Economics is worried about studying and influencing the economy. In theory, economics might be non-political. a perfect economist should ignore any political bias or prejudice to offer neutral, unbiased information and suggestions on the way to improve the economic performance of a rustic.
Political ideology influencing economic thought
Many economic issues are seen through the eyes of political opinions. as an example, some people are instinctively more suspicious of state intervention. Therefore, they like economic policies which seek to cut back government interference within the economy. As an example, the political economy concentrates on deregulation, privatization, and tax cuts.
On the opposite hand, economists may have a preference for promoting greater equality in society and be more willing to encourage government intervention to pursue that end. If you set different economists to report on the desirability of taxation cuts for the rich, their policy proposals are likely to reflect their political preferences. You’ll always find some evidence to support the advantages of tax cuts, you’ll be able to always find some evidence to support the advantages of upper taxes.
Some economists could also be scrupulously neutral and not have any political leanings (though I haven’t met too many). they will produce a paper that perhaps challenges their previous views. Despite their preferences, they’ll find there’s no case for rail privatization, or perhaps they find tax cuts do actually increase economic welfare. However, an official can use those economists and economic research which back their philosophy. Mrs. Thatcher and President were great champions of supply-side economists like Friedman, Keith Joseph, and Friedrich Hayek. There have been even as many economists suggesting this wasn’t a decent idea, but economists are often promoted by their political sponsors. In the US, the Paul Ryan budget proposals were welcomed by many Republicans because they promised tax cuts for the higher off, cutting welfare benefits, and balancing the budget.
On the opposite hand, economists who stick with data and avoid cherry-picking favorable statistics may possibly come up with conclusions and suggestions that don’t necessarily fit with pre-conceived political issues. Many economists could also be generally supportive of the EU and European cooperation, but the evidence from the Euro single currency is that it caused many economic problems of low growth, deflation, and trade imbalances.
Economics needs political support
If you study economics, you’ll make quite a convincing case for a Pigovian tax – a tax that produces people pay the complete social cost of the great, and not just the private cost. This principle of creating the polluter pay provides a case for Carbon Tax, congestion charges, alcohol tax, tobacco tax e.t.c. However, whether these policies get implemented depends on whether there’s political support for them.
For example, a congestion charge was proposed for Manchester, but it had been very heavily defeated in a very referendum. a replacement tax is never popular. As an economist, I might wish to see more congestion charging because it makes economic sense.
The political appeal of austerity
After the financial condition, there was a robust economic case for expansionary economic policy to fill the gap in aggregate demand. Politically, it is hard to push a policy that leads to more government debt. There is also an economic logic to Keynesian demand management during a recession – but an officer appealing to the necessity to ‘tighten belts’ and ‘get on top of debt’ is an easier slogan to sell to the final public, instead of a slightly more obtuse ‘multiplier theories of Keynes’
Who runs the economy – Politicians or economists?
In the UK and US (and Europe) economic policy has been relatively tight, given the state of the economy. As a consequence, it’s fallen to Central Banks to pursue an expansionary monetary policy to offset the deficiencies of economic policy. If politicians pursue tight economic policy, Central Bankers must adapt Monetary policy.
Microeconomics – freed from politics?
There are some areas of economics we could argue are freed from politics – basic supply and demand and ideas just like the theory of the firm aren’t laden with political ideology. But, even in microeconomics, you may argue that politics can’t help seeping in. If you’re taking a problem like privatization – there’s a transparent political issue. Who should command key industries – private enterprise or the government?
Another issue with economics is that some criticize the topic for prioritizing the economic process and maximization of monetary welfare. Some argue that the aim of society isn’t to maximize GDP – but to maximize happiness, the environment, and being satisfied with what we’ve got. Therefore, an officer from an environmental background may afflict the entire premise behind macroeconomics. It’s not nearly the most effective thanks to promoting the economic process. But, we must always be aiming for the economic process in the first place.