Why politicians and economists don't get along
Rarely have we seen both politicians and economists dance together and play the same tune on the state of the economy. When politicians begin to trumpet the prosperity of the country, economists become doubtful, earning dislike from politicians. However, high-level politicians who we consider as visionaries (rather than everyday politicians) favour economists the most because a visionary leader has a dream and economists can help make it happen. Bangabandhu Sheikh Mujibur Rahman had instructed the first five-year planners to chalk out a roadmap for a prosperous Bangladesh with equity.
Politicians often find economists problematic apparently because they divulge the unpalatable truth on economic indicators. The situation becomes worse when politicians prepare for an election and economists forecast dull growth figures or high inflation numbers. The tendency of politicians in power is to pressurise the central bank to print more money before election. If the governor is a rigorous economist by training, his/her relationship with the regime turns sour unless s/he is too compliant with aspirant politicians in power.
Politicians' dislike for economic policymakers becomes most apparent when the latter do not bow down to short-term targets to stimulate the economy artificially. That is why the two Bushes (dad and son) in the White House disliked economists Alan Greenspan and Ben Bernanke. Both presidents were Republicans and both economists were known for having republican preferences as well at the time of their oath for the Federal Reserve chairmanship. Economist Raghuram Rajan was seemingly unpopular with the current BJP regime in India because he was tough on high-octane defaulters who are otherwise liberal in donating black money to the party funds instead of repaying their loans. Political preferences never control economists' decision-making in the same way justices cannot remain partisan while discharging their duties.
Pakistani army-backed rulers loathed development economists who unequivocally suggested their government to reduce military spending and augment allocations behind health, education, and social safety. The Myanmar junta did not let economists grow in their country for decades. As a result, Burmese economists either had to flee or manufacture new theories about the benefits of having a strong ruler at the helm. Now, the scenario has changed, although Myanmar is producing more bureaucrat economists instead of pure economists who urge for a participatory democracy and trade openness.
Economists always urge for improving institutions that will, in turn, reduce corruption and rent-seeking. However, corrupt politicians know that they will lose power by making fortunes if the system is decent and functional. As institutions mature, there is little to extract. Economists do not have trade unions, and politicians thrive on it. Who would bribe the petty leaders unless the most anarchic transport sector is no longer in shambles?
Bangladesh's per capita income has grown five-fold in the last 24 years, and so has the income from the transport sector over the same period. But the government failed to ensure a minimum improvement in the standard of services in the sector. Economists would point it as an institutional failure. Even a partial adjustment between transport profit and the service standard over the last twenty years would require the greedy transport owners to install at least air-conditioned facilities in the buses. This is a purposeful failure of political institutions, helping the bus owners indirectly quadruple their profits. Economists become unpopular even with the mere mention of this injustice.
Bangladesh will one day become a developed country, but by when? Politicians predict this change in status to take place by 2041, but economists are doubtful about the timeline which is non-feasible, given the current growth of population and output. Here, politicians grudge economists for not being as optimistic as them. For politicians forging alliances with the rich is a win-win situation both for political fundraising and staying in power. Economists find it damaging for institutions and a compromise with long-term interests of competition and growth. Many economists consider hefty donations of the super-rich to government charities to be a form of bribe, but politicians, in contrast, perceive it as a gesture of 'generosity' and 'social responsibility'.
What suggestions can we give economists so that the relationship between them and politicians becomes slightly smoother? The first thing economists have to do is not to doubt any data politicians provide them (presumably after a cosmetic surgery). Economists must not question data quality. But that is difficult for genuine economists and so they would have to endure unfavourable opinions of themselves by politicians anyway. Bangladesh's data quality ranks the fifth out of five layers, and politicians have practically no pressure to upgrade its rank – probably because less manipulation is possible once data quality steps up in the global ranking scale.
The acrimony between politicians and economists will get stronger since our Parliament is likely to gradually turn into a club of lobbyists and businesspersons who will architect all lawmaking in favour of the tycoons and magnates – simply put, the producer class will brush the larger but powerless consumer class aside. Only economists can protest this damaging transformation – both morally and theoretically. Economists find this trend detrimental to the rise of small enterprises, competition, and the market economy – the root mantra of growth acceleration in a developing economy. Politicians crave concentration of power and control – a feature economists find inimical to inclusive growth and equity. A large segment of economists are in favour of globalisation and openness; most politicians see it as a scheme against them to defuse their local-level hegemony.
It is likely that income inequality will edge up when a country is registering respectable growth. But economists have a medicine for it, i.e. progressive income taxes particularly on the super-rich and spending the money for infrastructure, education, and health. This medicine might be a bitter pill for politicians to swallow. We live in a society where top loan-defaulters and high-scale money launderers are deeply linked with powerful politicians whose 'moneyed friends' find the criticisms of genuine economists unpleasant. Hence, economists gain a sense of distrust from politicians, possibly in a show of solidarity with their 'friends in need'.
The writer is a guest faculty at the Institute of Disaster Management and Vulnerability Studies (IDMVS), Dhaka University.
E-mail: birupakshapaul@gmail.com