When politics undermines economics

The recent fight for the speakership in Congress which threatened to delay the passage of the very needed, but “pork barrel” embedded 2021 Budget to help in the Covid pandemic and the unnecessary closure of ABS-CBN at a time of massive unemployment are examples of politics undermining economics. It seems a given or normal that politics is always bad for the economy. In the U.S., in the midst of this pandemic, the Republican and Democrat senators, with Trump weighing in, are delaying a $2 trillion fiscal assistance to the business and employees that are most affected by the economic recession, is another case in point. Add to this, the collapse of the Lebanon economy due to political incompetence and corruption, we can almost conclude that politics is bad economics.

Regardless of the type of government -- authoritarian, socialist, social democrat, communist or liberal democracy -- politics is always involved in governance. A political structure has to be in place to implement policies and direct government resources to promote the well-being of the population. The objective of all governments is for the politics/politicians to grow the economy and the economic status of the people while retaining their power over them. The harmonious relationship between politics and economics is the ideal, but this is disrupted and broken when politicians put their personal interests over that of the population, like when they expand their powers and overstay in their positions. The Hong Kong, Bangkok and Kyrgyzstan protests and demonstrations are illustrations and the dire economic consequences are already evident.

History has shown that governance cannot be wholly entrusted to politicians, so in ancient Greece Plato envisioned the idea of a “Philosopher King” who would have the talent of a politician and excellent administrative ability. Since this was not easily available, the entry of un-elected/appointed technocrats were adapted by all kinds of governments to help in the governance especially in the areas of economics. This has worked in many countries, especially in Singapore and Germany, and in some ways in China. This set-up is upended when the technocrats gets transitioned or co-opted by the political powers and end up expanding and prolonging their powers.

The current relation of politics and economics in most countries today, especially with the Covid pandemic, is getting more attention and relevance as the heavy hand of politics in suppressing the pandemic is creating more economic problems. The quarantines, lockdowns, and mobility restrictions are destroying livelihoods and stoking resentments from the governed. Citizens of liberal democratic countries and even those in authoritarian states are feeling the loss of individual freedom that they have exchanged for better standards of living, are feeling the short end of the bargain. They are and will blame politics and politicians as the responsible culprits of their conditions. People are demanding better governance, better politics and better politicians. This Covid pandemic will have broader and wider consequences and implications on politics and politicians. Even now it has affected the reputations and careers of many political figures, the likes of Trump, Boris Johnson and Bolsonaro in the negative and the likes of Ardern of New Zealand and Merkel of Germany in the positive side.

Ideological principles of truth and justice, freedom and liberty also take a greater role in the relationship of politics and economics during this pandemic.  Transparency on the public health situation, the actions of the government, and equality in the assistance are demanded by the people. Dissatisfaction on these issues will mean a loss of trust on the government and the politicians. So, in the final analysis, it is good economics that makes for good politics.