Voting does affect the economy!

November 2, 2016

 

Although voting is a fundamental right and duty for all citizens, times and procedures for political vote can hinder economic affairs and postpone opportunities to increase social welfare.
Starting from the most evident example, the U.S. political campaign requires a lot of money and investments; EU countries’ national elections scheduled for 2017 are delaying negotiations on international trade agreements; Brexit procedures for U.K. exit from the EU have endangered the financial and economic stability. As worldwide shocks and changes occur at a faster and faster pace, flexible and proactive institutions and political systems become a priority.

Raising consistent amount of money in political campaign might not lead to the most efficient allocation. According to the Washington Post on the 31st of August 2016, Hillary Clinton’s presidential campaign had raised $795 million, 90% of which already spent in debates, flights from state to state, staff salaries and other related expenditures.
“A presidential campaign is a peculiar, short-lived kind of start-up business, and like other firms it has overhead: the costs of being in business” as Tom Curry writes on nbcnews.com.
People have the right to be informed but in some cases a political campaign deviates from its pivotal purpose: as a responsible business takes into account its social impact other than its own profit, a mindful candidate’s campaign should have initiatives and sustainable solutions to promote development. It should not only aim at winning or at gaining consensus; it should not increase hate among different groups or spend unnecessary resources. In this regard, U.S. regulation allows organizations or individuals to spend money not only to support their party but even to advocate for the defeat of a candidate. Moreover, a presidential campaign starts almost one year earlier than the actual election; it seems a very extended period, especially in a dynamic reality where time is a scarce resource.

In 2017 several European countries are going to hold elections. The uncertain outcomes as well as the national interest in domestic affairs are taking precedence over the opportunities that the European Union is currently meeting. Again, time is limited: it is difficult to deal with international relations and with countrywide priorities at the same time. In particular, TTIP (Transatlantic Trade and Investment Partnership) with U.S.A. and EPA (Economic Partnership Agreements) with the East African Community are currently being disregarded after months of negotiations and debates. These agreements may be controversial and they have been, in fact, very criticised by the public opinion. However, a recent research paper suggests that a possible explanation for this withdrawal can be given in terms of an existing relation between election timing and international trade: specifically, an increasing number of concurrent elections would imply international conflicts, when voting is imminent, turning in cooperation, when elections are distant (Kayser, Trade and the Timing of Elections, 2004). Kayser also states that “This phenomenon takes on added gravity within supra and inter-national organizations such as the European Union, where the European Commission may welcome the attendant opportunities to introduce unpopular EU initiatives away from member country elections”.
This behaviour could affect social welfare by giving priorities to short-run interests rather than long-run prospects, whereas most theories confirm that trade and integration are overall beneficial. It could also confuse voters or mislead them about more cautious political and economic measures to be implemented.

Brexit showed that people’s decisions can lead to consequences beyond general expectations. The referendum is an inviolable direct expression of democracy but citizens need to be prepared and aware about the vote they are going to cast; otherwise, they would experience changes that they would never have expected. In this case, an extremely delicate choice was placed in the hands of the electorate, the mechanism of political procedures may endanger the stability of the whole structure.


In fact, in the short-term, U.K. has observed the exchange rate decreasing: technically, it means higher price for imports, practically it results in a higher cost of living for U.K. citizens, since the country is a net importer with a deficit in trade of goods and service of £4.7 billion (Office for National Statistics, August 2016).
The prediction of PwC that “the financial sector was more vulnerable to leaving the EU than the rest of the U.K. economy because Britain’s place as a financial hub relies partly on access to European markets” is revealing to be true (Treanor and Farrell, The Guardian, April 2016); the Institute for Public Policy Research has estimated a 10% drop in postings in the financial sector in July and August compared to May and June.
Moreover, Brexit has undermined U.K. relations not only with EU countries but also within the country as long as Scotland has recently been claiming for a new referendum for independence.

In conclusion, time and procedures for voting do affect economy: very long electoral campaign may result in time and money consumed and wasted resources that could be better allocated in the economy. Forthcoming voting causes an increased interest in national affairs and less cooperation among countries, thus slowing trade, negotiations and economic initiatives worldwide; voters’ anger and disinformation may produce political instability, render the economic system more instable and vulnerable decreasing social welfare.
These aspects have to be considered in order to set the best conditions for the fairest and most efficient political voting.

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