A key tenet of “public-choice” economic theory involves the incentives politicians face to make decisions with short-term benefits, regardless of the long-term costs. (As Thomas Sowell has explained,”Economists may say that there is no such thing as a free lunch, but politicians get elected by promising free lunches.”)
A brief article in the latest Bloomberg Businessweek offers another good example of the general rule. McGill University economist Christopher Ragan assesses Conservative Prime Minister Stephen Harper’s record:
Ragan, co-author of the most widely used economics textbook in Canada, grades Harper an 8 out of 10 for short-term management and 5 out of 10 for “long-term economic thinking.” Canada’s potential economic growth won’t be much greater than 2 percent a year beyond 2011 because of low increases in productivity and an aging workforce, Bank of Canada Governor Mark J. Carney said last year. “We can choose to be the proverbial frog in the pot of heating water, but that story does not end well,” says Ragan.
A major concern for Harper that economists don’t share, of course, is political survival.