One quick point. Everyone keeps telling me “but in political reality” whenever I say that there are trade-offs being missed in political party discussions.
I would like to point out that when an economist does analysis they don’t give two-cents worth of a care to this. When it comes to making a policy it is essential, but it isn’t part of the first stage of description.
It is just like the “equity” trade-off with efficiency in economic analysis. Economists focus on efficiency when describing a situation – but there are welfare trade-offs which imply that a policy based solely on efficiency is unlikely to be socially optimal. An economist can go so far as discussing the trade-off by describing how deviations from the efficient allocation work – but they can’t sit down and say “this is what society wants”.
In the same way, I have no doubt that political actions are politically optimal – they are being determined by utility maximising individuals after all 😉 . However, just because it is politically optimal doesn’t mean anything to me when I’m trying to discuss the framework and trade-offs inherent in the policy.
However, I have noticed that pointing out these trade-offs relative to the way political parties have been marketing themselves leads to a HEAVY amount of emotion and argument – which is fun. I suspect this is part of the partisan nature of politics. I hope that people from each party understand that I attack all political parties on this blog with equal boring economic analysis, and some (hopefully transparent) priors.
Over the last few weeks it has also taught me that there are a number issues many of the parties don’t understand very well – even regarding their own policies.
Update: To be absolutely clear here, I am talking about the political parties – not the excellent comments and emails that I have received from people about the issues. The comments and emails have been intelligent and balanced, and I appreciated them greatly. Furthermore, the criticism is not just of ACT and the Greens (given my recent posts about those parties) it is equally about ALL parties. Fundamentally the discussion around policies has exposed confusion all around the show in my opinion.
This is fascinating, as I had assumed the parties were being manipulative rather than confused. If I had to vote right now, I would struggle to pick anyone :/
Of course, I’m not too worried about this feeling – as I think political parties try to give the impression that they do a lot more than they actually do, be it the result of abridled ego or straight self-deciption 😉