The Economics of Politics

Economic growth is based on technological progress. Without technological progress there would be no rise in living standards over time.

One might think living standards would stay at a stable level, if technological progress came to a halt. A given level of technology corresponds to a certain capacity to produce goods and services. If technology neither advanced nor regressed, wouldn’t then living standards stay at the same level over time ?

No, they would not – because of politics. If the negative effect of politics on the economy were no longer offset by technological progress, living standards would decline.

To understand the pernicious effect of politics you can either read Mancur Olson’s The Logic of Collective Action or watch this 2-minute explanation by Patri Friedman:

 

3 thoughts on “The Economics of Politics”

Leave a Reply

Your email address will not be published.