How much control do politicians really have over the economy?

So, I really don't know much about economics so this is a genuine question, I've just noticed when people argue about whether or not a leader was good, they often cite the economic sucess or failure of the time. But is this a good gauge? I mean its not like a politician invented the iphone and sold it to millions of people.

But how much control do politicians really have over supply and demand and whatever else is relevant? They cant make people want something, sure they could come along and dump a big old tax of something too much to bear like 80% or something silly and entirely kill off an industry in their area if they wanted, but can they make things boom? And is it their fault when the market crashes, could they have actually stopped it or is it simply forces beyond their control?

Plenty. Tariffs can destroy or create tens of thousands of jobs. Infrastructure programs can (and will likely always) drag a nation out of a recessionary/depressed market cycle. Social services can cut healthcare costs to a tune of of everybody having effective care, or only a fraction of the populace being able to afford it. How governments fund tertiary education can elevate prestige ofinstitutions, increase individual performance of a nation's scholars, and create entirely new realms of possible economic engagement and trade to the wider world.

The 'economy' is merely a vehicle of expressing total trade. Political actions are the quickest and often most fundamental aspect of that market participation as a vehicle of consumption and investment. Not only how easy, effective, or what ways its total efficiency in which this vehicle operates, but often just how it looks at the surface of things.

Everything is political when it involves more than one person. In a Marxist structuralist sense, even the individual issurrendered to their own class consciousness. An economy represents a metric fuckton of people within and without a body politic ... thus the economy is a tool of political results and agency as anything else.

In the ways that people say 'everything is political', more accurately you might say 'everything is economics' ... it's a chicken or egg dilemma. Politics is not the examination of political agency. It's the examination of human interaction segemnted in its most typified fashion throughout the wider community arbitrarily determinable as to be a body politic as to be segmented from another body politic.

Trade is both the bedrock of typical social interaction, and nothing is more political than typical human interaction.

It depend on how you look at it, but essentially they have amazing control over wrecking the economy and only have power to improve the economy over very long term.

Think of it as a farmer taking care of an orchard, the farmer can just set fire to the whole things and destroy it in a few days, but to grow new trees takes years.

The problem is there's a big delay between policy implementation and paying off. You can invest in education or research, which will help the economy but take awhile, people need to graduate from school and the research need to be fully researched and then implemented. You can craft great laws but these will also take awhile to take effect, breaking monopoly take years to properly do since you need to make sure you don't just kill the company and that the smaller company will be able to thrive. You can invest in infrastructure, but not only will building it take times but you need to get business to take it into account and move in (say you build a new port, shipping lane will have to slowly adapt to the new port location).

Crashing it is pretty easy, high tariff will do that (that's what made the great depression great). Stopping funding in key area can quickly take it's toil (think no more cop tomorrow). Arbitrary changing laws will also scare investor (who want to invest in something ta could be illegal tomorrow). Or seizing properties (Zimbabwe says hi).

Depends on where you are, to some extent (a small, powerless country may be subject to the whims of larger countries and multinationals in the way that, say, the United States is not or at least needn't be). It also depends on how much other important economic entities have captured the government. Politicians can hardly control the economy if they can't control economic policy. And much of liberal and conservative ideology rests on not doing anything too revolutionary when it comes to the economy (so even if they could have a big effect, they likely won't).

On the other hand, sometimes you have things like this: https://cooperationjackson.org/

Fieldy409:
But how much control do politicians really have...

Less than they say when things go well, and more than they say when things go badly.

* * *

To a large extent, I'd see much of the work of politicians to be constructing a good infrastructure for economic activity to take place.

Consider interest rates - we are used to these under the control of national banks, but governments could assert direct control if they really wanted to and some governments still do. Combatting corruption. Infrastructure could include things like good administrative and legal records - maybe someone wants to mortgage their home to invest, they can only do that with legal records of property ownership (these barely exist in many developing countries.) Building roads, telecommunications, etc. You can also consider centralised strategy - some governments are very laissez-faire, others aren't, with varied success either way.

In short, governments have a lot of power over the economy. In Western countries, however, the fashion is to use it relatively little. But then, Western countries already tend to have good economic infrastructure.

When it comes to politicians and power, the answer is always "too fuckin' much".

Oh, I was meaning to post in this one.

The answer is not a whole lot, at least not in meaningful terms. Every President and every government administration generally has the power to completely torpedo the economy if they so choose, because torpedoing an economy is really fucking easy (see: Exhibit T.) That's why it happens so often by accident.

But improving the economy is actually hard, and in that respect, individual politicians have very little impact on economic growth. In the US, the government official with the most power over the economy is not the president, but the chair of the Federal Reserve, who sets interest rates and therefore determines how easy it is to borrow money. When the chair thinks the economy needs stimulus, they set interest rates low so that investors borrow money and then spend it; when the economy needs to cool down, they set the rates higher to encourage people to pay back their debts. That's a very important position, but it doesn't get the attention it really oughta, and people just tend to boil the state of the economy down to the sitting president - as if the "Trump economy" and the "Obama economy" were two separate projects managed by two separate people, instead of the same project being put in different hands.

The reality is that the economy is largely out of anyone's direct control. It's an unchained elephant, moving wherever the hell it wants based on whatever is immediately apparent. The things that drive economic growth are nearly always boring, abstract concepts - new technologies that increase efficiency or production capacity like what happened with natural gas, a sudden spike in demand for specific materials like what happened to the cobalt, tin and tungsten industries when smartphones took off, or the inexplicable long-term popularity of the Fast & Furious franchise. A random drilling expedition that uncovers a huge untapped reserve of oil can send oil prices spiraling with no input whatsoever from the government. An epidemic or civil war in a sensitive area can cause tremors that affect the price of any goods that were previously sourced from that area. When politicians are responsible for someone's economic windfall, it's nearly always an unintended by-product of another policy - India's planned expansion of its nuclear power infrastructure in the 2000s triggered a brief boom in the export of Australian uranium to meet the demand. On the complete opposite side of the scale, the Fukushima nuclear disaster in Japan prompted renewed investment in coal energy, which resulted in a surge in Australian coal exports! In neither case was the Australian government responsible for the sudden economic effects, but that didn't stop everybody trying to claim responsibility for it. (Yet no-one wants to claim responsibility for how the over-export of coal made domestic electricity costs spike...like I said, it's hard to manage well and very easy to fuck it up.)

By and large, good economic management mostly consists of trying to identify and exploit the random and unpredictable boons when they occur, and also trying to identify and contain the random and unpredictable disasters when they occur. It's sort of like riding an unchained elephant as it goes on a tour across the savannah looking for some shade; you just try to hang on and stay comfortable.

bastardofmelbourne:
Oh, I was meaning to post in this one.

The answer is not a whole lot, at least not in meaningful terms. Every President and every government administration generally has the power to completely torpedo the economy if they so choose, because torpedoing an economy is really fucking easy (see: Exhibit T.) That's why it happens so often by accident.

I disagree there, it's not that easy: as Adam Smith said "there's a great deal of ruin in a nation". Torpedoing the economy requires some seriously special effort. Certainly more than Trump's tariffs; these are estimated to currently be knocking off well under 0.5% GDP, although that might expand to 1-2% if current mooted tariffs are added. Even if we were to take the old Eastern bloc nations, their economies didn't collapse per se, but become stagnant: and that was partly down to obscene military spending.

To really wreck an economy, you'd need policies like Zimbabwe's annihilation of its own agricultural industry and massive overprinting of currency, or Venezuela's assault on it's own business sector. One notable thing about places that tank their economy is they are effective dictatorships, because painfully few who have to rely on a free and fair election will get away with causing that sort of damage.

Not much on the whole if they are just tweaking knobs and pulling a few levers but on a per industry level it can have a huge effect.

Even if they don't have much direct control, they'll still be praised or blamed for the state of the economy. The general populace will usually blame the party who controls the white house for the state of the economy.

Seanchaidh:

The Gentleman:
Because in the immediate short term, government policy often can do jack shit to help, although it can do a fair amount to hurt.

Governments can literally redistribute resources or buy what people need and give it to them. Westerners just get their panties in a knot about "muh free markets" (which aren't a real thing that can exist).

They can, but that will still have a relatively marginal effect on the overall economy. Can it make or break the difference between a shrinking/stagnant/growing GDP? Possibly; but it fundamentally is addressing only the margins of the economy overall. The core drivers will always be the basics of providing services and products to businesses and consumers. In other words: basic supply and demand.

Sudden large-scale changes in macroeconomic policy also increases the risk of capital flight (not yet an issue in most western counties), as businesses and investors are more likely to prefer locations with more stable or predictable economic policies so they can make more long term investments. A sudden shift to a "redistributive" system as you've described (rather than a more gradual change, tying certain taxes to specific social and government programs) is likely to create such capital flight.

[EDIT: Did my original post get eaten?]

The Gentleman:

Seanchaidh:

The Gentleman:
Because in the immediate short term, government policy often can do jack shit to help, although it can do a fair amount to hurt.

Governments can literally redistribute resources or buy what people need and give it to them. Westerners just get their panties in a knot about "muh free markets" (which aren't a real thing that can exist).

They can, but that will still have a relatively marginal effect on the overall economy. Can it make or break the difference between a shrinking/stagnant/growing GDP? Possibly; but it fundamentally is addressing only the margins of the economy overall. The core drivers will always be the basics of providing services and products to businesses and consumers. In other words: basic supply and demand.

Sudden large-scale changes in macroeconomic policy also increases the risk of capital flight (not yet an issue in most western counties), as businesses and investors are more likely to prefer locations with more stable or predictable economic policies so they can make more long term investments. A sudden shift to a "redistributive" system as you've described (rather than a more gradual change, tying certain taxes to specific social and government programs) is likely to create such capital flight.

[EDIT: Did my original post get eaten?]

All of July 12th got eaten, and some of today. Possibly some of the 11th too. TONS of posts are just gone, I am guessing something happened that reset the site to an early state.

 

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