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Tuesday, November 12, 2013

Term Limits and Long Term Thinking

One of the biggest problems in this country, and in-turn Washington, is the lack of long-term thinking. Thomas Sowell illustrates this brilliantly in his book "Applied Economics." 
When I was an undergraduate studying economics under Professor Arthur Smithies of Harvard, he asked me one day what policy I favored on a particular issue of the time. Since I had strong feelings on the issue, I proceeded to answer with enthusiasm, explaining what beneficial consequences I expected from the policy I advocated.  
"And then what will happen?" he asked. 
The question caught me off guard. However, as I thought about it, it was became clear the situation I described would lead to another economic consequence, which I then began to consider and spell out. 
"And what will happen after that?" Professor Smithies asked.  
As I analyzed how the further economic reactions to the policy would unfold, I began to realize that these reactions would lead to consequences much less desirable than those at the first stage, and I began to waver somewhat. 
“And then what will happen?” Smithies persisted. 
By now I was beginning to see that the economic reverberations of the policy I advocated were likely to be pretty disastrous — and, in fact, much worse than the initial situation that it was designed to improve. 
Simple as this little exercise may sound, it goes further than most economic discussions about policies on a wide range of issues. Most thinking stops at stage one.
Sowell's anecdote is an exercise few go through these days. I thought of this after my last article regarding Ron Johnson's new bill to let people keep their doctor's. Given the state of things as they are "right now," any legislation or choices we make have to be considered for their long term consequences because of what is already in place, not as we'd like to them to be.

Obamacare is in place. It is going to have unintended consequences. It already has with the policy cancellations and triple premiums. When people actually start going to the doctors and try to get the exchanges to pay for their care, it's going to get worse.

So Ron Johnson's legislation, while appearing to be a common sense piece of legislation will actually have long term consequences, namely extending the life of the ACA beyond it's natural lifecycle. Obamacare's very nature makes it unsustainable. The people are already feeling the pain. Letting it continue, without any adjustments, will hasten its demise.

Let's take this out to other things. Look at all the legislation that comes out of Washington. Usually it's by well-meaning politicians responding to their constituency to "do something," as Sowell points out. We as a people are always looking at the immediate and liberals base their entire political philosophy only on stage 1 thinking.

If we get rid of guns, there will be no shootings. If we get government to pay for health care, it will be free. If we pass a law against pollution, it will go away. Unfortunately it's the "and then whats" that get you.

Politicians have 2, 4, and 6 year cycles, depending on what branch of the government they are in. Congressman are by far the worst with 2 year re-election cycles that by their very nature preclude them from ever getting out of stage 1 thinking if they want to stay elected. The Senate's 6 year cycle can allow for some long term strategizing but not every Senator is up at the same time. Typically when a hot-button issue comes up, at least a third of the Senate will be up for election within 2 years and two-thirds within 4. They will do what's expedient.

People will always act in their self-interest but usually with a short sightedness that costs the country. Presidential term limits have created the concept of "legacy building." Presidents want to remembered for in history. No one wants to be Rutherford B. Hayes. I believe congressional term limits will have the same effect. If re-election is not the driving force behind these politicians career, they can afford to have long term ideas. These ideas will work and can be communicated to the masses. They aren't stupid, but they are emotional and short-sighted. That doesn't mean they can't be persuaded.

Constant re-election turns politicians into cowards, unwilling or unable to make the hard, unpopular choices for the long term good of the country. Ron Johnson's legislation may be good political strategy in showing the democrats for their unwillingness to give people choices. Or it may become law and keep the ACA going indefinitely. Is he thinking long term? Personally I doubt it. He's trying to make himself look good and do something he probably believes will help people. I don't blame him for that.

He's trying to get re-elected.

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