“Failures to connect” undermine many worthy policies. In this, the eighth year of LKY School, Dean Kishore Mahbubani emphasises the necessary multidisciplinary approach to meet an intertwined world.
GOOD POLITICS GOOD ECONOMICS good governance M
ichael Bloomberg is one of the smartest policymakers in the world today. He has led New York City brilliantly as mayor for 11 years now and running. For his leadership, he was awarded the Lee Kuan Yew World City Prize in March 2012. Yet even he has had his fair share of policy failures. When Manhattan began to have traffic congestion problems, he scoured the world for the best policy solutions. Soon he discovered that Singapore, London, and Stockholm had found the right solution. Since road space was a scarce commodity, the right economics price could allocate road usage efficiently. With the right economics solution, he went to the New York State Assembly to get their support. There he failed. Politics trumped economics. Local vested interests lobbied successfully against his proposal and blocked it; Mayor Bloomberg learned a lesson that all policymakers have to learn at some time or another. Good economics is not enough. Good politics needs to accompany good economics to get policymaking success. This failure to connect good economics with good politics is happening at all levels. 4 · Oct–Dec 2012 ·
Good economics is not enough. Good politics needs to accompany good economics to get policymaking success.
In July 2012, former US Treasury Secretary Robert Rubin warned that America was headed straight toward a “fiscal cliff” with a potential contraction of US$600 billion a year—or about 4 percent of America’s GDP— if the US Congress took no action to stop the automatic budget cuts by 2 January 2013. All this could trigger a double dip recession in the US. Rubin warned that this “unsustainable fiscal outlook undermines business confidence by creating uncertainty about future policy, economic conditions and our ability to govern, which in turn dampens investment and hiring,” as he wrote in “A Budget Grand Bargain Will Follow the Election” in the Wall Street Journal, 28 May 2012. Most policymakers know what a sensible economic plan would look like to prevent such an economic recession. It would involve a mix of tax increases and cuts in spending, especially in long-term entitlements. The SimpsonBowles Commission in 2010 offered such a sensible plan. Yet it failed to take off for the same reason that Mayor Bloomberg’s road-pricing scheme did not take off: there was no combination of good economics with good politics.