The political pundits are often quoted as saying that election outcomes depend on the state of the economy. But is this true? It is true that what people want is a “good” economy and not a “bad” economy. And the electorate recognizes that our government’s fiscal policy has a great influence on the economy. When the economy is “good” they want the government to continue its current fiscal policy, when the economy is “bad” they want a change in fiscal policy.
Therefore the common wisdom says in a “good” economy stay with the current political party in control, in a “bad” economy change the party in control. But is this is the best way to control the economy or is it just a shorthand rule-of-thumb, one that has led us in the wrong direction many times in the past?
The relevant question is not, where the economy is now, but rather where is the economy going?
In very early 2009 the economy dropped into a deep recession. The policies in effect at that point were still the policies of the prior administration. Once the new administration had a chance to institute new policies the economy started to recover. It was a very slow recovery, so that when the midterm elections rolled around the economy was still “bad.” Thus in 2010 the electorate chose to change the control of the House of Representatives to the other party; a party whose goals were to change policies that were working and to prevent expansion of those policies. Since it was a government in which control was divided between the two parties, a deadlock ensued which left the existing policies essentially unchanged, but battered in terms of public confidence.
The economy is still slowly recovering under those policies, the economy is still “bad,” and another election looms. Are we going to ignore the trends and make party changes which this time may reverse the trends? It is up to the people to choose. But I hope to remind them that in making this choice they should look both back and forward from today, not just choose to react to the economy of the moment.
Yes, it is “the economy.” But when electing public policy makers, it is the public that must get the big picture, the long-term flow of economic policy, the outcomes of interventions. We, the people, will be here suffering or benefitting long after the politicians have gone home. So, keep an eye on the direction not just the immediate state of the economy. It is an informed electorate that makes our democracy work.