Relationship between economics and politics

Contribution of Political Science to Economics

relationship between economics and politics

RELATIONSHIP BETWEEN POLITICS AND ECONOMY. On the Relationship Between Economic and. Political Discourses: a Few Examples by Alessandro Roncaglia. *. 1. Blanqui. I should first of all recall that this. The government of a state i.e. the political system selects and defines economic goals which are to be secured for the people. All economic planning is done by.

In practice there is a strong relationship between economics and politics because the performance of the economy is one of the key political battlegrounds. Many economic issues are inherently political because they lend themselves to different opinions. Political ideology influencing economic thought Many economic issues are seen through the eyes of political beliefs.

For example, some people are instinctively more suspicious of government intervention. Therefore, they prefer economic policies which seek to reduce government interference in the economy.

On the other hand, economists may have a preference for promoting greater equality in society and be more willing to encourage government intervention to pursue that end. If you set different economists to report on the desirability of income tax cuts for the rich, their policy proposals are likely to reflect their political preferences. You can always find some evidence to support the benefits of tax cuts, you can always find some evidence to support the benefits of higher tax.

They may produce a paper that perhaps challenges their previous views.

relationship between economics and politics

Despite their preferences, they may find there is no case for rail privatisation, or perhaps they find tax cuts do actually increase economic welfare. However, for a politician, they can use those economists and economic research which backs their political view. There were just as many economists suggesting this was not a good idea, but economists can be promoted by their political sponsors. In the US, the Paul Ryan budget proposals were welcomed by many Republicans because they promised tax cuts for better off, cutting welfare benefits and balancing the budget.

Many economists may be generally supportive of the EU and European co-operation, but the evidence from the Euro single currency is that it caused many economic problems of low growth, deflation and trade imbalances. Economics needs political support If you study economics, you can make quite a convincing case for a Pigovian tax — a tax which makes people pay the full social cost of the good, and not just the private cost. This principle of making the polluter pay provides a case for Carbon Taxcongestion charges, alcohol tax, and tobacco tax e.

However, whether these policies get implemented depends on whether there is political support for them. For example, a congestion charge was proposed for Manchester, but it was very heavily defeated in a referendum. A new tax is rarely popular.

The relationship between economics and politics | Economics Help

As an economist, I would like to see more congestion charging because it makes economic sense. Similarly, there is no statistically significant evidence that the Congress vote share went up between and in constituencies with higher MGNREGA spending.

Political ideology and economics - US government and civics - Khan Academy

This data analysis thus busts yet another morality tale. The reality is that when hundreds of millions of people vote in a complex election with many issues at play, there is an ineluctable element of randomness in the final outcome, which aggregates across the preferences of all these individuals.

Contribution of Political Science to Economics

The attempt to anthropomorphize all these hundreds of millions of differently motivated individuals into one representative voter with a specific motivation is doomed to failure. Debunking simplistic narratives is one thing, but does a rigorous, data-based analysis show any relationship, in the aggregate, between good economic management by incumbent governments and their subsequent re-election prospects? Here, too, evidence is mixed.

relationship between economics and politics

In the former two categories, there is some correlation between incumbency and higher growth rates during the incumbency period, while the relationship is weaker in the anti-incumbency states. Of course, correlation does not prove the existence of a causal relationship, suggestive though it may be.

relationship between economics and politics

Yet such findings are very fragile in a statistical sense. It is tempting but ultimately unhelpful to draw the nihilistic conclusion that as election outcomes are apparently random, elected politicians have no incentive to deliver good economic management which hopefully translates into good economic performance on their watch.