The Road to 2024: Bridging the gap between Economics and Politics

One scholar once stated that the humble dollar bill may be made of paper, but savvy politicians can wield it as a cudgel damaging enough to bend nations to their will or control markets for goods, services and people.

The full impact of the drama these two worlds of politics and economics play is hardly ever understood by the one it most affects.

As we enter into the campaign season there is going to be a lot of economic jargon thrown around and in between empty, some not-so-empty promises made to the poor, the hungry and sick, the unemployed youth, the debt-ridden employee, the single mother of five earning a minimum wage, the owner of that failing business and the overburdened farmer.

For this article I will use as much as possible understandable language and examples for emphasis of enriching the people on what to look out for when the political candidate stands at the podium and starts telling us that they are going to build a railway line to the moon.

More often than not does a government have the fine balance between economics and politics. What economics dictates is hardly ever what the society wants to grasp and accept hence political leaders end up making decisions based around resolving an irresolvable dilemma of how to meet people’s wants with limited resources.

This often leads to politicians resorting to telling tales of prosperity that are economically impracticable or they fail to explain how they will achieve a particular promise, such as asserting that they will increase the minimum wage from 800 pula to 3000 pula or how they are going to create a 100 000 jobs in the first month in office.

There’s no denying that these two spectrums have to work together in the running of the state. Dissecting these two broad studies; economics has two main areas of prominence being microeconomics which studies how individual consumers and businesses make production, purchasing, investment and saving choices whilst macroeconomics looks at how the entire economy works and the way policies can affect the combined effects of microeconomic decisions with the aim of studying and influencing the economy.

Politics is the theory and practice of influencing people through the exercise of power such as governments, elections and political parties. ‘It is not an end but a means, it is not a product but a process, it is the art of government’.

An ideal economist in theory should ignore any political bias or prejudice to give neutral, unbiased information and recommendations on how to improve the economic performance of a country and elected politicians could weigh up the economic information and decide.

But in practice it is hardly ever probable because the performance of the economy is one of the key political battleground since many economic issues are inherently political as they lend themselves to different opinions and expectations.

For example, economic issues such as deregulation, privatisation and tax cuts or tax increase are seen through the eyes of political beliefs. People are instinctively suspicious of government when it comes to economic issues, for instance tax cuts can sound popular but have undertones of increase in economic welfare.

This brings in the key discussion of how can government bridge the gap between economics and politics yet remaining legitimate. Scholars contend that democracy is the best available means of reconciling the conflicting views on economic and political matters through its institutions, debates, discussions, checks and balances, rule of law just to mention a few.

Politicians can use economics to bridge the gap and influence people in believing what they are introducing in terms of policy formulation, growing the economy and vice versa. Most importantly politicians should use economists and economic research to back their political views and ideals to be considered plausible.

When a political leader is attempting to roll back state policies there should be an army of economists who are able to provide theoretical justification for the political experiment. A case in point at present is the decision of going back to the negotiating table for a more favourable Botswana-DeBeers Partnership which has been widely regarded as one of Africa’s most successful public-private partnership has now turned to some seeing it as marriage on the rocks.

Delving deeper the key strategy is to maintain economic principles that stick to the data and avoid cherry-picking favourable statistics which result in coming up with conclusions and recommendations that fit in with preconceived political ideals such as economic wealth for all.

Additionally, economics can borrow the art of politics to support unpopular economic policies such as new taxes. A tax reform such as the alcohol levy can be good for economics because they have found a new way of making money through a popular consumable in the society. However, it can be politically unpopular because people don’t want their choice to consume alcohol to be controlled by tax.

Conversely, the alcohol levy that was introduced in Botswana in November 2008 was extremely unpopular it led to deep resentment towards the ruling party despite government efforts to spin it by setting up a fund for the levy which was to be ploughed back into the society.

The justification fell on deaf ears and any good that came out of it was hardly appreciated. In hindsight the introduction of environmental taxes such as the plastic levy did not cause an uproar since politicians and interest groups are voicing out the need to combat climate change.

Privatisation is a clear political issue when questions of who should control key industries; should it be private enterprise or the government though it is wholly economic. It is most sellable to a politician explaining the good that will come out of it such as better service delivery, improvement of infrastructure and reduction of the demand for government resources and revenue whilst at the same time it can lead to resource mismanagement and exploitation as a result of lack of regulations in some cases.

The Bretton-Woods often dictate privatisation to reduce the government wage bill in developing countries and in this instance the backlash lies with government when there are job losses. These are some of the issues that the ordinary person that has lost their job is faced with but not privy to the crux of the matter.

“Economics tells us what the best policy may be, but not why politicians so rarely choose the best policy”. For instance, the best policy is not to impose sanctions on a country that supplies us with gas but the politician doesn’t choose the best policy and the economist doesn’t tell us why they didn’t but rather we should brace ourselves for an economic crisis that comes with demand and supply.

Slowly but surely our living standard starts to take a turn for the worst in the name of choosing to be politically correct. A debate for another day.

Arguments in favour of raising the minimum wage often centre on the need to assist the working poor to live above the poverty level, which is almost always ideal. Yet, politically it is often not appealing because it can reduce the labour market because less for more does not sell especially for government.

The minimum wage is one of the highly-used carrots for the masses despite the dictates of economics. In other words, the minimum wage bill for a particular country can be better shared by many which makes it less but if it increased it leads to less being employed.

For illustration purposes; should five million pula be shared by 500 000 people getting 1000 pula each or 250 000 people getting 2000 pula each? It’s a double edged sword situation that requires truthful political manoeuvre for people to understand the implications of a decision over the other.

In the end what remains is what Thomas Sowell posited ‘the first lesson of economics is scarcity; there is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics’.

This is so because the political system of a government selects and defines economic goals which are to be secured for the people, they are the ones faced with making the tough decisions that make them age prematurely. Nonetheless one wonders who is to blame when faced with empty, unfulfilled campaign promises uttered by politicians; is it economics (the resources) or politics (state power).

The seemingly ever-present tug-of-war between economics and politics can have the fine balance in the society when the articulation of both contending principles are aligned with democratic ideals such as transparency and accountability. The society becomes more trusting when the policy vision is clearly enunciated and taken through the channels of democratic principles’ and institutions.

A case in point is the government spending during the Covid-19 pandemic was widely understood. We all aspire for political leaders that determine economic goals and policy with economic experts helping them to fulfil their campaign promises.

Janet Sekgarametso-Senosi is a Political Analyst. She has a Masters of Arts in Politics and International Relations (MAPIR) 2013 University of Botswana