126.96.36.199 The Difficulty of Assigning Economic Responsibility
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 and they can choose explanations that make them look good.
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 (188.8.131.52), or by increases in the prices of global 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 reported in a Der Spiegel article, How Goldman Sachs Helped Greece to Mask its True Debt; it revealed 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.
Voters have short memories. During an election they consider the situation as it is now, without thinking back too carefully to what politicians may have done previously.
They could use the economic performance of other countries as a benchmark, but they might not know how to seek it out. The media can play a useful role in making such comparisons but, as noted later, its political influence is often biased (6.4.3).
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