“IT IS CLEAR that [in elections] voters respond much more to short-term growth than to long-term growth”. In other words, an incumbent government is very likely to be re-elected if in recent months the economy has been improving. Paul Krugman, who is spending some time at Oxford University, mused on this finding (which has broad support in the political-science literature) at a lecture yesterday. Mr Krugman delivered a familiar (and not terribly well-prepared) speech on the perils of British austerity.
Mr Krugman made an interesting, if somewhat conspiratorial, point. He argued that the British government’s economic policy from 2010-12 was completely destructive. Indeed, as the chart shows, the British economy is still well below potential. He then pointed out that things started to get better around 2013—thanks in no small part to an easing of austerity. Growth only really got going at the end of 2014—as the election loomed.
Mr Krugman thus implied that the British government—deliberately? mistakenly?—had engineered measly growth at the beginning of its term, thus making it easier for the economy to roar back as the election approached. That would seem to ascribe to the coalition a rather unrealistic level of strategic wizardry and general deviousness. Though interesting, it may say...Continue reading
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