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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

economics & politics « Previous | |Next »
November 10, 2004

This post is courtesy of Brad deLong. The original article by Adam Posen in the Financial Times, whichBrad linked to, is subcription only. I introduce it here to highlight the way that politics commands economics these days and to dispel the myth put about by free market ecomomists that economics rules.

Posen says:

"Ideological and partisan politicians know that elections are... about... taking the reins of power and using them to realign the balance of interests in society in their favour.... The "Bush II" agenda will not be constrained by bipartisanship, fiscal discipline or even economic reality, because the ultimate motivation is not economic but ideological - to shrink government and weaken Democratic opposition. The three big economic initiatives promised by Mr Bush [privatisation of social security, tax cuts and tort reform] should therefore be seen for the political thrusts they are."

I doubt if it is to shrink government. We are talking about big government conservatism here.

I would argue that the ultimate movitivation is to realign the balance of interests in society so that the Republicans will stay in power after Bush has left the scene. The leaders come and go whilst the Republicans stay for the next decade.

Posen goes onto say:

"If Mr Bush's planned economic initiatives also promoted the general welfare, their dual use of locking in supporters would be welcome. However, the Bush administration is putting its political staying power ahead of economic responsibility.... Markets tend to assume that the US political system will prevent lasting extremist policies so, even now, observers discount the likelihood of the Bush administration fully pursuing - let alone passing - this economic agenda. If the thin blue line of Democrats and the responsible Republican moderates in the Senate bravely fulfil their constitutional role, perhaps the damage will be limited. If not, we can foresee the US economy following the path to extended decline of the British economy in the 1960s and 1970s and of Japan in the 1990s..."

Dire words. You can sense the economic crisis looming just around the corner.

Neo-liberalism is well and truely dead. But then that too was also a case of politics commanding economics. Economics is a tool of governance. That is the case in Australia under John Howard as in the US under President Bush.

| Posted by Gary Sauer-Thompson at 8:57 AM | | Comments (0)