Public Choice: Why Politicians Don't Cut Spending

Cascading Intervention Failure, Sentiment Coordination and Political Platitudes

Initial central planning, orchestrated by special interests through politicos, meaning central planning has become the order of the day, begets more central planning in the form of special interests and their politico ilk. How so?

When the initial central planning doesn’t work as intended the failure begets another special interest/politico intervention based on the last set of “plans” that failed. In turn, the new-newest plan fails which begets yet another set of special interest/politico intervention based on the new-newest plan failure and so it goes resulting in cascading intervention failure.

One might know the concept of cascading intervention failure under another title: It will be different this time. Yes, the concept that it’s not the plan that fails, it’s merely the people instituting the plan that failed. Therefore, new people will make the plan succeed. Yet the plan fails again.

Maybe, just maybe: It’s a plan failure and not a people failure? Nay, nay. It will be different this time! -Or- is it really: It will be different this time, like it wasn’t last time, nor will it be next time.

Sound familiar? Sounds like Greensboro in the last thirty years?

How can one spend thirty years, untold millions of dollars, and yet the city decays? How can one spend thirty years, millions of dollars, the city decays yet do the same thing over and over with only occasional opposition?

There certainly are many reasons, however, one reason, in particular, that encompasses most of the other reasons, is purposeful sentiment coordination by those orchestrating the cascading intervention failure. Sentiment coordination? How so?

Sentiment coordination is the attempt to make all believe in a common experience. That all, believing in a common experience, then need to act as an integrated entity in order to enjoy the common experience and achieve the ends of the common experience. Politicos yearn to be the focal point of the common experience and promote the image that individuals should act as an integrated entity so as to support the common experience and its ends. (1)

If one steps back for a moment and ponders the concept of common experience one will find that individuals do not display sentiment coordination as they lack common experience across the entire array of individuals. Jamal, Jose and Sam have differing experiences/differing sentiments. Even when individuals, such as Jamal, Jose and Sam display some level of voluntary coordination of sentiment, such as joining a club, the club generally has many members exhibiting many, many sentiments and the common experience differs widely among club members.

Regarding politicos and their attempt at sentiment coordination, exactly who sets the sentiment that needs coordinated? Is the sentiment cloaked in platitudes?

You guessed it! Politicos attempt to set sentiment coordination as a platitude. Maybe the following sounds familiar: job creation. Hence everyone is lead down the political path of sentiment coordination of “creating jobs” and being that job creation is a platitude, how could anyone be “against job creation”? Therefore, regardless of cascading failure in the realm of job creation, the failure is supposedly not the point as one needs to feel warm and fuzzy, in that, they support the common experience of job creation. Insidious, huh? (2)

One ends this exercise with unabated, constant and continuous cascading intervention failure. The failure is perpetuated as the sentiment coordination of a platitude makes all naysayer(s) politically framed as against the platitude i.e. “against job creation”. Regardless of the path of failure and multi-millions of dollars wasted, the failure and waste are politically-purposely framed as good… as one merely needs to feel the warm and fuzzy common experience of the political platitude.


Notes:

(1) The People’s Romance, Why People Love Government (as Much as They Do), Daniel Klein, The Independent Institute, Summer 2005

http://www.academia.edu/2802162/The_People_s_Romance


　

(2) Unsustainable platitudes, Pittsburgh Tribune, Donald Boudreaux, 08/14/2014

http://triblive.com/opinion/donaldboudreaux/6556379-74/petroleum-sustainability-policies#axzz39n9x2J8b


　

　

New Zeniths in Central Planning: Thirty Years of Downtown Greensboro Failure, Empty Industrial Parks and now the Mega Site

Beyond centrally planned urban areas and industrial sites being many times fertile grounds for corporate welfare, special interests and crony capitalism, one might want to examine another problem in the form of a knowledge problem. (1)

The central planner and associated politico ilk, the plans thereof, suffer from a knowledge problem in that: How does the central planner know all the plans of all the individuals that make up all others outside the central plan? How does the central planner know that all the individual particular time and circumstance based plans (the plans of the many) somehow and in someway come into equilibrium with the central planner’s particular central plan (the plans of the few)? Stated alternatively, the central planner proceeds as if his/her plan will succeed based on a wild guess aka “economic” impact study that in essence assumes away the particular time and circumstance of all others outside the central plan as not being plans divergent in nature from the central plan -and- implicitly assumes perfect knowledge of the particular time and circumstance plans of all others outside the central plan. Through magical thinking (the assumption of perfect knowledge) the central planner assumes those zillion plans and interaction between those zillion plans merge into equilibrium with the central planner’s plan. (2)

If perfect knowledge does indeed exist, then failure should rarely or never occur. Yes, you figured it out, the central planner doesn’t know and hence a major knowledge problem exists. Yes, failure is an option. The implicit assumption of perfect knowledge by the central planner ends in failure more times than not. As William Easterly explains [paraphrasing]: Despots and their central plans occasionally succeed, but more times than not they fail, with the only winners being those special interests and/or cronies enjoying the spoils of the now failed plan. (3)

Moreover, in US political economy the history of central plan failure, with the only winners being those special interests and/or cronies enjoying the spoils, is a broken record that is ongoing and extends into history over 225 years. (4)

　


Notes:

(1) Economics and knowledge, F.A. Hayek, presidential address to the London Economic Club, February 1937
http://www.econlib.org/library/NPDBooks/Thirlby/bcthLS3.html


(2) Ibid

(3) The Tyranny of Experts, William Easterly, 03/2014

http://www.amazon.com/Tyranny-Experts-Economists-Dictators-Forgotten/dp/0465031250/ref=sr_1_1?s=books&ie=UTF8&qid=1424082583&sr=1-1&keywords=the+tyranny+of+experts


(4) A Republic No More: Big Government and the Rise of American Political Corruption, Jay Cost, 02/2015

http://www.amazon.com/Republic-More-Government-Political-Corruption/dp/1594037272/ref=sr_1_1?s=books&ie=UTF8&qid=1424082678&sr=1-1&keywords=a+republic+no+more+big+government+and+the+rise+of+american+political+corruption

Political Platitudes

Platitude: Noun . 1. a flat, dull, or trite remark, especially one uttered as if it were fresh or profound. 2. the quality or state of being flat, dull, or trite: the platitude of most political oratory. (1)


When listening to rhetoric of politicos of all stripes and their ilk, bureaucrats, and special interest groups one needs to be aware of and identify platitudes within the rhetoric. Platitudes are the tools of the political class and its associates.


“A good way to test if someone is speaking in platitudes is to ask yourself if you can imagine a normal human adult believing the opposite.



Suppose someone informs you that he favors policies that promote human happiness. Can you imagine, say, your neighbor responding, “I disagree. I favor policies that promote human misery”? Probably not.



If you cannot imagine any normal person disagreeing with some proclamation, then that proclamation is a platitude. It tells you nothing of substance.



Consider today's fashionable calls for “sustainability.” The academy, media, cyberspace are full of people proclaiming support for policies that promote economic and environmental “sustainability.” So whenever you hear such proclamations, ask if you can envision a sane adult sincerely disagreeing.



You'll discover, of course, that you can't imagine anyone seriously supporting “unsustainability.” Therefore, you should conclude that mere expressions of support for “sustainability” are empty. And they can be downright harmful if they mislead people into supporting counterproductive government policies.” (2)


Some oft used platitudes favored by politicos and there associates are: favoring the creation of jobs, favoring a strong middle class, favoring less crime, favoring more education, add your favorite political platitude here à _________ .


Moreover, the deployment of political platitudes is not without stratagem. One might identify the stratagem as political slight of hand. How so?



The politico begins with the political platitude knowing the audience is in agreement with such platitude as disagreement is nearly impossible. Hence the politico has one’s agreement e.g. more jobs. Now comes “how”.


Yes, now comes the particular notional proposition of creating “more jobs”. As poorly thought out as the notional proposition might be, how can one be against such proposition as one agrees with “more jobs” i.e. the platitude.


Therefore, if one disagrees with the “how” (particular notional proposition) then one is attacked based on the platitude: “So you are against more jobs.”


The politico, bureaucrat, and special interest group will deflect opposition to the platitude, rather than an examination of the “how”.



Which then brings us to the public choice theory observation: platitudes are a poor basis for public policy.



Notes:



(1) dictionary.com



(2) Unsustainable platitudes, D.J. Boudreaux, Pittsburgh Tribune-Review, 08/12/2014



http://triblive.com/opinion/donaldboudreaux/6556379-74/petroleum-sustainability-policies#axzz39n9x2J8b

Sales Tax Increases and Sales Tax Exemptions

As the sales tax increases, so do sales tax exemptions. Exemptions? Yes, exemptions from sales tax or portions thereof are lobbied for by special interests so their special interest, the particular constituency thereof, are exempt. (1)

In the case of the one-fourth cent Guilford County tax increase proposal, the special interest spurring such increase, being predominately the education establishment and associated politico enablers, then cause a special interest domino effect, in that, other special interests and their politico enablers lobby for an exemption to such increase. More insidious, the sponsoring special interest and politico enablers many times incorporate into their sales tax increase proposal an exemption for other particular special interests and their associated politico enablers as a political constituency building exercise to increase the support for such a tax increase proposal on all the remaining non-exempt.

When a special interest desires a focused benefit at others expense, say through a sales tax increase, many times the special interest puts forward a revenue figure that such tax increase will generate. In many cases such increase revenue estimates are wildly off the mark and little or no increased revenue is generated, How so? First one must discount the political revenue estimate due to the exemption effect. Next comes legal tax avoidance by making larger dollar purchases e.g. large appliances, building supplies, etc. outside the political taxing authority's taxing area (purchase in a neighboring area with lower taxes). Also, tax increases inevitably increase the size and scope of the subterranean economy aka black market where items are bought/sold free of any sales tax.

Another effect causing sales tax revenue to be less than politically estimated is related to the seen and unseen. The unseen being transactions that never occur due to the increased tax and hence never become a taxable event. For example, the one-fourth cent tax increase proposal is politically/purposely sold as such a small incremental increase that no one will even notice/be affected. Yet an incremental increase applied to disposable income over time can add up to a substantial sum. Say Jane Goodfellow has $30,000 of disposable income to expend in a one year cycle within Guilford County. With an addition one-fourth cent tax increase Jane is faced with an additional tax of $75 [$30,000 x ¼ cent]. Hence Jane can not engage in transactions of $30,000 of disposable income as her disposable income is now <$30,000. Now multiple this effect by 100,000 Jane(s) and the incremental, once aggregated, becomes a very large number of transactions that never occurred and hence un-taxable.

The reduced transactions, those transactions that never occur, the unseen, then lead to an employment effect. The aggregated reduced transactions mean a faceless, nameless series of individuals were not needed to facilitate the reduced transactions. These faceless, nameless individuals either lost employment or never gained employment. However, when it comes to special interests and their politico enablers, the faceless and nameless are never given a second thought as the collective self-interest of the special interest and their politico enablers is paramount.


(1) Sales Taxes and Exemptions, Stratmann, Reese, and Rachmat, Mercatus Center, George Mason University, 08/2014.
http://mercatus.org/sites/default/files/Stratmann-Militaru-Reese-State-Sales-Tax-MOP.pdf

Regarding the Political Dupery and Nitwitery of ¼ Nonsense

“Community interest groups and businesses have donated more than $100,000 to a committee campaigning for a quarter-cent increase in the local sales tax rate.”

“The donations, as well as other endorsements, “signal that our business community knows how critically important public education is to economic development, how important it is to attracting jobs to Guilford County, and how important it is that we maintain a top-notch school system,” said Anita Bachmann, the committee’s campaign coordinator.” - Tax campaign draws $100,000, Greensboro News and Record, 10/29/2014

　

James and Jane Goodfellow, when interviewed about “government“, will on balance, tell the interviewer that government rips them off and politicians/bureaucrats are corrupt. One might say that the answer repeated over and over by James and Jane Goodfellow(s) is: The wisdom of crowds.

A problem arises, in that, the many and various James and Jane Goodfellow(s), the common sense observation that government rips them off and politicians/bureaucrats are corrupt, can’t quite articulate the “why”. Stated another way, common sense will get you through the day but common sense does not explain “why”.

One might want to consider a specific building block on the way to answering ”why”. One building block is that of special interest groups.

One can certainly paint special interest groups as “community interest groups” or “businesses” but the zebra is the zebra regardless of the color of the stripe. It is of no matter that a particular special interest group’s mantra is education, green energy, tax loop holes, infrastructure, tax abatements, economic incentives, etc. A special interest is a special interest and as such wants focused benefits.

Those focused benefits applied to the particular special interest comes at the price of the many. That would be you. The many (you), in fact fund the focused benefit for the use, enjoyment, deployment, etc. of the focused special interest.

Many times it is difficult to answer the “why” due to political slight of hand. How so? The special interest is merely collective self-interest. The mantra of the special interest is generally cloaked in some altruistic endeavor. That the altruistic endeavor will somehow and in some way benefit all. Problem is the special interest group is made up of self-interested people (a normal human condition). The special interest group would very much like one to think that a magical moment occurs where the characters making up the special interest step out of their private self-interested life and become altruistic when functioning within their role as a special interest. Nay, Nay. Self-interest remains and is not supplanted by the supposed altruism:

“[Peter] Stillman … points out that those who see “a strong central government or a strong ruler” as a solution implicitly assume that “the ruler will be a wise and ecologically aware altruist,” even though these same theorists presume that the users of CPRs [common-pool resources] will be myopic, self-interested, and ecologically unaware hedonists.” - Governing the Commons, Elinor Ostrom, page 218

　

Special interest groups, the very long list thereof, who indeed gain the funding of the many (you), have a surprise in store for their own rank and file. Once funding is procured, the supposed altruistic endeavor receives the least funding, the rank and file of the focused benefit receive the next least amount of funding, while the power purveyors of the special interest gain the most. Stated alternatively, the focused benefit once procured is further focused upon the power purveyors of the special interest.

　

[Paraphrasing] We would all like to see government spending go down as long as it is not the government spending that affects us. We would all like to see government deficits go down as long as increased taxes fall on someone else. Most people welcome more government spending on them, few welcome more taxes. - Money Mischief: Episodes in Monetary History - Milton Friedman

　

　


　

Upon Further Review: 1/4 Cent Sales Tax Increase

Within the realm of public choice theory (politics without the romance) is the proposition of: Focused benefit and diffused costs.

Focused benefit and diffused costs is an observation regarding special interests through politico enablers. The special interest, be it the education establishment or any other special interest, want to acquire a focused benefit upon themselves through a small incremental price extracted from a diffused group.

The insidious mechanics are as follows:

(1) the special interest desires additional funding for their particular constituents making up the aggregate special interest,

(2) the special interest knows that a small incremental price (tax) increase will not be rationally opposed by any one individual in a large diffused group,

(3) the special interest is highly organized and knows the unorganized/diffused group, that the price is to be extracted from, is not organized,

(4) the special interest then recruits politicos to champion the additional funding, with the implicit assumption that the constituents of the special interest will become constituents of the sponsoring politico,

(5) the politico sees an opportunity for a political constituency building exercise through other people’s money (the unorganized/diffused group),

(6) the special interest, with resources supplied by its constituents, mount a very focused campaign for the increased funding while the diffused group has zero resources and a diffused constituency that is highly unlikely to form a focused campaign against the increased funding.


The insidious stratagem of the special interest depends heavily upon: A small incremental price (tax) increase that will not be rationally opposed by any one individual in a large diffused group. An example might help. Jane Goodfellow, one of many price payers (taxpayers) is not going to expend one hundred hours of research to fully understand the issue, spend many evenings attending multiple meetings and become fully aware of the issue proposed by the special interest. Jane Goodfellow’s rational position is to forgo the research and meetings and merely pay the increased price (tax) as the increased price (tax) is a smaller price than the price of the research and meetings.

Moreover, the special interest knows the chances are remote that many Jane Goodfellow(s) will organize themselves together around a particular and small incremental price (tax) increase as the Goodfellow(s) are diffused with no organization.

Insidious to say the least.

　
An additional observation is the rational choice by individual constituents of the special interest. What rational choice? The individual constituent is in effect campaigning to raise his or her individual price (tax). That is, the individual constituent of the special interest faces the same price (tax) increase as the unorganized/diffused group. However, it is rational for the individual constituent of the special interest to support a price (tax) increase upon themselves if the benefits flowing to such individual constituent is greater than the price (tax) increase experienced by the individual constituent.

Therefore, in the particular case of ¼ cent sales tax increase, the aggregated ¼ cent sales tax increase, across millions of dollars of taxable purchases (conceivably billions of dollars of taxable purchases), becomes a very large number of aggregated additional tax collected. The large sum collected is then dispersed to the small focused benefit group of which the constituent is a part. As long as the benefit bestowed is perceived to be larger than the self imposed price (tax) increase experience by the individual constituent of the special interest, then it is totally rational to support a price (tax) increase upon oneself as the price (tax) is less than benefit bestowed.

The rational choice by the individual constituent of the special interest, to increase price (tax) upon themselves, explains a nagging question of why someone feverously supports a price (tax) increase that they themselves will experience. How so? In the main, the outward political position of the individual constituent of the special interest supporting a price (tax) increase, that they themselves will experience, is that such increased price (tax) will create/facilitate some altruistic endeavor. Meanwhile, the inward focused benefit being greater than the individual’s price (tax) is a motivating factor, if not an overriding factor.

Even more insidious, huh?

Welcome to public choice theory, politics without the romance.