One aspect of the trilogy, however, presents an interesting insight into the economic analysis of politics and institutions. Many mocked The Phantom Menace for focusing on the mundane topics taxation and trade routes, while getting mired down in the muddled bureaucracy of the Galactic Senate.
To disregard the political intrigue inherent in the prequels because they lack action and flash is to ignore the dominant story thread of the trilogy. Every aspect of the three movies, from the Naboo Crisis to the Clone Wars, serves to further the goals of future Emperor through political means.
Senator Sheev Palpatine (also known as Darth Sidious and, later, the Emperor), drives the plot of movies forward through political maneuvering. Though the process is gradual, Palpatine manages to control both sides of a civil war and overthrow the government of the Republic, forming a Galactic Empire with him at its head.
In Episode I: The Phantom Menace, the plot revolves around the Naboo Crisis. The Trade Federation, a megacorporation and commerce guild, blockades the planet of Naboo in response to the Republic's taxation of trade routes previously marked as Free Trade Zones. It should be noted that the Trade Federation was under the influence of Palpatine, though cloaked in his role of Darth Sidious. Following the blockade, the Trade Federation invades Naboo. In other words, a trade war led to military conflict. French economist Frédéric Bastiat is alleged to have said:
"When goods don’t cross borders, Soldiers will."
Palpatine was also the Senator representing Naboo in the Galactic Senate. By engineering a political crisis on his home planet, Palpatine planned to thrust himself into the political spotlight, taking advantage of the crisis to grow his power.
The ruler of Naboo, Queen Amidala, escapes the blockade and eventually makes her way to the Galactic Senate, to plea for assistance against the invasion. She is blocked at every turn, with the corrupt Senate bureaucracy moving too slowly to act, and many Senators denying an invasion ever took place.
The current Chancellor, an unremarkable figurehead, is deposed by a vote of no-confidence. Palpatine, as the Senator from Naboo, is widely seen as the logical replacement to fill the seat, and is elected by a wide margin.
Here, one can see one of the biggest lessons in political incentives, as widely taught by economists and political theorists. Crisis, political or otherwise, tends to guide support towards strong-men who promise action and strength. Palpatine engineered the Naboo Crisis, and positioned himself to take advantage of it.
In The Phantom Menace, one can see crucial economic lessons play out. The folly of oppressive taxation and opposing free trade is apparent, as this led directly to a military conflict. In addition, the incentives of collective decision making, where the government grows and centralizes in the face of crisis, is used by Palpatine to further his rise to Chancellor.
While much of The Phantom Menace focuses on mindless action, irrational characters, and something about Jedi, the backdrop of political intrigue and corruption shows a depth and complexity seen nowhere else in the prequel trilogy.
(Analysis continued for Attack of the Clones HERE.)
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