Voice of the People
Ill-informed politicians cause economic woes
It seems that political leaders are lacking information on the economic situation in our country. They have displayed serious deficiencies in their ability to handle stabilization policy. Their economic advisers find it difficult to explain the economic situation to them.
There is also a variety of political inhibitions against taking action. Instead of stabilizing the economy it tends to destabilize it, by demonstrating the deficiency of politicians in handling monetary and fiscal policy.
In time of boom, the government often follows an expansionary course. When balance of payment crisis develops, it takes restrictive action often too late, which pushes the economy into a deeper recession. On the basis of this experience, it seems that a policy that did not attempt to counter the short-run swings in the economy would have been more successful in achieving stabilization.
It is best that the authorities should concentrate on letting the volume of money and credit increase steadily at the rate dictated by one-term growth trend of the economy.
In our country, capitalist economics are inherently stable; the crises are usually the result of bad policies on the part of ill-informed politicians. Most Americans believe that our government must seek better tools for stabilization of our economy, and also the size of budget surplus or deficit is not a good criterion of its effects on our economy.
Some types of fiscal action may produce the same surplus or deficit, but they will not have the same effect on the economy.
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