Contrarianism and Policy Policy

Drunken sailors generally spend cash that they’ve already earned themselves, rather than running up debt to be paid by others. If our politicians started spending like drunken sailors, it would in fact represent a dramatic improvement. -- Glenn Reynolds

The above quote brought to my attention by an amusing thread on Samizdata, which also features multiple uses for a drunken sailor.

I've received some helpful feedback suggesting that when I write about some problem or policy that I also include some of the background to explain further why I am concerned. It would be great if I had time to do that; for example, when I say the Chrysler and GM-Obama railroaded reorganizations will not only be costly failures but will have damaging secondary effects which will hold back recovery throughout our economy, I could talk about how investment happens, why each participant's interests have to be understood and respected, and why a heavy-handed reordering of the normal ranking of interests in bankruptcy appears to be designed to transfer Federal tax dollars (loading the future with at least $70 billion more debt) to the UAW and its members (whose middle-class greed and political power already helped bring down the Big Three automakers.) The secondary effects will likely (but invisibly) include more difficult financing for all unionized companies, higher rates for all financing as the US' reputation for rule of law takes a slight hit, and a lower dollar as investment opportunities in other countries look relatively more secure.

I could try to explain the chains of reasoning involved, but then there would be chapters on basic economics, public choice theory, game theory, history of finance, law of bankruptcy, etc etc. In other words, I would have to write a book summing up everything for people who have never learned very much about them, but feel free to have strong opinions on policies nonetheless. This is the result of both rational ignorance (because the cost of educating yourself about an issue is far greater than any benefit one might personally derive) and groupthink (where your beliefs come from others you admire and trust, since having similar beliefs to your friends and neighbors assures you of at least having company when you make wrong choices and promotes the feeling of group harmony.)

So my policy here is to write about policy and politics only when 1) a news item has probably not come to your attention through other sources, and I think you would benefit from hearing about it, or 2) I have an opinion you probably have not heard ten times already. Since I have an unusual depth of knowledge and experience about business and economics, my opinions will not be typical of the crowd, and I'd ask you not to accuse me (as has happened in this space) of being a Republican, a Randite, someone who wants to live forever (?), or a victim of internalized homophobia (?).

I really should write that Big Book of Everything. One of the types of work most useful at this point is synthesizing and organizing what is known into a quickly-learned package; I greatly admired, for example, Sussman and Abelson's work on Scheme and the basic computer science textbook they wrote because they took a mess of academic results and complicated precursors and created a streamlined curriculum that encapsulated a lifetime of learning into two terms. Neither of them got rich doing it, or famous except among a small number of people who understood what they had done, but they made it possible for others to advance much more quickly. And something similar for political economy and life in general would be vastly more useful for bright young people than most of what's out there.

Meanwhile, back in the world of here and now, only a tiny fraction of the stimulus money has actually been spent, and moves are afoot to stop the rest of it as it appears the economy is starting to stabilize on its own. The "emergency" actions may have helped restore confidence, but none of the supposedly necessary programs to buy toxic bank debt, rewrite mortgages, or stimulate the economy with a quick flood of cash actually happened. Banks are running away from TARP as fast as they can, and it's clear no one wants to cooperate with the government so long as they feel there's a danger their business will be taken over or micromanaged from Treasury. The system, in other words, is routing around the damage caused by attempts to "do something, anything" generated by the political system. If you are following the general news, you probably don't know any of that.