Politicians' Lack of Understanding of Economic Circulation Increases National Burden and Exacerbates Economic Distortions

In recent years, one of the reasons for the increasing economic burden on citizens in many countries is that political leaders, lacking an understanding of economic circulation, are driving economic policy. Economic circulation refers to the process by which consumption, investment, government spending, and trade interact to create a healthy and growing economy. When policymakers fail to grasp this, it leads to policies that ultimately harm the public and exacerbate long-term economic distortions.

1. Tax Increases Suppressing Consumption and Slowing Economic Growth

When governments raise taxes to cover budget deficits, citizens' disposable income decreases, leading to a reduction in consumption. Lower consumer spending affects businesses, reducing their sales and discouraging investment, resulting in a slowdown in economic growth. While higher taxes may temporarily improve fiscal balance, they create a vicious cycle that harms the overall economy and puts more pressure on citizens.

2. Inefficient Government Spending and Economic Stagnation

When public funds are directed toward inefficient projects, the sectors that truly need investment for growth suffer. For instance, excessive spending on infrastructure in regions with declining populations or pouring resources into unnecessary public works may end up wasting taxpayer money. This misallocation of resources reduces overall economic efficiency, increasing the burden on the public and contributing to economic stagnation.

3. Widening Wealth Gap and Declining Consumption

Policies that favor the wealthy or exacerbate income inequality further widen the gap between rich and poor. As the wealth gap grows, the purchasing power of the general public declines, leading to reduced consumer spending. This directly impacts businesses, resulting in reduced revenues and stunted economic growth. Without proper redistribution policies, the vitality of the economy as a whole diminishes, and long-term growth becomes increasingly unlikely.

4. Inadequate Monetary Policy in Response to Inflation and Deflation

When political leaders fail to understand the dynamics of economic circulation, they may implement inappropriate monetary policies in response to inflation or deflation, destabilizing the economy. For example, in times of deflation, expansionary fiscal policies and monetary easing are necessary. However, if the government imposes austerity measures instead, it can deepen the economic downturn. Conversely, in periods of high inflation, failing to tighten monetary policy leads to spiraling prices, putting pressure on citizens. These policy errors exacerbate economic distortions and prolong instability in people's lives.

5. Decline in International Competitiveness

When a country's economic circulation is dysfunctional, its businesses lose their competitive edge in the global market. A decline in exports due to weakened international competitiveness results in trade deficits. Moreover, a lack of investment in innovation and industrial advancement weakens the economy further, reducing foreign investment. This leads to a prolonged economic downturn, further hampering long-term national growth.

6. The Importance of Policies Based on Economic Circulation

Economic policy should not only address short-term issues but also focus on long-term sustainable growth. Policymakers need to understand economic circulation and implement measures that promote consumption, create a favorable investment environment, strengthen income redistribution, and maintain sound monetary policies. Furthermore, to boost international competitiveness, governments must allocate spending efficiently, prioritizing investments in growth industries and technological innovation.

Conclusion

When politicians lack an understanding of economic circulation, they implement policies that increase the economic burden on citizens and worsen long-term economic distortions. Tax hikes, inefficient public spending, widening wealth inequality, and inappropriate monetary policies lead to economic stagnation and instability in people's lives. To prevent this, it is essential that political leaders develop a deep understanding of economic circulation and implement sustainable policies that preserve the economic vitality of the country. Only through long-term, forward-thinking policies can economic stability and improved living standards for citizens be achieved.