Tuesday, December 10, 2019

Politics and Solutions

This post is all about politics, policy, and problem solving. Policy is so dominated by politics and ideology, I thought I would take a step back from all that noise to think about what we are really dealing with.

At a personal level, we spend our lives encountering challenges and figuring out how to deal with them. While ethics or ideology might enter some of these decisions, many of them are determined by the objective pluses and minuses. Should I buy a SUV or a two-door sedan? Should I go to Indiana University or Purdue? Should I turn left here or turn right? Is it time to replace my furnace? A logical process for finding the best solutions to these and many other questions aids us every day.

Why don’t we do the same thing in the public arena? Should we have a national policy to reduce income inequality? If so, then what is the best policy to achieve significant and lasting improvements? How can we effectively reduce poverty? What do we do to have a strong national defense? How can we have an efficient national infrastructure or successful immigration policy, or how can we make sure enough JD is produced each year?

I realize that when it comes to the public arena, the elements of an objective analysis might get more complicated, but does that mean we have to abandon all logic and start screaming ideology at each other?

We might not agree fully on which problems government should try to solve, but we generally agree it is appropriate for government to try to resolve some of them. Despite this agreement, there are some well-known hazards to consider. Not sure our friends in Washington are capable of the process. But clearly you should agree that this sort of simple logic should not be impossible to muster.

Below I list 6 common-sense steps to approach any national problem.

            Where is the pain center? Can we be specific about the nature and extent of the problem? Seems obvious to me that one should begin by clarifying the nature and extent of the problem. What is it? Who gets affected? How big is the problem?

  Where did it come from? While a problem might be highly visible and impactful, do we know what the source or cause of the problem is? That is, do we have a clue as to what to treat? If the sources are multiple, can we list the causes of the pain and perhaps rank them by size of impact?

How should we treat the problem? Monetary policy is often used because the Fed believes that government either doesn’t know how or is incapable of handling the real sources of a problem. So the Fed often changes monetary policy simply because it observes a potential threat to the economy even if the actual problems have absolutely nothing to do with interest rates or money. Wouldn’t it be nice to aim our policies at the actually sources of our problems, and then use a remedy appropriate to the problem?

Balloon management. Push in the bubble on a balloon and another bubble forms. I learned balloon management when I was a student at Georgia Tech. The bubble on the balloon is like a problem we are encountering. The solution is to get rid of the bubble. Pushing on the bubble will reduce that problem but inevitably when you push one bubble in, you create another one. The trick to good management or problem-solving is to make the second bubble smaller than the first one. Good managers realize they will always create a second bubble, and the trick is to make it smaller than the original one.

            Long term consequences. Sometimes the second bubble does not show up for a while. We have plenty of experience and theory that explains why a policy that overheats the economy will eventually cause interest rates to rise and a crowding out of private investment spending. Balloon management suggests taking this long-term result into account when we use fiscal policy to stimulate the economy.

Unintended consequences. When you try to solve a problem, the action creates other outcomes you might not have anticipated. Balloon management is about expected consequences. But sometimes we get surprised by the eventual impacts of a policy introduced today. Tariffs on Chinese goods might sound practical but how will the Chinese respond?

These last three points underscore how important it is to acknowledge these spillovers as we make our decisions. Ignoring them is to bring peril.

            Where does ethics and/or ideology come in? Try as we might we all have either explicit or hidden ideologies and biases. They are there. We can’t escape them. But we can try to bring them to the surface and try to make sure they play a proper role in any decision. We can try to make sure they don’t dominate every decision. 

So that's it. Whether at the personal level or the national level, it makes no sense to use name-calling and shouting to solve our problems. We will never be perfect when it comes to a complete, objective, and totally effective approach but we probably could do a lot better for ourselves if we  followed some simple decision-making rules. 

What is it about government these days that makes such an approach seems so impossible?

12 comments:

  1. Dear LSD. Geeze, don’t you have much funner and better things to spend time on than daydreaming about how/why not the bozos in D.C. solve problems? Tiz the seazen to be jolly and me thinks you’ve been remiss on adjusting your daily pail-full of JD to git you in the spirit . . . ahem . . . mood. Ya know . . . attitude adjustment hour is omnipresent somewhere in the wirld and me thinks ya ought to git on board with the proper time zone. Ya gotta git your attitude adjusted properly.

    Onto more sober commentary. I hear many D.C. bozo talking hedz say [sic], “We have to have an adult conversation about xxxxxx .” Oddly, all D.C. bozos are adult but most behavior/conversation is childish\churlish\petulant etc.—a fer departure from the root cauze analysis you describe. As a holiday gesture I suggest you reconfigure your time to concentrate more on holiday spirits and less on navel-gaz’n ‘n contemplat’n D.C. feckless attempz at problemia solv’n. As a Gawja Techie grad in IM you can dust off one of your old text bookz to read up on time management. Cheerz . . . . it’s 5 o’clockie soon in your time zone. Don’t-a worry . . . be ‘appy!

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    1. Dear Tuna,

      Me thinks you have been into the spirits a bit today. I just wish I was there to share whatever hooch you slipped in from the backyard. I will work on my time management techniques as I think about excellent topics for next week's installment of this blog.

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  2. Great piece. In a perfect world the citizen send their representative to local or national positions to help "make things happen". The representative starts out thinking great things for the solving local and national problems. After 5 to 8 months they get absorbed into the "political system" and begin to be self serving into the system of trading favors ( also called great negotiating). The fringe benefits are better than anywhere they have ever worked unless they are Trump. However, they have to stay reasonably close to the system or nothing will get done and they will be voted out.....unless of course they have amounted many favors. None of this cultural stuff is related to the real way problems are solved outside of the political culture. It does make for great news stories

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    1. Hoot, I like what you say but even your first sentence might be too optimistic. Many are attracted to the job because they know they don't have to have any real skills and it promises them a life in front of the camera, fame, high income, great bennies and so on. If they have a pretty face and an outstanding ability to lie and exaggerate, they can easily get more votes than sober average folks who think a lot.

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  3. Larry--
    Appreciate your taking time to craft a series assessment and, more importantly, to focus on some steps to improve the situation. I would add to your thoughts that we, as a Nation, have to get away from the "blame the other guy" mentality--and that includes blaming Congress for the quagmire we have put them in. Depending on the source, somewhere between 55 % and 62% of the voters bother to cast a ballot yet we expect a process to come out of this state of disinterest that will improve our lot. We are a nation of people who insist on our "rights" without any corresponding devotion to the responsibilities that accompany those rights. Time to own the blame.

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    1. Thanks for your good thoughts Ed. I am guessing a larger % of people know which teams will be in the NFL playoffs and which sitcoms will get awards next year. As a result few people have the time to know what good policy is and therefore we get gruel instead of steak. Not sure I see any way out of this mess. We are too rich for our own good.

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  4. Larry--Actually your comparison to the level of awareness of NFL and sitcom awards is an interesting one. Makes one think that perhaps part of the issue of engagement might be that the "influencers" have not found a modern way to communicate issues such that it drives engagement. Since the advent of FB and the other social media vehicles, we have seen a significant shift in how to grab and keep eyeballs ( and presumably the thinking motor behind those eyes). Politicians tend to keep to the same tried and true ways to get the message out, with the unhappy exception of our present leader. He has managed to capture the discussion on an ongoing basis with little need ( or accountability) for presentation of anything approaching facts. Yet--it works for a great many in the electorate. I yearn for a neutral, fact based source for all kinds of information, e.g. politics, Amazon buying recommendations, ads that go beyond puffery. Otherwise, we sink into a culture of distrust of anyone other than ourselves--hardly a good path forward. With that--Happy Holidays to all!

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    1. Thanks Ed. I suspect that most generations have thought that their replacements were going straight to hell. What you yearn for is probably there -- you just have to work harder to find it among the muck. Have a great holiday. I wish I could say I will see you in Sanibel this January. But it just ain't gonna happen this year. Maybe next year?

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    2. Yes--I agree that it is sad that you will not be with us this year and hope next year changes that situation. The BIG ARTS center is looking beautiful and the range of programs they offer is truly invigorating. It remains one of the few places I know where one can participate in civil dialogue and learning. So we need you back as I am sure 2020-21 will have a great deal of fascinating data points to analyze! In the meanwhile, I will stay tuned...

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  5. Harvey Homitz and I concur with Sanibel Ed. We shall miss the resonance of your weighty tread on Sanibel's sandy shores and the jingle bell sound of ice cubes tinkling in your glass of JD.
    More to the point we worry about your safety or should I say sanity trading Sanibel for Seattle.... The West Coast is full of 'techies' and whale watchers (have they nothing better to do?) not to mention earthquakes, tsunamis, flash floods and forest fires all no doubt triggered by Trump!
    Cheers and Merry Christmas.

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    1. I will find a way to come back and haunt you guys on that beautiful island. So don't let your guard down and be ready for the return...not to be confused with resurrection...In the meantime stay safe and keep Doug away from moving vehicles. And come visit the left coast...I'll buy you a nice glass of cab. Happy Holidays!

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