Elections & Economic Growth
What is the connection between electoral politics and economic growth? This paper provides an in-depth analysis of the impact government has on the American economy and, as a result, the role elections play in proposing and implementing policies designed to foster economic development, address fiscal shortcomings and meet the financial needs of current and future constituencies.
Keywords Consumer Confidence Index; Gross Domestic Product; Polimetrics; Recession; Standard of Living
Author and columnist Barbara Ehrenreich once observed that a free enterprise economy depends solely on markets. In turn, those markets, according to the most advanced mathematical macroeconomic theory, depend on the moods of the people she called "the Boys on the Street." She went on to explain, "When the Boys are in a good mood, the market thrives; when they get scared or sullen, it is time for each one of us to look into the retail apple business" (Columbia World of Quotations, 1996).
While Ehrenreich's statement may be interpreted as a somewhat glib and a bit overly simplistic assessment of the way the modern economy operates, one cannot deny the impact on the economy that the human element delivers. After all, prices are set based on the willingness of investors to purchase or sell as they are by the costs involved with manufacturing the product or providing the service. If one investor sees another individual sell his or her stock in apparent panic over information he or she receives, the former investor may act similarly. Markets, after all, thrive when consumer confidence is high and wane when investors' fears are manifest.
In macroeconomics, the relationship between supply and demand is an integral theme. There is little doubt that government has long played a central role in the US economy throughout the nation's history. However, America's implementation of a free-market economy has been accented by a tacit understanding that government should adopt a Hippocratic Oath of its own with regard to the country's business institutions: "First, do no harm." Government's role has long been to facilitate economic growth and create the underpinnings that will give the economy long-term stability. For the first century of American history, the Legislative and Executive branches adhered to that policy.
Then again, when the nation was faced with one of the worst fiscal disasters in its history, the Great Depression, which was compounded by the horrific events of World War II, government's active presence in rebuilding devastated economies in North America as well as Europe and Asia was not reluctantly requested by the citizenry — it was overwhelmingly expected.
Since the Great Depression, politicians have maintained an active role in seeking economic growth. Their interest is clear — if the voters are concerned with the state of the economy, then the issues facing the fiscal system must be a priority. The colloquial statement uttered by Democratic strategist James Carville in the 1992 presidential campaign, "It's the economy, stupid," remains true to the present, evoked by political candidates from both sides of the American political aisle.
What is the connection between electoral politics and economic growth? This paper provides an in-depth analysis of the impact government has on the American economy and, as a result, the role elections play in proposing and implementing policies designed to foster economic development, address fiscal shortcomings and meet the financial needs of constituencies.
As far back as the Reconstruction, economics and electoral politics have experienced linkages. After the Civil War, attentions rightly turned to two fronts: Cultural reparations between whites and former slaves and economic development. The success of America's elected leaders, it is believed, was increasingly becoming based on how the American economy fared, especially in the decades that followed one of the country's darkest eras. One study, however, indicates that while these linkages existed prior to the turn of the 20th century, they were amplified by the Depression and Second World War. This upturn is attributed to the fact that government was called upon to stabilize the markets, stimulate business development and get Americans back to work (Lynch, 1999).
Indicators of Economic Status
In order to understand these linkages, it is prudent to study the tenets of economic growth itself. There are a variety of factors that can be used to measure economic growth. The Federal Reserve, for example, employs several indicators as measuring sticks when establishing economic policy. The first of these is also the most prominent: Gross domestic product (GDP). This indicator can be defined as the total value of goods and services produced within the borders of the US, regardless of who owns the assets or whether or not the product or service was created by a US or foreign-born worker (Federal Reserve Bank of New York, 2006).
A second indicator is that of consumer confidence. A useful mechanism for monitoring the behavior of shoppers is the Consumer Confidence Index (CCI), which measures the attitudes of consumers regarding the economic environment. In late 2013, this important survey revealed a decline in citizens' belief in the short- and long-term strength of the economy. In November of that year, the index declined to 70.4, while the Expectations Index declined from 72.2 to 69.3 from October to November. However, there was some optimism on the job front, as 11.8 percent of those polled indicated that jobs were “plentiful,” representing a 0.2 percent improvement from the previous month (The Confidence Board, 2013).
While US stocks are up more than 150 percent from their 2009 lows, during the midst of the economic recession, investment authorities advised caution entering 2014; the likelihood that stock prices will continue to rise at such a rate are unlikely, and economic prognosticators are mixed on the direction of the US economy (T. Rowe Price, 2013). Because the US economy remained volatile, despite signs of continued economic recovery (including a reduction in unemployment), the it was certain to affect the 2014 midterm elections and the 2016 presidential elections.
Quality of Life
A third indicator of economic growth is manifest through an analysis of the population's quality of life. While assessments of manufacturing productivity, unemployment...
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