Do we get the economic policy we deserve?

By Paul Walker 22/10/2012

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 workersand 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.