By Joanne Davidson
A lot of people consider economics as the most powerful element to control the world. Money makes the world go round. Right? However, our friends at http://loweguardians.com/ believe that there are times when politics can win over economics. Here’s how:
Modern society is complicated as it is. As the world has become more and more inter-connected because of technological developments in communication and travel, politics and economics also tend to overlap and influence each other more by the day.
Despite overlapping features, politics and economics rarely meet halfway. Sure, both are the same in a sense that they are driven by human interests – politics being a ‘popularity contest’ of while economics is driven by supply and demand.
However, this is basically an over simplistic view. There are many factors that drive both the winds of politics and economics. Though economics usually rely on statistics and historical data, politics is usually driven by public perception and influential groups or institutions that also have specific interests.
This is why in the greater scheme of things, economics is usually defeated by politics and to fully illustrate that point, we list several examples of that below.
First things first, majority wins.
Most experts would say that the majority opinion is not always right, but the fact is, politics is dictated by it. Take for example the latest Brexit fiasco – a move which took even the European Union itself by surprise. In an economic sense, the U.K. is bound to lose tax and tariff privileges that were once enjoyed under the E.U., possibly prompting an increase in imported goods and services in the long run.
This is a well-founded possible consequence for leaving the union, but this did not matter to the British majority which blamed the ease of immigrant entry to the E.U., causing stiff competition among their job market.
In the Brexit scenario, the majority might have affected the import and export economy of the U.K., but they voted for their own self-interests – to make jobs more available for the homegrown population.
Economic Impact is Hard to Predict
Politics usually offers ways to solve current issues and problems which makes it more appealing and relatable to the people. Economics meanwhile is more about data analysis, and it usually takes years before economists realize how certain policies (shaped by politics) were effective or not in the long-run.
Although a lot of analysts are consulted when it comes to policy-making, a not-so-rosy view for a supposed solution is bound to be unwelcomed by the general public. Then again, growing public frustration puts pressure in politics which can eventually put economic doomsayers aside.
So instead of coming up with inclusive and holistic solutions, the pressure usually prompts leaders to place band-aid solutions to complex societal problems. It may seem great ‘now,’ but economists are usually more concerned by its long-term effects.
There are also times wherein economic doomsayers are proven wrong. This is because some economists also forget to consider changes in human behavior, technology and trends – and these mistakes also reinforce the belief of many people that politics is more helpful when it comes to daily living compared to economics which is more or less uncertain.
In the event however when pessimistic economists were proven right, it is almost always too late. Once jobs and investments are declining, and prices are way too high for the average person, it is only by then when the problems are acknowledged – and the people will again demand solutions from their politicians.
[Note: Economics used to be called Politcal Economy, which better relates the true political nature of Economics. The philosophical battle between all the various forms of socialism – communism, fascism, the welfare state, crony ‘capitalism’, progressivism, Keynesianism, monetarism, and on and on – versus Free Market capitalism as described under the Austrian School is a purely political schism. -Bob]
Joanne Davidson is a seasoned writer who enjoys creating helpful articles and interesting stories. She has worked with several clients across different industries such as advertising, online marketing, technology, healthcare, family matters, and more. She is also an aspiring entrepreneur who is engaged in assisting other aspiring entrepreneurs in finding the best office space for their business.
Check out her company here: http://loweguardians.com/