Thursday, April 29, 2010

Short-term versus Long-term Analysis

No doubt y'all are probably tired of me pointing out my theory about liberals being biased toward the short-term and conservatives toward the long-term, but I found a great example of this yesterday from, who else?, Matt Yglesias:
a bailout “of Greece” would largely be a bailout of Greece’s creditors, you’d be giving Greece money that Greece would use to pay people who own Greek bonds. Obviously that’s win-win for both the bondholders and for Greek people, but it’s actually the bondholders who have more at stake. A roughly parallel situation existed with the AIG bailout, which was less a bailout of AIG than it was of institutions to whom AIG owed money and who failed to do due diligence on AIG’s financial situation.

A similar thing could be said for bailing out people in upside down mortgages. The people who really win are the banks that lent them the money. Well, yes, they do win. But in the long run so do the people who don't have to go through bankruptcy or default on their mortgage. Ah, but bailing out homeowners would create a short-term benefit, which is that those people would be able to stay in their homes. Greece isn't going to go anywhere, they'll just have trouble borrowing in the future, contagion might spill over to the rest of the PIGS, and the Euro may fall apart.

I guess my point here is that the short-term economic interest framework of analysis commonly used by many progressives to understand the world has serious problems. It's funny to me because the short-term greed they denounce in the economic world, i.e. on Wall Street, so vociferously, they pretty much apply to the political world. For example, there's that whole meme about people clinging to their religion and guns and consequently voting against their economic interests by going Republican. Well, that's basically saying that if people were more short-term greedy when they were in the voting booth, then they'd vote Democrat.

There are compelling moral cases that buttress many progressive goals, at least in my opinion, but the limited scope of analysis, i.e. short-term, when it comes to what is actually occurring or will occur when trying to accomplish those goals is where progressives go wrong in my opinion.

No comments:

Creative Commons License
This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.