Paul Krugman: Economics and Elections

Why don't voters penalize politicians for poor economic decisions?:

Economics and Elections, by Paul Krugman, Commentary, NY Times: Britain’s economic performance since the financial crisis struck has been startlingly bad. ... Yet as Britain prepares to go to the polls, the leaders of the coalition government that has ruled the country since 2010 are posing as the guardians of prosperity, the people who really know how to run the economy. And they are, by and large, getting away with it. ... Voters have fairly short memories, and they judge economic policy ... by recent growth. Over five years, the coalition’s record looks terrible. But over the past couple of quarters it looks pretty good, and that’s what matters politically. ...

This is ... a distressing result, because it says that there is little or no political reward for good policy. ... In fact, the evidence suggests that the politically smart thing might well be to impose a pointless depression on your country for much of your time in office, solely to leave room for a roaring recovery just before voters go to the polls.

Actually, that’s a pretty good description of what the current British government has done, although it’s not clear that it was deliberate.

The point, then, is that elections — which are supposed to hold politicians accountable — don’t seem to fulfill that function very well when it comes to economic policy. But can anything be done about this weakness?

One possible answer ... might be to remove economic policy making from the political sphere and turn it over to nonpartisan elite commissions. This presumes, however, that elites know what they are doing... After all, American elites spent years in the thrall of Bowles-Simpsonism, a completely misplaced obsession over budget deficits. European elites, with their commitment to punitive austerity, have been even worse.

A better, more democratic answer would be to seek a better-informed electorate. ... So reporting on economic issues could and should be vastly better. But political scientists would surely scoff at the idea that this would make much difference...

What, then, should those of us who study economic policy and care about real-world outcomes do? The answer, surely, is that we should do our jobs: Try to get it right, and explain our answers as clearly as we can. Realistically, the political impact will usually be marginal at best. Bad things will happen to good ideas, and vice versa. So be it. Elections determine who has the power, not who has the truth.