The People – United – Will Often be Shortsighted

I got a taste of direct democracy when we lived in New Hampshire. Our little community still used septic tanks, which required regular maintenance and were leaking sewage into local waterways.  It made sense to connect them up to a larger municipal line.  After about five years, the change would pay for itself and after that it would yield consistent cost savings. 

The problem was the five-year payoff.  Some of the older or more mobile residents figured that they would not be around long enough to reap the benefits, which were far in the future but knew that they would be stuck with the upfront costs of the investments today.   So you get the picture right out of a Norman Rockwell painting.  Old Mr. Parker, wearing his simple red plaid shirt, stands up in the town hall meeting to oppose the plan.  Nobody wants to be rude to the old guy and – besides – he is right.  Very likely HIS costs will outweigh HIS benefits.  

The fact is that reaching consensus on many hot issues is almost impossible. That is why they are hot issues.  The frustrating part is that everybody is right from his own perspective. There are no villains. People have figured it out right.

We see this in all large scale reforms and many small ones.   The most recent big examples were the aborted attempts to reform Social Security a few years ago and the probably truncated health care proposals we see today. The dynamics of the situations and even many of the participants (many now opposing health care reform opposed SS reform) are the same.  In both cases, opponents had correctly figured out that the changes would probably leave them net losers. Everybody saw the need to reform in general but everyone could also find places they would suffer in the details of any real world proposal. 

We don’t think rationally about gains and losses.  A loss generally causes a lot more pain than the pleasure we get from a similar gain.  That is why most people would act quicker to avoid the loss of $100 than they would to take advantage of the opportunity to gain it.   From the accounting standpoint, the two are identical. In both cases the subject has $100 less than they would have.  But it sure doesn’t seem the same.   Researchers have consistently shown this happens even in very serious situations and even the semantics makes a difference. People are much more likely to accept the need for an operation that has a 95% success rate than they are one that has 5% failure.   This aspect of human nature plays into every debate about political changes.  It is always powerful and it is always irrational.

Frankly I don’t think it is possible to make sweeping changes that are at the same time effective and popular, which is why Social Security reform failed and why health care will probably not achieve its objectives. Unfortunately, I think the same goes for climate change. Current benefits must be perceived to be significantly higher than costs, especially costs in the future or the logical choice is stand pat.   It might also make sense just to be caution. 

When you think about it, most change is potentially harmful. I can think of very few changes that would make me immediately much healthier, for example, but lots of things could happen to make me worse off.

That is why I think you have to go with incremental, imperfect and differential change.  Change a few key things at a time and see how they evolve.   It is a kind of iterative change where you learn from each step and then incorporate the learning into your next move. It takes a longer time and it is not as exciting.  Probably most problematic is that it is hard for any politician to get credit.  But it tends to work better.

It is really hard to get all the people, or even most of them, to do the right thing all at once.  All serious change starts with a small group of innovators and then spreads more widely. The people – united – will often be shortsighted.  (BTW, you have to chant that like the old student protestors used to)  But they are pretty good at making good individual decisions about what really matters to them and these add up to a lot.  Maybe they are right to resist the big changes.  A variety of ideas is better than one big one.