Throughout history there have been few ever present facets of life, two of these would be the economy and the political realm in one form or another.  This constant existence brings in the thought of “Why?” these two worlds are always present because of their superb importance to a group, society, state, or nation.  A problem exist in which many economist theorize on economic growth without taking the political situation into consideration which can be detrimental to growth.  The two rely on a certain interdependence of one another in an attempt to maximize the economic growth of a country or nation.  

Economic growth often centers around 3 key factors: labor, capital, and productivity.  Current economic indicators such as international trade, homeownership rate, and wholesale trade are either stagnant showing no statistical increase from the previous year, or have declined showing an economic state that is not improving. (US Census Bureau)  With the current state of the nation economists must factor politics into economic models, and bridge the gap between the “real” world and the economic theory to provide sustained growth to the national economy.  To provide economic growth to a nation a certain knowledge of what influences and provides the desired growth is key.  Following these theories must be implemented into the modern economy, which must often be done through political avenues.  The lack of economic growth can be attributed to flaws in the development and implementation of economic theories, particularly with a lack of recognition of the connection between the economic and political worlds in theory development.  This overlooked connection between the two worlds must be recognized to produce the nation with economic growth.

The preface for this essay lies in the question of “Why the national economy has succumb to a state of stagnation and how does the connection between political and economic worlds play into this state?”, and additionally how do we fix this far reaching issue?  The United States economy has had its fair share of turmoil over its history.  This consist of The Great Depression and the housing market crash of two thousand eight as the two worst events followed by other occasions of economic recession.  Following the housing crash of two thousand eight the market did recover significantly, yet over the past years nearly all growth has stopped.  This loss of growth can be attributed to different factors yet the fault can be placed primarily on failed theories to stimulate improvement.  In many instances plans failed to produce gain because the developers were unable to factor in one key connection, that between political and economic settings.  When developers ignore this connection they are setting the plan up for failure.  In the current state of the nation nearly everything relies heavily on the political state in which something is being introduced.  The connection between the two industries has been present in the United States since the countries birth over two hundred years ago, so why have plan designers failed for so long to recognize its importance?  In some cases there is recognition and the failure to produce has fallen on faulty design, yet for the most part stimulus plans have been created without accounting for the political state.  

The relationship between political and economic worlds is a situation where you cannot have one without the other.  Micro economics in one aspect can be seen without political influence or intervention in examples such as simple supply and demand, yet “Many economic issues are seen through the eyes of political beliefs.” (Pettinger)  It is in this case of “You cannot have your cake and eat it too” that we find politics and economy in which there is really only one solution.  The simple solution is to just use this connection to maximize the benefit produced for the individual or nation, yet history has proved that it is easier said than to actually achieve this.

Alongside this connection between political and economic environments the “Political Economy Theory” also known as “International Political Economy” (IPE) has been developed.  The theory was created to study the relationship between the economic and political relations in the increasingly interconnected world.  In its origins the focus was to study production methods in newly capitalist nations, but it has evolved to study the intricacies found in the global economy.  The theory can be used to study various situations “For example, free trade between countries or among many countries in a particular region is the result of economic and political considerations.” (Timimi)  Economist Keith Timimi states that “The political economy theory is one of the most comprehensive theories in the world which can become a successful tool in combating the complex and serious issues threatening to nullify the bounties of liberalization and globalization.”  Those responsible for development must use all the tools at hand to create growth and in turn a better country. 

It is common place to hear nearly anyone and everyone state that growth is economic gain is important, but why is this?  With leaders around the world focusing on improved healthcare, poverty, and living standards it can be easy to wonder about why the nation is not lending all its resources at these issue instead of working on economic gain.  Dambisa Moyo a predominant expert on world economies states “with economic growth counties enter into a virtuous cycle of upward mobility, opportunity, and improved living standard.”  She articulates how so many of the nation’s pressing issues can be solved through sustained growth in economic industry.  

Growth can be had by focusing on the three main economic drivers, “Captial, labor, and productivity.” (Moyo)  Labor is a vital aspect of industry and understanding of the current situation is helpful to increasing output and ending the growth drought in the United States.  In the market factor of labor a pressing issue in the United States is the physically aging majority group of the labor force.  This issue was addressed by William Hoagland an applied economics expert, when Hoagland wrote on the subject he stated that “It is not just the number of people in the labor force, it is important the age of those in the labor force.” (Hoagland) A significant portion of the United States labor force is nearing the retirement age with brings in the impact of government spending in areas such as Social Security and Medicaid.  This specific issue of an aging labor force will impact the goal of improving the economic state of the country in ways beyond just losing a portion of those in the force with experience in their field.  The issue brings in the connection between politics and the economy because many economists fail to emphasize the importance of restructuring the government spending pertaining to the increase in those exiting the labor force.  A recent study by National Bureau of Economic Research states “Our results imply annual GDP growth will slow by 1.2 percentage points this decade and 0.6 percentage points next decade due to population aging.” (Maestas, Mullen, Powell)  According the data provided without a change in government spending due to the aging labor force there will be no gain in economic well-being for the nation.  Economic developers must account for the aging labor force and push for change in government spending in areas of Social Security and Medicaid to end the growth drought.  

In relation to the aging labor force and increased government spending on those exiting the force, the key growth driver of capital is also introduced.  For national growth government spending as a whole is important to factor in, if the primary goal is to produce economic gain at the national level.  For example over the past eight years the United States has spent roughly twenty six and a half trillion dollars on financial awards in the form of contracts, grants, loans, and other financial assistance. (USA Spending.GOV)  Given that these figures do include many necessary expenses in the fiscal year the aggregate amount is a cost that is paid directly through taxpayers.  A solution to limit this government spending and in turn increasing monetary growth as a nation lies in fiscally responsible capitalism.  By placing more fiduciary responsibility pertaining to government spending on the capitalist private sector, the nation would be an environment more conducive to sustained economic improvement.  Many argue that by increasing the responsibility placed on the private sector corruption is increased and increases income inequality, yet by utilizing more of the private sector more jobs can be created, a portion of the burden placed on the federal government can be lessened, and more individuals are provided with the opportunity to succeed.  In addition a system utilizing a mix of the increased private sector and government assistance would possibly maximize the potential for economic growth as a nation.  Utilizing infrastructure and the technology as an example, private actors alongside government guidance can better living conditions in the country and progress the technological impact of the United States while providing millions of Americans with quality paying jobs.  By employing the connection between industry and policy the nation can produce sustainable economic growth in the market factor of capital.

Productivity can be a subjective topic in terms of success as a nation.  Economists often look at productivity in terms of stock market growth, change in unemployment rate, trade deficits, and homeownership rates.  Some issues lie within this because these indicators can be skewed data or they do not well represent the population, but in general they are quality indexes of the economy and productivity.  The connection between politics and the economy is expanded further when it comes to productivity.  As a specific example stock market growth is typically dependent upon buyer confidence, with the new presidential administration promising to decrease regulation in markets throughout their campaign a significant spike has been observed following the election on November eighth.  Looking objectively at productivity indicators, they have historically seen the most change due to government policy changes and work done by political administrations.  Trade deals and subsequent changes in the national trade deficits can affect unemployment rates in the United States.  In the current state of the nation historically high trade deficits and unemployment rates are present, working with corporations through the federal government to keep and return manufacturing centers in the United States will lead to lower trade deficits and unemployment rates, by products being made in the country less needs to be imported and American workers would be used to fill positions in factories.  Productivity is one aspect of economic growth that the connection between politics and economy is not forgotten, yet the known connection is not utilized to its fullest potential.  

Given the many examples of what can be gained through the connection of politics and economic growth it is time to ask “Why is this not being done?”  This question leads to the complexity that is found in United States politics and economy.  Focusing first on the political side of the aisle, one of the facets of American politics is that the federal and state governments are comprised of elected officials.  The United States Constitution lays out the groundwork of politics that officials must be elected and that they are elected for one term at a time ranging from two years for representatives four years for president and six years for senators.  Given these term lengths the president can only be elected for two terms totaling eight years.  This is to limit power of the elected officials and is effective in doing so, but it also limits how much can be done with administrations being replaced by new officials.  With officials only in office for certain lengths of time specifically the President it can be difficult for new economic plans to be implemented because the process can last for years in some cases. 

 In relation to the implementation of effective economic theory the thought of “What group determines what needs to be done?”  To answer this the old saying “He who pays the piper calls the tune” can lend logic to the matter.  With political officials being elected by the population of voters, theoretically the voters decide what is to be done in government, although this is not always clear cut it is often the case in the real world.  In the economy other factors are present for the most part the economic goals of the majority of the population dictate the political economic goals.  An instance of this “To the extent that groups gain economic power, political power will follow; think of how, in 19th and early 20th century Britain, the middle classes and then the factory workers got the vote. In turn, economists will try to grapple with the problems that seem most relevant to the societies in which they live, but those issues will be seen through the prism of the political power structure.” (Coggan)  The pitfalls of politics can be seen with officials that are elected by altering their platform to the publics need yet not always doing well on their promises but as a whole the political power of a nation often follows the economic power of the nation’s population.  

The United States will always have issues that plague portions of the population, it is within this aggregate of issues that the obstacle of stagnation in terms of economic gain on the individual and national level.  The current complication of economic growth is where the impactful failed recognition is found.  Fiscal drought is a difficult issue to fix, yet those responsible for stimulating growth for the betterment of the nation have fallen short.  

To create new sustainable growth in an economy those developing plans must have extensive knowledge of the drivers of growth as well as an understanding of the current situation in which the plan will be implemented.  There is an important connection and relationship between the political world and economic centers.  This connection if gone unrecognized can not only suspend desired growth, but can lead to a regression in the state of the economy.  A focus on creating economic gain is important to the country, yet if the connection of policy and economy is not grasped the drive to create improvement is wasted by running in circles, never moving down the path to success.  By focusing on the big picture, many of those trying to create growth neglect to see the vital details specifically the connection between political and economic outlets.  Additionally those who are successful in recognizing the connection often times are not successful in methods to apply their knowledge of said connection to the current state.  You would not try and drive a car with a flat tire, so why do economist try and theorize without factoring in this connection?  Recognizing this connection is simply not sufficient, developers must use this connection effectively to improve the economic state of the nation which will lead to an improved state of the nation as a whole.  I urge those responsible for economic theory development to account for the relationship between politics and economics and use an open mind to progress the United States.
