The art of politics, and its unintended consequences

Economic vs political decision making

For those frustrated after dealing with uncompromising bureaucrats and politicians who refuse to acknowledge the damage they have caused, the field of economics can explain how such disasters can happen, and the built-in incentives that prevent corrective action.

There is a strange discrepancy between economic and political decision making, that is eloquently explained in this presentation by economist Thomas Sowell.

“Economics is the study of scarce resources which have alternative uses…

Politics is the art of the plausible ….

Economics involves trade-offs. Politics involves solutions, real or imaginary …

You generate political support by creating a “crisis” … After you convince people there is a crisis, you show your solution … When it leads to a detrimental result, the only cure for this new bad situation is more of the same policy”

Economics is the study of scarce resources that have alternative uses. The rationing of scarce resources is inevitable. A famous saying in economics is “there is no such thing as a free lunch“: you can’t expect results without allocating resources. Economics involves trade-offs between alternatives at its core.

Politics is different. Politics tries to ignore the inherent constraints that economics must deal with. Instead it pretends that grand objectives can be achieved at no cost. Bold promises get votes.

Politics is the art of the plausible. What politicians advocate doesn’t have to be possible, merely believable. Much legislation is not properly thought through, resulting in unintended consequences.

Politicians love to talk about solutions, as if they had no associated costs. Yet there are no magic solutions, there are only trade-offs. You make something a little better at the expense of making something else worse. If resources are devoted to a particular issue, they can’t be spent dealing with other issues.

Politics involve solutions, real or imaginary. The perspective of trade-offs is lacking. Alternatives are not explored objectively. The touted solution is put forward, typically by exaggerating its benefits and ignoring its side-effects.

A solution needs a crisis. A crisis can be easily manufactured using creative statistics. A crisis does not mean that it is worse than many other undesirable issues facing society, or even that it is getting worse.

It’s easy to call anything a crisis, exaggerate its negative aspects, then call for a solution without considering alternatives. A policy is put in place, supposedly to respond to the crisis. Despite its well-meaning intentions, it can result in harmful unintended consequences.

Sometimes the situation becomes worse. The bureaucrats then call for more of the same policy, throwing more of other people’s money at the “crisis”. The cure for a failed policy is often more of the same.

An insidious side-effect of a failed policy is to create a new set of bureaucrats and consultants who make a nice cushy living out of it. They are happy with the status quo, it works nicely for them.

Political decision making applied to the bicycle helmet law

Sounds familiar? This is the perverse process that brought the bicycle helmet law to Australia. From the history of the helmet law, the typical steps are there:

1. Even though cycling head injuries were not greater than pedestrians or motorists, the government, lobbied by misguided doctors, singled out cycling as being a “problem” requiring government intervention.
2. At the time the legislation was introduced, cycling was rising, providing significant health benefits to society, while cycling injuries were falling. There was no “problem” to fix.
3. The policy failed to achieve its objective. The unintended consequence was to reduce cycling and to increase the risk of injuries. Before the policy the “problem” was getting better. After the policy, it was getting worse. The bureaucrats response has been to call for more of the same policy.
4. The bureaucrats have funded many “studies”, using creative statistics, to defend their policy. These studies may be worthless from a scientific point of view, but they are useful political propaganda, often quoted in media responses to justify the policy. There seems to be no shortage of academics willing to take easy money for policy-driven studies.
5. The bureaucrats keep trying to justify their policy using a naive narrow point of view exagerating its benefits while ignoring its side-effects. They still use long discredited claims like “helmet protect against 85% of brain injuries“, even though helmets are more likely to aggravate brain injury. They ignore negative side-effects: the decline in cycling, or the increase in accidents and injuries. They still defend the helmet law based on its theoretical benefits while ignoring its actual results. They seem unable to distinguish between helmets and the helmet law. Even though helmets can protect in some circumstances, that doesn’t mean that forcing them on all cyclists is a good idea, any more than it would be for pedestrians.