Thursday, October 3, 2013

The costs of political neutrality

Paul Krugman and Lydia DePillis explain that apparently well intentioned "big business" interests fail on many occasions to stop policy outcomes that are really bad for themselves. As an example, they mention the government shutdown in the US, which clearly goes against business interests. While conventional wisdom assumes that big business have a lot of power in politics, the fact is that, although they do try to have a lot of power, the degree to which they are successful depends on the strategies they follow, the strength of democratic institutions and other determinants. One of the reasons they fail to stop really disastrous outcomes is that, when they are transparent, they typically surround their pleas by an aura of political neutrality. When one of the political sides is much more biased towards irrationality, neutrality's only effect is to give an advantage to the crazy side. Something similar happens not only in the USA with big business, but also in other countries with all kind of people with professional or other reputations to maintain. For example, in Italy it is obvious that disaster for the country as a whole and for normal businesses in particular has a name: Silvio Berlusconi. And it is obvious to any external observer that the only serious organized alternative to Berlusconi is the center left. Why then many apparently reasonable economists, business people, professionals, artists, etc., fail to express their explicit support for the reasonable side is a mistery to me. In Spain, we are in the midst of an enormous economic and institutional crisis, with right wing parties in Spain's and Catalonia's governments not being even able to have structured negotiations that facilitate a formula that makes it possible for Catalonia to have a better status in Spain, mirroring the logic of federal multi-national states. Center left and left parties and organizations are developing very reasonable ideas on how to improve upon the status quo. But if they do not receive the explicit and active support of people that in private acknowledge that we are headed for disaster (one that could threaten the stability of the euro zone and southern Europe), disaster will just happen.

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