Political Ideology: The Cancer of Economics (Part 16)
"For there to be economic inefficiency, it is necessary to produce an increase in the Public Sector and an increase in the State Deficit, since when this double combination occurs, the State will be unable to finance its expenses via taxes."
Study carried out by Jorge Vendrell that will be part of his next book entitled: "#TOP SECRET CRIOGENIZACION ECONOMICA" Appointment obliged by copyright.
The long road to economic knowledge has always been shrouded in countless ideological obstacles that have impeded its development.
Ideology has imposed itself on the economy by leading its way, and giving rise to the emergence of the political ideology of right and left; a nonsense that has marked the political and social evolution of humanity, and that only the political center based on macroeconomic research could make it disappear.
Economic science is itself a mathematical science in which a series of actions give rise to another of reactions, in the same way that happens in chemistry or physics. It is for this reason that we are not dealing with a social science as politicians and some economists preach, but with a mathematical science whose economic effects will be felt by society.
The complexity of the relations that are established in economics often escapes the analysis of those who believe that economics is a social science that is governed by its political will, being precisely at that point where the problem begins, since being a mathematical science and not social political actions of an economic nature that do not conform to the rigors of economic science will have negative consequences on the balance Economic and economic, producing the fall in GDP and employment.
Politics is determined by economic ideology, born from the fusion of both political ideology, which is nothing more than a self-interested view of economics, and whose objective is to shape a political ideology.
This partisan view of the economy is responsible for the stagnation that, for millennia, has lived the economic science that has not advanced in a consistent and lasting way preventing independent macroeconomic evolution based on research, as happens in any other scientific field, making economics hostage to politics and those who in their great ignorance do not know the basic rules that govern it , and they ridiculously believe they can change.
Consequently, political ideology is biased and therefore offers a self-interested view of the world that they build from predetermined ideas regardless of whether they are based, in many cases, on erroneous postulates. That is why political ideology should be regarded as the cancer of the economy, preventing it from advancing in the field of economic research and subjecting it to the political will of those who govern by ignoring the laws governing macroeconomic activity.
THERE IS NO BIUNIVOC CORRELATION BETWEEN DEMOCRACY AND ECONOMIC DEVELOPMENT.
To the surprise of many, there is no correlation between democracy and economic development, because in fact there is no two-way relationship between democracy and economic freedom, although it is often thought that the two are the same thing, when in fact they are not.
Democracy is directly related to political freedom, but not to economic freedom, so we are dealing with two different kinds of freedoms.
Through democracy, freedom to elect political representation is exercised, but in order to obtain economic freedom it is necessary to obtain sufficient resources to guarantee a minimum freedom of choice, which in low incomes is barely obtained, and which in any case is limited to basic products that allow personal subsistence; and that in the middle income depends, in most cases, on the level of access to credit available.
"It is for all these reasons that I maintain and affirm that democracy is synonymous with political freedom, but not necessarily with economic freedom, being possible to obtain a greater degree of economic freedom in states with restricted political freedoms, than in states in which there is a greater degree of these."
The political ideology that limits economic freedom by raising taxes and raising the public deficit is the real cancer of the economy.
It should not be inferred from my earlier statement that all democratic countries defend less economic freedom than those that are not; nothing could be further from the truth, the US is a full democracy that promotes economic freedom, whatever political color it governs and North Korea does not. What I do say is that the countries with the highest level of political freedom do not have to be the ones where a greater degree of economic freedom prevails.
THE HIGHER A COUNTRY'S LEVEL OF SOCIALIST IDEOLOGY, THE LOWER ITS ECONOMIC EFFICIENCY WILL BE.
History has made it clear on numerous occasions that the greater the degree of economic socialism, the greater its inefficiency. The dismemberment of the Soviet Union is the most obvious case of this fact. The turn of China's economic communism towards state capitalism confirms this, and the difference between Venezuela, a country with greater oil resources than the United Arab Emirates, is evident, especially if we take into account the current economic situation of both countries.
Today, economic communism has given way to market socialism. The ideological subordination of the economy to a socialist political ideology is initially carried out through the increase of taxes, levies and taxes that limit investment and the growth of the Private Sector that loses weight year after year in favor of the Public Sector that does not stop growing. This should not be seen as a problem if this growth does not result in an increase in the public deficit.
"For there to be economic inefficiency it is necessary to produce an increase in the Public Sector and an increase in the state deficit, since only this combination indicates that there is an economic limitation in the Private Sector that prevents it from growing above the Public Sector, and that the State is unable to finance all its expenses via taxes."
That is why eminent economists like Friedman have argued that economic freedom was better given in undemocratic countries than in democratic countries, which is why Chile and Spain, under dictatorships, grew economically much more than the vast majority of democratic countries of their time. And why China, faced with the economic collapse that was looming if it had continued with its economic communism, decided to retain its fundamental part, political communism, and to change its old economic communism for a much more efficient state capitalism, and whose result evidences greater stability and economic growth of the country in the long term.
This is also the reason why the United Arab Emirates and especially Dubai has developed sustained economic growth over more than three decades, achieving through the "economic spillover", born of a policy of full employment, that social welfare reaches all its citizens. This unprecedented success, based on the balance between growth and employment, is the cornerstone of the Circular Macroeconomics that I lead.
The result is a full-employment economy such as the Emirati economy, which makes it possible to reduce the level of taxes that has a direct impact on the increase in investment and competition, which has an impact on reducing inflation, increasing consumption, employment and the real income of citizens, being the most efficient economic system as a result of separating the political ideology , of economic freedom which is why the Uae has many more defenders than detractors every day.
When ideology determines economic decisions, the economic results are a fall in GDP and an increase in unemployment, which leads me to say that the political ideology that limits economic freedom by increasing taxes and raising the public deficit is the real cancer of the economy.
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Jorge Vendrell - World Economy Development Center