The economics of politics

Simon Smith

Throughout my career, I have steadfastly made a distinction between economics and politics. You may say they are inexorably intertwined.  They are, but when it comes to analysing currencies, interest rates, the economy etc., my politics are not worth anything.  People I’ve worked with for years have no idea of my political views. They probably know I’m not an extremist, because by nature such people cannot keep that under their hats, but beyond that, I remain an enigma.

But that’s been really hard to contain over the past year. I managed it through Brexit; although an increasing number of analysts failed; the issue being too personal for them to push aside their own personal opinions.

But to me, it’s a hiding to nothing. If your judgement is clouded by your politics, then I’ve generally no wish to read on if I’m looking for a rational presentation of the arguments and application of economic and financial theory to the real world.  The other reason is that no-one is ever going to change their politics (at least not overnight), so if you think that your politically-based reasoning is going to change minds, then think again.  Invariably, you are wasting your breath, ink or more likely energy spent typing.  This is why I’ve unfollowed all the ‘remoaners’ on I used to follow on Twitter (those that wanted to remain, lost and just can’t let it go).

But when it comes to the shape of US politics, it’s harder to keep quiet. The happenings in the Trump administration have never strayed far from the top story and have such a massive bearing on the world and markets that it’s nigh on impossible to keep things to yourself. But that probably less reflects the politics than the personality.  For me, it boils down to whether the things that make a successful businessman also make a good politician.  They probably don’t.

This is why I also look to the US political system with some bafflement. It’s almost required that one must have the Republican or Democrat label, be they in the fields of law, finance, central banking, or wherever.  It’s so divisive and will prove to be ever more so over the coming 4 years.

So, as best you can, keep your politics to yourself, you’ll views will be much more respected and valued as a result.

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