Written By Basilio Chen

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Is Presidential Election year and we are one month away from 2012 Presidential Elections in the USA.  This year, there are elections all the world over including China and Japan.

Last year and part of this year, we have seen new government leaders come and old leaders leave.  Italy is one such large economy with new leadership.

It is the believe of many that the government can make an economy improve and some even believe is the role of government to make economies rich and improve forever.

Since 2000, we have seen 3 major crisis of financial magnitude to affect the economy the world over. 2000, the dotcom bubble bursting, 2009 the real estate bubble busting into a mortgage crisis, 2011 the European sovereign debt crisis which is still percolating.  In the background, we have China and India which have had decades of growth defying all economic gravity and continously performing over all crisis non-stop.

Here are some charts showing how even the centrally controlled governments (here China), have little correlation of government changing to economic results. (the vertical lines showing every 5 year Congress where new leadership is determined.

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To some extend the (incomplete – data not available) Foreign Investment line does show a increase in GDP as FAI increased.

So we will extend the same conclusion to the USA political debates and subsequent election.

One more chart, even though the culprit to the last 2009 real estate crisis started in the USA from excessive mortgage credit, you can see here that the effect of the real estate bubble (excitement) also manifested in China (as shown by the parabolic rise of the Shanghai Stock Index) and subsequent real estate crash creating the crash of the China stock market.

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Further economic and political science theorist may continue this study.

In addition, since winning politics t0days is more a follow the market approach (“find what people like to hear, and tell them that”).  The policies that government leaders enact are in reaction to social trends.  For example, there are significant trends toward regulation, increased taxation, protectionism and anti-importing tendencies (nobody seem to understand or want to understand the advantages of outsourcing).  The policies and laws adopted do have a long term effect on the economy, and policies and laws are enacted by the government, however is that direct or indirect consequence of social trends.

As undermined is the idea of the value of a free economy and free market.  Like gravity and the Universal Law, is there and it always shows it’s manifestation sooner or later.

Can Government Help the Economy, 5.0 out of 5 based on 1 rating