THE BUSINESS EYE: ELECTIONS AND THE ECONOMY by Ariel Nepomuceno
As the fundamental component of a democracy, election and its impact on the economy, or the economy and its impact in an election, are widely discussed issues during balloting that have caused the triumph and loss of political candidates. Such is the importance of economic issues during elections that in the United States of America, the colloquial statement of Democratic strategist James Carville in the 1992 Presidential campaign “It’s the economy, stupid” continues to be induced by politicians and political strategists, not only in the US, but in many other democracies of the world as well.
Carville’s statement echoed across the US at that time that it was seen to have partly caused the loss of then US President George H. W. Bush’s 1992 re-election bid.
How Election and the Economy Influence Each Other
In the Philippines, the linkage between electoral politics and the economy goes as far back as when we had our first real democratic election after the Second World War. Driven by public calls to facilitate the fast reconstruction and rehabilitation of a war torn nation, a credible government led by duly elected officials was tasked to normalize the market and motivate business development to generate employment.
The elected officials leadership qualities then, were measured based on how many Filipinos were able to find jobs, how fast and efficient were they able to stimulate business and how they were able to improve the lives of Filipinos. In short, it was the people’s choice for the right leadership that predicated their quality of life after the war.
And since that time, succeeding government leaderships were and still are rated for their efficiency and success in governance, based on that criterion. Economy after all, from a layman’s understanding of the word, is food on the table and jobs. Meaning, a good economy provides more food and jobs, while a bad economy means less food and no jobs.
The state of the nation’s economy wields vast influence in making electoral choices. And while major international development banks say the country is enjoying the best economic growth in the ASEAN Region this year at 6.2 percent, other economic observers and the opposition claim this growth is not felt by most of the Filipinos.
Such is the complexity of the issue on economics that a better understanding of the word economy should first be attained. How do we determine economic growth and the economic status of a nation then?
Economy and Gross Domestic Product (GDP) – The first indicator in determining the economic status of a nation is the GDP. It is defined as the total value of goods and services produced within the borders of a nation regardless of who owns the assets or whether or not the product or service was created by its citizen or foreign-born worker (Federal Reserve Bank of New York, 2006).
Economy and Consumer Confidence – Called the Consumer Confidence Index (CCI), this is the second indicator used in determining the economic status of a nation which is based on the behavior of shoppers and attitude towards its economic environment. Meaning, if consumers have more money to spend, the nation’s GDP is obviously high, boosting consumer spending through higher productivity.
Economy and the Quality of Life – This third indicator of economic growth is determined through the analysis of the people’s quality of life.
In short, with the three indicators in place to measure economic growth, voters can simply go over their lives to see if their government is doing its job to make life easier for them.
The Structural Effect of Elections on the Economy
There is that belief that elections help restrain government officials from corruption and motivate them to improve the economy instead. Faced with their campaign promises and accountabilities for their deeds as elected officials, and most importantly, setting their sights for re-election or to a higher elected post, elected government officials are usually cautious of their acts while in office. Although, this may not be true at all times.
But while elections could result in positive economic improvements, it has its disruptive structural effects as well. Depending on its level of credibility, elections could create frictions, divisions, and worst, chaos. These could all result in an economic down spin affecting the people’s quality of life. And since election is a periodic exercise, every three years for local officials and every six years for presidential in the Philippines, Filipinos have to go all through these electoral politics every three years.
However, frequent elections could also be good for the nation, allowing voters to assess its cyclical effects on their lives. So long as these are done credibly, frequent elections mean more opportunities for government reforms. As the saying goes, “six years is too long for a bad leader, but too short for a good one.”.
On May 9, 2016, we shall all be going to the poll precincts once again to exercise our vested right to choose our next set of leaders for the period 2016 to 2022. And as we hold on to the pen that would help determine the fate of our lives and the fate of the Filipino nation, let us look upon our lives and see if we have felt that economic growth or not. After all, a hundred or even just a few votes can matter in a credible election.
ARIEL NEPOMUCENO is the Deputy Commissioner at the Bureau of Customs, and a columnist of Trade In Magazine.