Michael Lissack There is no need to take account of future liabilities piling up; the costs of not maintaining roads and railways, or of the pension liabilities that accrue for each worker in the unfunded state pension scheme. We don't know the difference between dollars "wasted" on military expenditures and dollars "invested" in a road. If we behaved that way in our own lives we should never buy a house, we would run our cars until they fell apart, and we would spend the minimum on our children's education, because the long-term future would always come second to paying the bills. In our private lives we get round that problem by turning large lumps of investment, such as a house, into smaller streams of expenditure, by means of a loan or a mortgage. We then plan around that smaller known expendi- ture. In short, we generate usable information and then use it. Government works the opposite way. It destroys usable information for fear that more knowledgeable interests might use it. To take a tragic example, if the FDA mistakenly approves a device that has adverse side effects, this would result in highly undesirable publicity. On the other hand if the FDA delays in approving a life saving device the people who die are politically invisible. For a regulator it is easier to err on the side of overcaution even when the results are deadly. Other problems come from attitudes and expectations that are built into our national outlook. We have a great belief in absolutes, in seeing problems in black and white rather than in shades of gray. Changes to the system are portrayed by the media as purely beneficial, and the public remains re- markably unskeptical. While there may be a net benefit for most people and we may have no choice other than to compromise, nevertheless we would achieve a better solution if we saw the problems of reform as complex. In a complex world, first order effects (intentions) can be drowned out by second order effects (the reaction which takes over). Consider the issue of rent control (as a New Yorker, this issue is near and dear). Because long time residents of a neighborhood have more po- litical influence than newcomers, New York legislators are and were more concerned with protecting sitting tenants than with protecting new arrivals. The law therefore put tight limits on rent increases for old tenants while
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