Price Ceilings: Government Imposed Shortages, the Story of The Oil “Shortage” of the 1970’s

180 Existing Mega Sites and Now 181: "And then what? What's next?"

"And then what? What's next?" comes from Thomas Sowell. Sowell tells a story of a college economics professor he had, that when a student came up with a grand scheme of how to solve an economic problem, the professor would then ask: "And then what? What's next?"

The point being that few schemers look beyond the first stage economic consequences of said scheme. What is the second, third, and nth economic consequence of the scheme? Sowell calls it "Thinking beyond stage one" which is very likely based on Frederic Bastiat's (French economist) The Seen and The Unseen (1851):

http://www.econlib.org/library/Bastiat/basEss1.html




Buchanan, Tullock, Arrow and many more public choice theory academics have pin pointed something from the above discussion: politicos sell the first stage consequence. The first stage consequence is the only important consequence to the politico due to political time horizons (next election). Hence consequences years into the future of a scheme proposed today are meaningless to the politico as they will likely be out of office, retired, or have moved through the proverbial revolving door and be a lobbyist when the other consequences appear. But to achieve reelection based on political time horizons, the first stage consequence is the only stage of consequences important to the politico.

Also, the politico associates first stage economic consequences with "doing something". That is, the politico has to appear as if he/she is doing something (the exception being the political enigma Calvin Coolidge). The politico is convinced they need to be showing the electorate they are "doing something" and that something is of no matter regarding future consequences per above as the politico merely deploys such actions based on political time horizons and they know, they themselves, will pay no direct price for failure of the scheme. Sweet!

Now let us put the above into an action phase. At some point in the past building industrial parks was a "doing something" stratagem. Yet the stratagem was really a scheme and the second, third, and nth economic consequence of the scheme? As reported, the
Greensboro-High Point MSA (Metropolitan Statistical Area) is
#4 in the nation for comparable MSAs regarding empty industrial sites.    

 Where are those politicos today that proposed and initiated the schemes? Who is left with the consequences of #4 in empty industrial parks? Meaning, politicos pay no direct price for failure (other than non-reelection) while the remainder (everybody else) is left with the consequences and the price of failure. Insidious huh?

Consider the Mega Site. Consider political time horizons and "doing something" and first stage economic consequences. Consider the building of the 181st mega site available across the nation (which could likely be depicted as 181 lottery tickets, some purchased with taxpayer money, trying to win the one elusive auto assembly plant).

Now let us move to the future. Twenty years from now 180 mega sites will not have an auto assembly pant, maybe, maybe one site will have an auto assembly plant. The 181 sites, those built with public funds, showed politicos where "doing something". The politicos are gone, taxpayers twenty years from now are left to deal with empty mega sites. Therefore the taxpayer associated with the empty sites paid for the politico "doing something" which was directly associated with the particular politicos political time horizon, yet the politico paid no direct price for failure, only taxpayers paid the price. Very nice indeed!

Ode To UNCG's Dr Linda Brady… Redux

“Of course by now you've already heard the news that Chancellor Linda Brady has announced her retirement…..” - Billy Jones

Thomas Sowell has observed on many occasions that politicos never pay a direct price for being wrong. The only price paid is non-reelection. Sowell’s observation, the mechanics thereof, are as follows:

(1) the politico puts forth a notional proposition of the way things ought to be,

(2) the politico then frames the notional proposition as fact,

(3) the non-fact fact is then argued through verbal virtuosity,

(4) the non-fact fact becomes legislation or governmental action,

(5) the legislation or government action is followed by first stage positive economic consequences followed by cascading negative unintended consequences for years into the future,

(6) the politico pays no direct price for the cascading negative unintended consequences, rather the price falls on the masses.

When past political actions by the politico begin to haunt him/her, they conveniently retire and generally the retirement is based on something along the lines of “more family time”. They retire and no direct price is paid by the politico for the legislation or government action spawned by the same politico.

It is worth pointing out that "government" is abstract and hence governments do not think, act or decide. Politicos think, act and decide. Therefore, it is in reality not "government action" it is actions by politicos through the mechanism of government. That mechanism is directed by bureaucrats. Hence the bureaucrats are an extension of the politico i.e. the mechanism.

Occasionally these bureaucrats make extreme errors. Errors that lead to immediate cascading negative unintended consequences. Like their politico counterparts, the bureaucrat conveniently retires. They conveniently retire with no direct price paid by the bureaucrat for past actions.

That is, in both the politico’s and bureaucrat’s case (the decision maker and the purveyor of the decision mechanism), retirement becomes the escape hatch and that is the end of the story with others left to pay the price.