Economy · August 2, 2022

When civilizations collide: economists and politicians

As often happens when civilizations collide, politicians and economists find each other more than a little strange. There are, in fact, important differences between the two groups, not just in their goals and incentives, but in key areas such as how they think and speak. For instance:

logic. You may think that logic is logical. However, I define the logic used by economists as Aristotelian logic, that is, the classical system of logic based on syllogisms, corollaries and deductive reasoning. Politicians often don’t use this logic. Instead, they use what I call political logic, one that will work best with the voters or other politicians they are negotiating with.

Tongue. Based on logic, the language we economists use to speak and write is often dry, sometimes barely comprehensible to the layman. Conversely, the language in which politicians like to speak and write is often vivid and in clear English. But because it’s so full of effects, economists tend to stop when we hear it.

calculation. … Economists use arithmetic and, when necessary, calculation. Economic equations can be complex, but they are simple as they follow the rules that most of us have learned in math class. But political arithmetic is different: it is weighed by influence. … Imagine a policy that generates $ 1 million each for 10 people and costs 10 million people $ 2 each. By doing the simple economic calculations, we can quickly see that the policy leads to $ 10 million in profits and $ 20 million in losses. So we conclude that this is probably a bad idea, unless there is some good reason to do it despite the loss of wealth. But if you apply the political calculation to the same numbers, … [t]The 10 people he helps so much will pay rapt attention and may even show their gratitude with political donations. Meanwhile, the 10 million people who lose two dollars apiece probably won’t even notice. Politics, therefore, has a political merit.

Intelligence. Academic economists appreciate traditional intelligence as captured by things like high IQ, good ideas, and the ability to express those ideas. Success in academic economics generally does not depend on people’s skills. Successful politicians, on the other hand, depend much more on their social and emotional intelligence. …

targets. Political economists are generally trying to maximize social welfare. Politicians, of course, are trying to maximize their election or re-election prospects, which may not be related to social well-being.

Policy evaluation. The aspect of politics that matters to economists is the substance of politics: is it really good for society? What matters in the political world are, of course, politics and the message involved in politics. Sounds good? Needless to say what is good and what sounds the good ones are not always aligned.

concerns. The main concern of economists is efficiency: we talk about it, we think about it, we dream about it. But efficiency doesn’t matter much to politicians, who are much more concerned with equity, or perceived equity, which is a broad concept that encompasses income distribution but also much more.