Saturday, June 30, 2012

Understanding Where Bureaucrats Go Wrong

I don’t think bureaucrats and politicians are bad or dumb people.

But, I do think that many people misinterpret where bureaucrats and politicians go wrong.

This video is illustrating a point made by Adam Smith, but it’s also the central point that Robert Lucas made in pioneering the new-classical revolution in macroeconomics in the 1970’s (for which he won the 1995 Nobel Prize).

Smith called figures like the robot in this video “man of system”. Too many of our bureaucrats and politicians behave the same way: if all of us pieces on their gameboard would just stop moving, all their plans would work.*

* I saw an interesting example of this several years ago, that I wish I had on video. We had two big three year-old hound dogs, and we got a terrier puppy. The big dogs got along well with the puppy. But when he would get too rambunctious, the big hound dogs were kind of at a loss as to what to do: they wanted the piece on their board to stop moving when they wanted it to. How does an adult dog deal with this (when biting will get them in trouble)? It tries to sit on the puppy to make it stay still. Really. Now, think about bureaucrats and politicians. In many cases, is their behavior when the pieces on the board won’t sit still to enact rules and legislation to keep them from moving so much? This is what immigration law is about. And think about the bipartisan push of the last few decades to encourage home ownership: a scheme with the side effect of reducing movement.