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Policy Vs. Politics (Vol. 31)

Updated: Feb 7, 2023

analyticsbox | Dec 22, 2021


Policy vs Politics

Policy Determines the Outcomes,

Not the Political Party

We are witnessing the most divided politics that we have seen in the modern era. Having endless political squabbles does nothing to advance our country - our interests are not served by that. What serves our interest is good sound policy from our governmental units - Federal, State or Local.


At Main Street Economics, we have no interest in political parties. Our sole focus is on understanding economics and good policy, which is a reflection of understanding the economic results of the policy. It sounds so easy, BUT it is anything but easy.

Why? Because there are many opinions and desires from people, all with the best of intentions. And the political process naturally leads elected officials that want to be re-elected to do what they think will help get that done. That often leads to politicians doing things that seem useful to constituents, but in many cases are actually not useful or downright harmful if considered over the longer term.

Milton Friedman famously said, “One of the greatest mistakes is to judge policies and programs by their intentions rather than their results.”

Therein lies the problem. In their zeal to please constituents, our representatives are enacting policies which do not yield good outcomes. Regardless of whether the intentions are real or politically motivated, if the outcomes are bad, the policy is bad.

For example, in the last 20 years, neither party has balanced a budget, and the Federal debt has gone from 5 Trillion in 2000, to 30 Trillion in 2021. And unfunded liabilities (see No Spin #6) are estimated at 100+ Trillion. That is $130,000,000,000,000 in liabilities of the Federal government! THAT IS UNSUSTAINABLE DEBT, WHICH


CONTINUES TO GROW EVERY YEAR. And the current plan to deal with our ever growing deficits is to borrow more money. Will we learn before it is too late that borrowing more money is not the solution?

THE BOTTOM LINE

Regardless of intentions, this country is headed for a train-wreck if we do not institute sound fiscal policy, NOW. It is imperative that we consider policy carefully and move toward a balanced budget with programs that consider proper incentives and financial responsibility. Check out our website and read No Spin #20 on Fiscal Policy and No Spin #16 on the Formula for Success for more information on the best way to go forward.

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