Tuesday, January 13, 2009

The Sisyphean Judgment of Politicians

I remember several years ago when I was cleaning the lawn I heard my neighbor start swearing as loud as he possibly could, saying "Godd**n it! God f***ing d**n it!" Given that he seemed like a very unhappy man, I thought he had finally snapped and was strangling his wife. When I went over there his wife was the one to answer the door and apologize for his actions, that he had only been yelling at a football game on television.

Fits right into a sitcom does it not? Only the usual stereotype goes as a husband yelling at the television that he is capable of doing better than the coach or referee. It has not happened yet that anyone has been able to get out of his armchair and bench of coach, but the stereotype can serve as a metaphor. Not only do people get upset at the judgment of sports officials, but also at everything else regarding judgment, such as someone's preference in clothing or their taste in movies. But in each case the restriction is the same: people can do nothing about such things other than what is immediately relevant in their lives. The person in exception is the politician.

Politicians do not merely sit irritated in their armchairs; they have the actual means to act on the threat "I can do better than them." Contrary to what they believe they can do, they cannot do better and have caused every economic crisis by attempting to do so. There are five reasons why every politician who forces his judgment will be unable to achieve his initiatives:

1.) Lack of specialized knowledge

In order to succeed in one's career endeavors one has to be an expert in the field. This requires specialized knowledge, and obtaining specialized knowledge requires months, if not years, of study plus the time it takes to master putting that knowledge into practice. To expect that a random politician can in five minutes assume the responsibility of making a decision that may take five years of study to be able to deal with the context is absurd.

An example in our present time is the auto bailout. As a condition to receiving federal money the Big Three automakers were told by congress to submit a business plan of what they were going to do with that money. The people of congress and of the White House are not business men nor are well-practiced in the area, so how can one expect them to make an appropriate judgment on the plan, let alone be able to comprehend it?

2.) Lack of time for dedicated study

Not all advanced decisions require specialized knowledge, but rather at least informed knowledge. One can purchase insurance without being an insurance expert or having the aid of one; one only need know what specific coverage is needed and what the budget is, and then afterward to weigh the alternatives between competing companies. The process takes not an hour, but multiple days to do the research on what companies offer and also to get a price quote (unless the law requires companies to charge all their patrons equally).

Such a process presents problems for the politician, for even if they are making a decision that requires one only to be informed, they do not have the time to do the appropriate studying/research. They are making decisions and weighing alternatives everyday and they have no time to go too deeply into any one consideration. Combine this with the fact that politicians are gaining more power and thus having more decisions to preside over, and the damage is multiplied.

Worst yet, sometimes politicians don't even bother *to try* and take the time. The original $700 billion bailout was a proposal entertained less than two weeks, and the proposal outlining it is hundreds of pages long. Could they really have read and understood the provisions that fast?

3.) Absence of profit motive

Combined with the above factors, what motivation do politicians have to do well in terms of success rather than merely having good intentions? In some areas where they do a good or even a great job they benefit none. For instance, roads. Everyone complains about a bad road, but no one says anything about a good one. No one sends a candy bouquet just because a mayor fixed a road, which is why road maintenance is largely neglected. Instead the focus is shifted on things that will make the newspaper, such as park openings or other community improvement projects. Anything that will give them good publicity is exactly what they are going to do.

Most of all, let us not forget that it is almost always the case that politicians do not get subjected to the problems they create, and thus cannot be counted on to "sympathize" with the public. Healthcare crisis causing long waiting lists at the doctors'? Politicians can use their celebrity status to jump to the front of the line and get all the best care first. Higher taxes reducing the prosperity of everyone? Their paycheck is fine and their standard of living unharmed. And so on.

Since politicians only want to make decisions that will benefit their career and since they have limited experience with the problems they create, what do they care to try their best to make things better for everyone?

4.) Making the judgment of others impossible

In an attempt to make things better politicians oftentimes take actions that make it so other cannot make a rational decision, thereby making things worse instead. The best example would be the Federal Reserve, the government agent that controls the money supply. The federal ability to increase or decrease the money supply is what causes inflation (too much money) and deflation (too little money). Inflation is what caused the housing crisis. Inflation distorted the *true* prices of the housing market and made it appear more profitable than it actually was, so people came to erroneous conclusions based on the distorted data and more houses were built, banks lent more (though mostly by the force of government), and people borrowed more, creating a false boom. The money supply came back to earth and the true prices became known, and there we have our bust. Some may have seen it coming, but most did not due to the data (the money) being distorted.

5.) They take on the impossible

Combining again all the above factors and then you have politicians way over their heads. For example, consider the people in charge of setting prices in a centrally planned economy. Prices in general need to be adjusted everyday. In order for a single business to be able to set their prices to the most profitable level, they must know what prices they and their competitors charged in the past and how profitable that was, the expenses involved in the production of the product/service, the demand and supply, the value relative to the market rate and demand, and many other factors, all for just one business to consider. In all these considerations what is required is specialized knowledge, time for study and research, a motive, and correct data. A soup company may try different prices over a period of weeks, months, or even years; they will not make such short-range decisions such as saying soup needs to be one cent cheaper today and two cents cheaper tomorrow.

To expect even a few thousand people to be able to adjust millions and millions of prices on a day's notice is beyond impossible when one small business (outside a centrally planned economy) may slave for hours over its own limited considerations. A centrally planned economy deals with so much it is humanly impossible.


But given all this why do politicians continue to try? Should they not be honest enough to know better and learn from their mistakes?

The answer becomes apparent when examining why jobs appeal to people. Broadly, for example, doctors want to save lives, mechanics love working on cars, accountants love dealing with finances (or perhaps mathematics), and so on. Given a certain nature and corresponding duties, a certain job appeals to certain people.

What of politics? The dregs of society. For example, taxes are involuntary and are thus stealing; either pay them or go to jail. Now what type of person would want to preside over taxes? One would want to steal, a thief.

To make matters more frustrating, sometimes when a person is elected to a position he turns into a monster with a mind of its own, unwilling to listen to the considerations those who elected him and only worrying about his concerns. Rod Blagojevich is such a person. When Barack Obama left his senate seat Blagojevich decided it would be a great opportunity to make some money. Having been caught in the act, he rationalizes that he has not done anything wrong and vows to fight every step of the way, just like how a robber who has been caught at the cash register tries to, when on the way to the back seat of the police car, rationalize that the police are bullies.

Given that the job entails doing what thugs and power-lusters do, thug and power-lusters are logically attracted to the profession. So not only do we have politicians making decisions they cannot make properly, we have the worst people doing it.

The only solution to both problems is to bring government back to its proper state, the state of protecting individual rights. By doing this then a whole different class of people will be attracted to the profession: people who want to protect rights. Then individual judgment will be left free. To let people make judgments to the best of their ability is the only way for the economy to prosper. Even bad judgments are profitable: people will learn what not to do and why, thereby avoiding a repeat of the same mistake in the future.

But for the time being we are entering a period where the government is viewed as not only proper in making economic calls, but also as capable of doing so better than the competitors in the arena. Reality will show these people to be sorely mistaken.

What can we do to make things change for the better? Simply: disagree. When someone raises an objectionable point do not allow it to go unchallenged, even if the challenge amounts only to saying “I disagree.”

It is really too bad politicians cannot stay within the confines of the stereotype, and resign to their armchairs.


Stuart K. Hayashi said...

Excellent blog entry! :-)

Benpercent said...

Thank you Stuart! Though I do think I need to cut down a little bit on my ambitious lengths, so as to produce pieces more timely. :P