It's the Economy, Stupid!

The title of this post is taken from a quote typically attributed to James Carville, a political advisor during the Clinton Administration. It might equally have been attributed to Karl Marx's emphasis on Economic Determinism. The graphic above is from a 2024 PEW Research Center poll which finds that 81% of Voters are primarily concerned with the Economy.  Other issues come in a distant second.

The paradox here is that voters are generally uninformed about: (1) the state of the Economic System, (2) simple ECON 101 Economic Theory, (3) how the Political system works and (4) whether successive political administrations have any impact on the Economic System or are just passive bystanders taking blame for successive economic crises.  The graphic above (click to enlarge) tries to map out some of the confusion.

The basic inputs to the Political System are voting and opinion polls. The things that are under control of decision makers within the Political System are government expenditure (G), Taxation (TAX) and the Money Supply (M). How G, TAX and M affect the Economic System and Economic Outputs are open to argument. And, as I have been arguing here, Shocks to both the Political and Economic Systems are when we find out how, if at all, the two systems work. There should ideally be some Feedback between all this and voting behavior, but there are such long time delays that voters tend to forget causal relationships (see my discussion here).

So, what is the Political System really supposed to do? Here's an old idea that goes back to 17th Century terminology: the Political System is supposed to act as a Centrifugal Governor. The idea also appears in Arnold Tustin's book The Mechanism of Economic Systems (1953). When the centrifugal governor rotates more rapidly it slows down the steam engine, for example. Even if 17th Century Politicians thought this was the way a Political Governor was supposed to work, it no longer is in the 20th and 21st Centuries. The Political System is not supposed to slow down the Economic System.

It is unfortunate that the 17th Century idea of a Political Governor has been lost (we have Neoliberalism to thank), especially since Climate Change has slipped to one of the least important issues for voters. Slowing down the Economic System is one proven way to reduce CO2 Emissions (as was proven during the COVID-19 lockdowns).