Bad Politics and the Economics

In the new movie, The Gatekeepers, starring Matt Damon and Anne Hathaway, an American president is faced with the difficult choice of removing a U.S. senator who is considered “unfit to serve.” Unfit to serve was the very accusation directed at President George W. Bush at the start of his term, a charge that Bush refused to answer and seemingly rather amused himself at the prospect of having to answer to the accusation of “bad politics.” If the film is any indication of how American politics is conducted today in the White House, it’s an interesting idea. After all, aren’t all elected officials up for election every four years so perhaps the country needs another “elbow grease executive branch cleanup.”

But it goes further than that. Because the film makes fun of both sides of American politics, much more than a comedy in which a bad politician is lampooned, it also attacks the American democracy itself. It is a very revealing film that makes light of both the excesses of idealistic idealism and the corruption, cronyism, and outright greed that permeate our political institutions. It is a timely expose of how badly our system is broken and it is a film that anyone who values their own intelligence and a robust commitment to a healthy republic must see.

Of course, the United States is not perfect by any stretch of the imagination. There are plenty of social evils in our nation, including large segments of the population which are clearly hopeless utopiaists. And yet in America there are still people willing to put forth the effort to build the most incredible of skyscrapers, to put together the greatest of defense technology, to develop the most wonderful of medical procedures, to push the most cutting edge educational curriculums. The bad part of American politics, according to this criticism, is that the Republicans are just too arrogant to admit that they aren’t working, while the Democrats are too willing to work hard. In the end, according to the most trenchant of critics of American politics, the system is basically a Ponzi scheme: the richer have more, the poorer have less.

This is the crux of the matter, according to the most trenchant of critics of bad politics in America. The existence and prominence of both parties in America mean that politicians of both parties are inevitably beholden to the same interest that funds both themselves and their parties. And that means that while the Democrats may sometimes gain ground from time to time, they are forever indebted to the Koch brothers, and to Ayn Rand and other hard-liners on the far right. So basically, the critiques of American politics made by Noam Chomsky are true.

By the way, it is worth noting that the criticisms of American politics by Noam Chomsky and other prominent scholars of international affairs have been frequently made by scholars of good politics as well. Indeed, many scholars of both international relations and good economics have long argued that the existence of strong national unions and political parties in America is largely caused by bad economics – cheap petroleum, labor-intensive manufacturing processes, etc. – rather than by any uniquely American culture. The political scientists put it this way: that national governments create favorable incentives for citizens to behave in the economic interest of the country, and that this government behavior creates a microeconomics of sorts that benefits both parties.

By the way, the “carbon tax” that has recently plagued environmentalists in the United States is a good example of this point of view. Many economists argue that the Bush administration’s attempt to institute a carbon tax as a way to address climate change was little more than a politically expedient move to generate support for expensive green energy initiatives from environmentalists. As a result, the “carbon tax” looks set to be a major political failure. Indeed, a recent study by professors at Cambridge University found that it would fail to reduce carbon emissions, and would in fact increase carbon dioxide levels.

By the way, it also helps that economists don’t like taxes. It is estimated that economists around the world would rather write off an investment than give it away. So, if this is a political logic, it is quite powerful. And when you consider all the promises that were made during the campaign about higher education, health care, infrastructure, clean energy, and so on – it should be clear that politicians have not been doing their homework when it comes to designing policy – when it comes to economics.

But, as always, the devil is in the details. Economists may not be able to explain every possible outcome with the data they have, but they can offer a perspective on why a given policy may not pass the scrutiny of economic policy makers. It is important, then, not to look at the details, but to look at the big picture. We should examine the political reasons behind bad economic policies and understand that the solution lies in the process, not in the legislation.


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