3.3.7 Targeted Political Uses of Economic Power

Most political control of the economy is directed towards the whole of the domain being governed, but sometimes governments choose to use the available levers of economic power in a selected area.  Some such interventions may be intended to achieve a purely political purpose, but they inevitably have economic consequences.  There are four patterns of intervention considered here:

  • Governments can intervene to support a specific industry or region (
  • They can apply sanctions or tariffs, or give economic aid, to other countries (
  • They can manipulate their decisions to attract political donations from specific individuals or organisations (
  • A government can strike ad hoc deals with companies, using its power as a bully to get its way ( This undermines the framework of rules that govern an economy, ultimately increasing the cost of doing business.

Some of these types of intervention are politically effective, at least for a short time, but they all place a burden on the economy of the country that uses them.  They act like invisible taxes.



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