Galbraith and Blinder...

Just as an aside, I wanted to discuss an interesting parallel I saw between Blinder’s and Galbraith’s economic and political observations about American society. Blinder discusses politician’s use of ‘superficially appealing slogans’ based on faulty reasoning and blind ideology. He compares politics to merchandising, in the since that you have to gimmick to sell the product. In a political market place in which explaining policies needs to happen in less than 40 seconds, good economics rarely sells. This mentality of summing up complex realities with false big ideas is likewise found in Galbraith’s description of the ‘production driven’ mentality of the U.S. economy. Merchandising is used to manipulate the consumer into believing that he or she needs the next most luxurious item (iPhone 5, anyone?). These two ideas shed light on a broader phenomenon happening in the development of the U.S. economy. The fact that the consumer is the individual unit that drives the market leads to manipulations of the consumer, which results in market inefficiencies. Blinder’s description of ‘t-shirt ideas’ suggests that politics have become politician-driven just as Galbraith’s economy is production-driven. In the pursuit of self-interest, the political and economic sphere have been transformed so they are not driven by the demand of the consumer/voter, but rather by the product/policy produced by the seller/politician. During tutorial, Erin and I discussed the idea that implementing inefficient economic policies might just be indicative of democracy because politicians have to ultimately represent the beliefs and desires of their constituents, even if these politicians know that a more nuanced economic policy would be more efficient. Politicians are thus forced to create a simplistic and ideological representation of a complex economic reality in order to sell it to their voters. The nature of this economic and political system suggests that Blinder’s recommendation of increased economic education among the public would be ineffective.