Final answer:
The author explains economic failure through political shortcomings, such as governmental inefficiency, undervaluing analytical economic policy approaches, and misguided confidence in U.S. economic exceptionalism. These include the failure to respond to increased military spending and tax cuts, and foreign policy decisions that led to voter unrest in the 2004 election.
Step-by-step explanation:
The author attributes political explanations for economic failure to several factors, including weak governmental institutions, policy response to economic indicators, and the impact of political decisions on economic outcomes. Initially, following an economic downturn, a weak and inefficient federal government, primarily focused on patronage and maintaining power, failed to provide adequate assistance to those facing unemployment and financial distress. The historical lack of such governmental intervention contributed to the inability to address the economic challenges effectively.
Additionally, the reliance of democratic governments on voter reactions rather than analytical approaches to economic policy, such as demand and supply curves, suggests that political influences could undermine the enactment of sensible economic policies.
Moreover, leading economic policymakers, like former Federal Reserve Chairs Alan Greenspan and Ben Bernanke, downplayed warning signs of economic distress, advocating for an 'economic American exceptionalism' that ultimately did not spare the United States from the financial crisis experienced globally.
The case of the 2004 U.S. election also underscores how political decisions, such as tax cuts, increased military spending, and foreign policy issues related to the Iraq invasion, contributed to economic instability and voter dissatisfaction with the government's economic management and preparedness.