18.104.22.168 The Difficulty of Assigning Economic Responsibility
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Politicians can make use of most people’s lack of understanding of economics, and the impenetrability of the subject, to deflect criticism:
- Macroeconomics is inherently complex, so even experts disagree with each other. Governments can choose their experts.
- It is rarely possible to be sure what caused any particular economic result and it is particularly difficult to determine what the contribution of a previous government’s macroeconomic policy decisions has been. For example, inflation can be caused by a government printing money to pay for its overspending (22.214.171.124), or by increases in the prices of commodities such as oil, or by wage demands which are not accompanied by a comparable improvement in productivity
- The Greek government, when borrowing money in 2002, used questionable practices to conceal the true debt position from the Greek people and from other countries in the Eurozone – as described in an article entitled How Goldman Sachs Helped Greece to Mask its True Debt, which was published on 2 August 2010 by Der Spiegel, revealing the use of “fictional exchange rates” whereby “Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks”. Italy had also used a similar device in previous years.
- Governments can choose explanations that make them look good.
In practice, people judge economic performance on the basis of whether they feel confidence on a personal basis and on what the media are saying (126.96.36.199). Failure to match expectations leads to dissatisfaction and pressure on governments (6.4.2). Conversely, governments lacking other forms of legitimacy may still be accepted by the people if they are seen as delivering economic benefit.