Anyone who has lived with roommates has personally experienced what economists call externalities. Dirty dishes piling up in the sink, terrible music blasting at 2am, and a strange smell emanating from the door down the hall. These are externalities because your messy roommate only considers their own preferences for cleanliness, not the costs they impose on the rest of the people living there.
I think your argument jumps straight from "governments aren't perfect" to "governments are no better than nothing".
There are various ways that the government is somewhat incentivised. One is by educated voters who care about the long term stuff.
Also, if the externalities within the next 4 years are significant, the government will undertax them. But undertaxed externalities are better than untaxed ones.
I am trying to apply the standard externalities argument to governments.
The standard argument goes: We should expect firms to overproduce negative externalities like coal pollution unless they are strongly incentivized to do otherwise since they get lots of benefits from coal powered electricity and pay few costs for coal powered pollution.
Applied to governments: We should expect governments to overproduce negative temporal externalities like debt unless they are strongly incentivized to do otherwise since they get lots of benefits from short-term spending and pay few costs for long term stagnation.
True. Governments aren't perfect actors. They aren't incentivized to always be good. But they still regulate pollution in a way that makes the problem less bad.
This is also a neoreactionary / Hoppean argument against democracy: the claim is that monarchs or sovereign corporations will tend to be better at internalizing temporal externalities than elected officials because they have the same sort of long-term interest as the farmer in your example. While the upsides of democracy greatly outweigh this sort of downside overall, it's still worth thinking about how better mechanism design might incorporate a bit more long-term thinking into an overall democratic structure; consider e.g. Garett Jones' proposal in 10% Less Democracy to "give the bondholders a vote".
Thanks for the book recommendation, I will look into it. Perhaps this is a strong argument for sortition-based democracy? Instead of policy being determined by elected officials that have no skin in the game beyond their office, if we turned to the public directly...they might vote for policies on the basis of longer timelines, such as their own and their children?
Yes, I can see that. You'd still have the classic public choice problems (e.g rational irrationality and concentrated benefits-diffuse costs) but I think it could be an improvement
I think your argument jumps straight from "governments aren't perfect" to "governments are no better than nothing".
There are various ways that the government is somewhat incentivised. One is by educated voters who care about the long term stuff.
Also, if the externalities within the next 4 years are significant, the government will undertax them. But undertaxed externalities are better than untaxed ones.
I am trying to apply the standard externalities argument to governments.
The standard argument goes: We should expect firms to overproduce negative externalities like coal pollution unless they are strongly incentivized to do otherwise since they get lots of benefits from coal powered electricity and pay few costs for coal powered pollution.
Applied to governments: We should expect governments to overproduce negative temporal externalities like debt unless they are strongly incentivized to do otherwise since they get lots of benefits from short-term spending and pay few costs for long term stagnation.
True. Governments aren't perfect actors. They aren't incentivized to always be good. But they still regulate pollution in a way that makes the problem less bad.
This is also a neoreactionary / Hoppean argument against democracy: the claim is that monarchs or sovereign corporations will tend to be better at internalizing temporal externalities than elected officials because they have the same sort of long-term interest as the farmer in your example. While the upsides of democracy greatly outweigh this sort of downside overall, it's still worth thinking about how better mechanism design might incorporate a bit more long-term thinking into an overall democratic structure; consider e.g. Garett Jones' proposal in 10% Less Democracy to "give the bondholders a vote".
Yes I agree with both of your points. I think that paying politicians in 100 year bonds would be a good idea!
Could you share more on that and more examples of temporal externalities? Very interesting post, thanks for writing it.
Thanks for the book recommendation, I will look into it. Perhaps this is a strong argument for sortition-based democracy? Instead of policy being determined by elected officials that have no skin in the game beyond their office, if we turned to the public directly...they might vote for policies on the basis of longer timelines, such as their own and their children?
Yes, I can see that. You'd still have the classic public choice problems (e.g rational irrationality and concentrated benefits-diffuse costs) but I think it could be an improvement