Tuesday, April 2, 2013

When the Ruling Class Gets It Wrong

What do you do when you are ruled by an upper crust that is getting it wrong, and doesn't know what to do?

Our ruling class has messed up the financial system, has messed up the health care system, has messed up the education system.  But they don't know what to do about it, except keep on keeping on.

That's the reality of life today.  Our ruling class, from liberal to semi-conservative, believes in a top-down administered society.  The ruling class sets up programs, from pensions to banking to health care, using the ideas from the best minds available, and then goes on to the next gig, on the assumption that they have solved the problem in question.

But the basic problem of human existence is that you can never just set up things and then go on to the next gig.  Human life is a constant adaption to changing conditions, whether it is life as a hunter gatherer, an agricultural worker, or an industrial mass-production worker.  Someone has a bright idea, and everyone adapts.  But the bright idea is not the answer to everything; it is not even the answer to one thing.  Pretty soon people realize that the new idea, while good on the whole, has created some unexpected problems.  So we need to change and adapt.

But the problem with government is that the Stage 2, the unanticipated consequences, are almost impossible for government to deal with.  The system is already in place.  The ruling class has gone onto the next gig.  What do you mean there is something wrong?

The problem is that politics and government have a very small bandwidth.  Whereas millions of consumers and thousands of producers can make daily adjustments in their behavior, a national government is a committee of 535 people.  And its laws direct the government bureaucracy to produce uniform decisions based on a rulebook of regulations.  Forever.

People in government respond to all problems as a loss of control.  Soaring health-care costs are due to out-of-control insurance companies.  Financial crises are caused by greedy bankers or reckless speculators.  What's needed is a more rigorous system of control, to make sure that the bad actors don't go rogue.  So we get Sarbanes-Oxley when a couple of corporations start cheating when things go south.  We get Dodd-Frank when the government's subsidies of home mortgage lending put the whole economy underwater.  We get Obamacare when people respond to the natural incentives to their first-dollar health insurance by treating health care as a free resource.

But what do you do about it?  Here we are marching to disaster, and nobody is doing anything about it.  The truth is that there is nowhere for all of us to hide from the march of folly.  When the bust-up comes we will all suffer the consequences.  And we will all be called upon to help those utterly devastated by the collapse and the turmoil.

I guess that the only thing to do is to keep your ship ship-shape, with the masts properly stayed, the rigging properly renewed, the sails new, the hull caulked, the engine properly maintained, the food well protected.

And you keep telling the world that it doesn't have to be like this.  We know how to keep an economy on an even keel.  We know how provide for the poor.  We know how to protect the environment.  And we know how to do it all without big government.

So why don't we just do it?  Because we are all too human.  We believe in a world of good and evil, and we are eager to punish the evildoers identified by our leaders, be they bigots, greedy bankers, Marxists or union thugs.

Maybe we should stop searching for villains and just get to work.

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