Market Economy vs Political Economy
The “currency” that drives the political marketplace is fundamentally different from the private economy. In the private economy, it is enough to have a good idea, identify a new product, develop it, and sell it to an identified (or created) customer base. In the market, entrepreneurship and competition determine outcomes. Returns and values matter and are ultimately determined by individuals making choices.
In the political economy, good ideas, philosophical values, and economic efficiency have little to do with how public policy decisions are actually made. The biggest error made by advocates of government planning, from Marx to Keynes to Obama, is the assumption that bureaucrats and elected officials possess both the detailed knowledge and right motives to be able to solve the economic problems of a nation. While microeconomics correctly assumes that individuals act in their own self-interest, every macroeconomic proposal for government intervention assumes that public officials act in the public interest, somehow supressing their individual interests to the greater interests of society.
In reality, public choices are driven by the inetersts of those making the choices – the politicians who draft, promote, and vote on the legislation; and the special interests that work to influence the political decision-making process. Politics is driven by the need to solicit new voters to the polls. Power (to tax, spend and regulate) is used to consolidate those votes, and to buy more votes at the margin. The policyagendas of both parties are driven by this pursuit of votes and power.