Of Politics and Economic Reality: The Art of Winning Elections with Sound Economic Policies

Of Politics and Economic Reality: The Art of Winning Elections with Sound Economic Policies

Of Politics and Economic Reality: The Art of Winning Elections with Sound Economic Policies

Of Politics and Economic Reality: The Art of Winning Elections with Sound Economic Policies

Excerpt

Politics, we have been led to believe, is the archenemy of responsible economics. According to this view, our leaders don't lack for good economic advice; they just lack the will to make responsible but unpopular decisions. In principle they may agree on the need to control spending, balance budgets, promote free trade, and reform social security. But "political expediency" dictates that they fund pork-barrel projects, create tax loopholes, impose import quotas, and leave retirement benefits untouched. "There is, as it were," write Milton and Rose Friedman, "an invisible hand in politics that operates in precisely the opposite direction to Adam Smith's invisible hand."

Presidential elections, observes Fortune, "have a way of putting economic policy through the wringer." For his 1972 reelection effort, the magazine notes, "an unpopular Richard Nixon suddenly shifted course, lifting the spending floodgates and slamming on wage and price controls." In 1976 Gerald Ford "opened up the pork barrel, funneling countless millions to districts in Florida and elsewhere." In 1980 Jimmy Carter supported the Chrysler bailout because "he was alarmed by the prospect of losing the blue-collar vote in the depressed industrial snowbelt."

Nor is political "interference" with responsible decision making unique to U.S. politicians and institutions. According to the Wall Street Journal, before the 1983 elections even the resolute Margaret Thatcher of the United Kingdom took sev-

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