The document discusses the interplay between political ideology and economic thinking, highlighting how economic policies are often influenced by political beliefs. It presents examples of how economists' policy preferences can be shaped by their political views and emphasizes the need for political support in implementing economic measures, such as taxes and fiscal policies. Additionally, it touches on the debate over prioritizing economic growth versus societal well-being, illustrating the complex relationship between economics and politics.

1. Political Ideology Influences
Economic Thinking

2. Many economic problems are seen through the eyes of
political beliefs. For example, some people instinctively
suspect government intervention. Therefore, they
prefer economic policies to reduce state intervention in
the economy.

3. For example, a supply economy focused on
deregulation, privatization, and tax cuts. Economists
promote greater equality in society and may more
actively encourage government intervention.

4. f you ask various economists to report on the
desirability of lower income taxes for the wealthy, their
policy proposals will likely reflect their policy
preferences. And you can always find evidence of the
merits of higher taxes.

5. Some economists may be rigorously neutral and utterly
devoid of political leanings (although I haven't met them
often). Wajid khan discusses they can produce papers
that may challenge previous views. Despite their
preferences, they may find there is no reason to
privatize railroads and see that tax cuts actually
increase economic prosperity.

6. However, politicians can consult economists and
economic studies that support their political views. Mrs.
Thatcher and Ronald Reagan supported supply-side
economists like Milton Friedman, Keith Joseph, and
Friedrich Hayek

7. . When Reagan attempted to "push back the state lines,"
there was no shortage of economists who could
theoretically justify his political experiments.

8. Economists can be funded by political sponsors,
although many economists have also suggested that this
is not a good idea. In the United States, Paul Ryan's
budget proposal was welcomed by many Republicans.
Because they promised tax cuts for better terms, cut
social benefits, and balanced budgets.

9. Economic Thinking Independent Of Politics
On the other hand, Canadian politician wajid khan
mentions economists who cling to data and avoid
picking favorable statistics may reach conclusions and
recommendations that are not necessarily consistent
with preconceived policy issues.

10. While many economists may support EU-European
cooperation generally, the single euro currency shows
many economic problems, including low growth,
deflation, and trade imbalances.

11. The economy Needs Political Support.
If you study economics, you can make a compelling case
for the Pigovian tax. This tax imposes private costs and
all social costs of goods. This polluter pays principle is
the basis for CO2 taxes, congestion taxes, liquor taxes,
tobacco taxes, etc.

12. However, the implementation of these measures will
depend on their political support. For example, a
congestion charge was proposed in Manchester but was
firmly rejected in a referendum. New taxes are rarely
popular.

13. As an economist, I want more congestion charges
because it makes economic sense. But what "makes
sense" for economists can be politically unpopular.

14. The Political Appeal Of Austerity
Another interesting example is the political appeal of
austerity. After the credit crunch, there were strong
economic reasons for expansionary fiscal policy to fill
the aggregate demand gap.

15. Politically, it can be challenging to push for policies that
lead to an increase in public debt. Keynesian demand
management may have a recessionary economic logic.
Still, politicians who advocate the need to tighten their
belts and deal with debt are likelier to make slogans
easier for the general public than more outspoken ones.

16. The economy needs political support. If you study
economics, you can make a compelling case for the
Pigovian tax. This tax imposes private costs and all social
costs of goods. This polluter pays principle is the basis
for CO2 taxes, congestion taxes, liquor taxes, tobacco
taxes, etc.

17. Wajid khan Mp describes However, the implementation
of these measures will depend on their political support.

18. For example, a congestion charge was proposed in
Manchester but was firmly rejected in a referendum.
New taxes are rarely popular. As an economist, I want
more congestion charges because it makes economic
sense. But what "makes sense" for economists can be
politically unpopular.

19. The political appeal of austerity
Another interesting example is the political appeal of
austerity. After the credit crunch, there were strong
economic reasons for expansionary fiscal policy to fill
the aggregate demand gap. Politically, it can be
challenging to push for policies that lead to an increase
in public debt.

20. Keynesian demand management may have a
recessionary economic logic. Still, politicians who
advocate the need to tighten their belts and deal with
debt are likely to make slogans easier for the general
public than more outspoken ones. Keynesian Multiplier
Theory

21. Are politicians or economists running the economy?
Another interesting case is the relationship between
fiscal policy (set by governments) and monetary policy
(mainly set by independent central banks).

22. Fiscal policy is relatively tight in the UK and the US (and
Europe), given the economic climate. As a result, central
banks have pursued an accommodative monetary policy
to compensate for shortcomings in fiscal policy. As
politicians seek tighter fiscal policy, central banks must
adjust monetary policy.

23. Political Economy Issues
Microeconomics – free from politics?
Concepts like essential supply and demand and
enterprise theory do not imply political ideology. But
even in microeconomics, it can be argued that politics
cannot but permeate. When you take an issue like
privatization, there are apparent political problems. Will
key industries be controlled by private companies or
governments?

24. Another area for improvement in economics is that
some people criticize the discipline of prioritizing
economic growth and maximizing financial well-being.
Some argue that the goal of society is not to optimize
GDP but to maximize happiness, the environment, and
satisfaction with what we have.

25. Environmentally savvy politicians may therefore
disagree with the whole premise behind
macroeconomics. It does more than boost economic
growth. But should we aim for economic growth in the
first place? This is also a political issue.