Politics Becomes Nasty When My Gain Is Your Loss

Some people compare the politics and politicians of today unfavorably with those of 1950s and 1960s.  But two things different today compared to then.  Actually, many things are different, but two of them are especially important when it comes to our economy and our politics.

First, the economy today is growing at little more than 2% a year, if that.  In the 1950s and 1960s, it was growing much faster.  Second, government, and especially the federal government, was smaller back then.  Which means two things.

One, when the economy is growing faster, there is more for people each year (whether via the market or from the government).  When the economy is growing slower, there is less.  The lower the rate of growth, the smaller the extra amount in the economy that can be divided up among the people.

Two, when government is smaller, you can increase the amount you give to people by just increasing the size of government and the amount it spends.  But if government is already bigger, it is harder to give people more by merely increasing the size of government.

All of which means that, instead of everybody, or almost everybody, being able to get more each year (whether from the market or the government) because the economy is growing a lot and government is getting bigger, it is now a matter of people fighting over a smaller amount of increase.  Instead of our politicians merely having to agree on how to divide up an increase in the economy that is enough to take care of almost everybody, we are now in a situation where what one person gains, another person loses.  Which makes for a nastier politics and an economy that doesn’t seem as good.