Thursday, June 17, 2010

Time Horizon: A More Practical Explanation

I thought I'd explain how this time horizon thing works out in practice.

If you have a short time horizon, then you hold a view of political-economy that is more shifted toward the political. Interests and resources and pretty much fixed, and the key variable is who has the power. The investigation into who holds the power may lead you into other subtopics, for example various institutional structures or how interests organize themselves, but the key determinant over who gets to control the fixed amount of resources is the arrangement of power among the interests.

In this view, things like the number of votes matter more than rhetoric and ideas. Matt Yglesias analysis of Obama's speech typifies this type of thought:
The most important thing to keep in mind about the sort of “major” presidential speech we saw last night is that they don’t matter. At all. They don’t move votes in Congress. They don’t move public opinion. The bully pulpit method of governance doesn’t work. And that’s about the best I can say about Obama’s speech—even if it had been much better, it wouldn’t have done much good.

And he's generally correct. In the short-term, speeches like this don't often matter. What matters far more is who holds power. Similarly, returning to the Bernstein piece, he sees that concept of individual liberty as a nice story, but what really matters is the exercise, or lack thereof, of power by the state.

It also creates the idea that power, which is often fleeting for any party in a democracy, needs to be used to its fullest and quickly. So, let's get [insert progressive agenda item here] in now. If that means we need to worry about how to pay of it later, then let's worry about that later. Likewise, long-term fiscal problems shouldn't be a reason not to pursue fiscal expansion right now. And really governments can spend now while kicking the can down the road for a long while, which often makes it appear as if politics does trump economics. A similar thing also applies to collective bargaining. Keep pressing for higher wages through political action without regard to the potential long-term health of the firm that supplies the jobs.

A more longer term outlook shifts toward the economic. So, there's a recognition that politics distorts and often hinders economic activity. There are concerns about unintended consequences and paying for stuff. Moreover, there isn't a zero sum game between interests over fixed resources. How has what interests and the amount of resources and wealth shift and change over time. There's also a recognition that ideas matter. A speech by a president might not necessarily change the outcome of the specific political battle, but can influence the debate or our national consciousness over the long run. For example, the influence of Wilson's Fourteen Points only manifested over time. Likewise, if you look at any particular debate, then the idea of Manifest Destiny, the Monroe Doctrine, Reagan's accusation of the Evil Empire, or whatever, could probably be explained away as far less influential than who or what party held power at any particular moment, but they do matter.

This isn't to say that any particular conservative or liberal politician or party will always adhere to taking the longer or shorter view. Both parties are tempted and often do exercise their power as quickly and forcefully as possible to advance their agenda. See the recent Bush Administration. Both try to make cases that their policies will have long run benefits. For example, Obama talked about how the reason for health care was to bend the cost curve. Nevertheless, I think you can assume something about longer versus shorter term focus and the corresponding instincts from where politicians and parties sit and vice versa. Liberals looks at more direct, short term causes, benefits and consequences. Conservatives looks at longer term and more indirect of the same.

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