According to one conventional view of macroeconomic politics in contemporary democracy, governments are responsible for performance regarding inflation, unemployment, and income growth. Periodic elections give voters an opportunity to judge that performance and to approve or disapprove, choosing new leaders if performance has been unsatisfactory. From that perspective, democratic institutions provide ways to ensure both the accountability of public officials and the adequacy of government performance. A persistent or unusual problem may lead to a reform that is designed to resolve the problem, such as the creation of the quasi-independent monetary authority in 1913, or the establishment of a new set of budgetary procedures in 1974.

According to another conventional view, the democratic process is not so benign. In that view, politicians are opportunistic, and voters are naive. Incumbents manipulate their performance to appear misleadingly good at election time, and both challengers and incumbents make unrealistic and insincere promises. Voters are myopically oriented to the present, which makes them unprepared to hold incumbents accountable for their performance over entire electoral periods, or to relate electoral choices to future well-being in a meaningful way. Economic performance deteriorates. Politicians exploiting popular discontent propose superficial reforms that fail to solve the problems, such as the Gramm-Rudman-Hollings deficit-reduction acts of 1985 and 1987.

The truth is likely to be found somewhere in between those extreme alternatives, which I shall designate as the benign and the malignant views, and the truth is likely to vary over time and place.