“It’s the economy, stupid,” was the slogan thought up by James Carville for Bill Clinton in 1992. That it should be quoted so often today is testimony to its brilliance. But actually the interaction between politics and economics in a mature democracy can be quite tenuous, for a number of reasons.

The time lags before a shift in policy takes effect can be quite long. Often investors will look through an action that would otherwise discourage them because they expect the policy will be reversed after the next election. Large firms can gain an advantage with apparently adverse regulations, using them to shut out smaller competitors. Obviously politicians can on occasion wreck an economy, as they have in Venezuela and Zimbabwe, but in western mixed economies politics is less invasive.

There is, however, a problem, and it is relevant to the US now. Policies that in the medium term would help not only boost economic growth but also build more equable society may be unpopular in the short-term. The best example of that were the Hartz labour reforms, introduced in Germany from 2003 to 2005. It is hard to recall that at that time Germany had far higher unemployment than the rest of the eurozone and was dubbed “the sock man of Europe”. The reforms changed everything - unemployment fell from 11 per cent in 2005 to 7.5 per cent in 2007. But they were unpopular and the government fell.

In the US there is a huge need for tax and regulatory reform. The personal tax system is full of loopholes, so that the very rich can end up paying lower rates than middle-earners. Donald Trump has used these devices himself. Corporation tax rates are among the highest in the developed world, but companies can avoid them by shifting profits offshore. Regulation inhibits job creation and shuts out potential workers. It also varies from state to state. Example: to become a hairdresser in Florida you have to have 1,000 hours of education in another state and one year working elsewhere before you can even apply to take the Florida exam for a licence.

President Obama addresses a Trump supporter being heckled by a rally

The American economy has been growing steadily and in many ways still leads the world. But it is not satisfying many of its voters - witness the anger evident in much of the campaign. With a less distorting tax system and better-crafted regulation it could be so much better.

That is really the central economic challenge for the next President. Can he or she improve the tax and regulatory system so that growth is higher and, crucially, the benefits of that growth are spread more widely?

We have plans, detailed ones in the case of Hillary Clinton, as to what might be done about federal taxes. Neither candidate’s are encouraging. Clinton’s would complicate the personal tax system further, increasing tax on high-earners, and in any case such plans would be hard to get through Congress. Trump’s have the benefit of simplicity, but at the cost of fiscal irresponsibility. The present seven income tax bands would be cut to three, with the biggest cuts at the top and without corresponding cuts in spending. And while Trump would also cut corporation tax, it is not clear how the loss of revenue would be made up.

Donald Trump's most controversial quotes Show all 14 1 /14 Donald Trump's most controversial quotes Donald Trump's most controversial quotes On Isis: "Some of the candidates, they went in and didn’t know the air conditioner didn’t work and sweated like dogs, and they didn’t know the room was too big because they didn’t have anybody there. How are they going to beat ISIS?" Getty Donald Trump's most controversial quotes On immigration: "I will build a great wall — and nobody builds walls better than me, believe me —and I’ll build them very inexpensively. I will build a great, great wall on our southern border, and I will make Mexico pay for that wall. Mark my words." Reuters Donald Trump's most controversial quotes On Free Trade: "Free trade is terrible. Free trade can be wonderful if you have smart people. But we have stupid people." PAUL J. RICHARDS | AFP | Getty Images Donald Trump's most controversial quotes On Mexicans: "When Mexico sends its people, they’re not sending their best. They’re sending people that have lots of problems. They’re bringing drugs. They’re bringing crime. They’re rapists." Getty Donald Trump's most controversial quotes On China: "I just sold an apartment for $15 million to somebody from China. Am I supposed to dislike them?... I love China. The biggest bank in the world is from China. You know where their United States headquarters is located? In this building, in Trump Tower." Getty Images Donald Trump's most controversial quotes On work: "If you're interested in 'balancing' work and pleasure, stop trying to balance them. Instead make your work more pleasurable." AP Donald Trump's most controversial quotes On success: "What separates the winners from the losers is how a person reacts to each new twist of fate." Donald Trump's most controversial quotes On life: "Everything in life is luck." AFP Donald Trump's most controversial quotes On ambition: "You have to think anyway, so why not think big?" Getty Images Donald Trump's most controversial quotes On his opponents: "Bush is totally in favour of Common Core. I don't see how he can possibly get the nomination. He's weak on immigration. He's in favour of Common Core. How the hell can you vote for this guy? You just can't do it." Reuters Donald Trump's most controversial quotes On Obamacare: "You have to be hit by a tractor, literally, a tractor, to use it, because the deductibles are so high. It's virtually useless. And remember the $5 billion web site?... I have so many web sites, I have them all over the place. I hire people, they do a web site. It costs me $3." Getty Images Donald Trump's most controversial quotes On Barack Obama: "Obama is going to be out playing golf. He might be on one of my courses. I would invite him. I have the best courses in the world. I have one right next to the White House." PA Donald Trump's most controversial quotes On himself: "Love him or hate him, Trump is a man who is certain about what he wants and sets out to get it, no holds barred. Women find his power almost as much of a turn-on as his money." Getty Images Donald Trump's most controversial quotes On America: "The American Dream is dead. But if I get elected president I will bring it back bigger and better and stronger than ever before and we will make America great again." GETTY

As for regulation, the thrust of Clinton’s proposals would be increased controls, particularly on the banks and on the environmental performance of companies. Trump would do the reverse. But many of the restrictions on labour, such as those of Florida noted here, are state matters rather than federal ones. An effective President would learn to work with Congress, but that would not affect matters decided at state level. The US system is built round the concept of separation of powers.