The most tedious phrase in economics commentary is: “It’s the economy stupid.”
Trotted out by every columnist at one time or another (myself included, I’m ashamed to say), it is shorthand for another maxim: ultimately, what decides elections is the economy.
This has some superficial truth to it.
Often when the economy is nosediving the electorate will punish the party of government by voting them out.
Indeed, the phrase was coined by James Carville, Bill Clinton’s election strategist in 1992, as part of a Democratic strategy to remind voters of the weak George HW Bush economy.
But does economics decide every election?
Of course it doesn’t – not anymore, anyway.
For evidence, look no further than the referendum campaign during which we were warned frequently that if we voted Leave we’d be voting for economic decline.
Lo and behold, we promptly voted Leave. And lo and behold, the economy is now about 1% to 2% weaker than it would likely have been.
If economics decided every policy action, we wouldn’t be contemplating a “no deal” Brexit or even the Chequers deal.
We would be heading straight for the option with the smallest impact on potential growth – membership of the European Economic Area.
But right now that seems to be about the least likely outcome.
The truth is, to judge from the way economic policy is being decided in both the UK and elsewhere, we are already living in the post-economic era.
For many decades, politics in most developed countries was primarily focused on increasing gross domestic product – the country’s national income.
We fixated for years on how fast our economies were growing. So much so, indeed, that it became trendy to moan about how we should end our obsession with GDP.
Well, guess what – it’s happened.
Right now, Downing Street is occupied by someone pushing for a Brexit deal which, according to the model used by the Treasury, is closer in GDP-impact terms to a hard Brexit than a soft one.
The White House is occupied by someone who wants to tear apart the trade deals that have helped bolster American growth.
Every economist worth their salt believes that if Donald Trump pushes ahead with his plans to tighten up NAFTA and impose further tariffs on the Chinese and others, the US economy, not to mention everyone else, will end up weaker than it would have been.
In another era that would be inconceivable. But, remember, we live in the post-economic era.
As someone who has spent his professional life focused on economics, you might have thought I’d be appalled, but the truth is, I’m actually rather cheered by this.
True, we shouldn’t take lightly decisions that will make us all poorer. That, after all, is what weaker GDP is – less income to be shared among us in the future.
But there’s a difference between being clear-headed about these trade-offs and being continually terrified about them.
Weaker economic growth is not the end of the world.
When I report economic analysis showing that GDP is likely to be weaker if we leave the EU without a decent deal, it’s a projection, not a threat.
It suggests we will be a bit poorer than we would be otherwise. But if that’s a price we’re all willing to pay for Brexit, then so be it.
I can think of plenty of things – family, stability, happiness and so on – that come far higher than economics in my own personal list of priorities.
Living in a post-economics world doesn’t mean ignoring the economics. It doesn’t mean suppressing economic analysis, as the Treasury is with its post-Brexit economic projections. On the contrary.
But it does mean that for the first time in ages, people are no longer putting economics at the very top of their priorities.
I don’t know about you, but that sounds eminently sensible to me. I can think of plenty of things – family, stability, happiness and so on – that come far higher than economics in my own personal list of priorities.
The great irony is that many of the people most enraged about the economic impact of the US president and about Brexit are the self-same people who have spent the past decade moaning about our fixation with GDP.
Well, they got their way.
Policy is no longer being decided on the basis of economic outcomes.
The problem is it still isn’t being done quite the way they want it.
It’s not the economy, stupid.