackRock by working just four days a month. This from a Chancellor who imposed the most draconian public sector squeeze since the wielding of the Geddes Axe in the 1920s.
Nothing would please me more than getting back to some good old fashioned economics (and I will). But so long as politicians fail to live up to the economic standards which they demand of others, and so long as their actions continue to conflict with the way in which economists think about many of today’s big issues, politics will always provide a lot of source material for economists. But if you think that I am too harsh on politicians’ actions, I would recommend you take a look at the blog at Another Angry Voice and you will realise what a model of restraint I am.
No comments:
Post a Comment