It's Time To Be Big, Bold, And Obvious

by Brian Schrader

Sometimes bigger really is better. Also plaques.

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We may have outsmarted ourselves.

In the last half-century, public policies have more often come in the form of incentives and tax breaks than in more traditional forms like direct interventions, and wealth transfers. These technocratic solutions are often billed as more effective and less expensive than direct intervention, and while I question the accuracy of that claim, it's worth noting that even if such techniques are cheaper and more effective, they come with some pretty significant downsides.

Democracy depends on the idea that the people can voice their opinion and judge the performance of their representatives. As Ezra Klein describes:

Democracy is designed as a feedback loop. Voters choose leaders. Leaders govern. Voters judge the results, and they either return the leaders to power, or give their opponents a chance.

Our democracy's feedback loop is broken because of a number of institutional problems, but it's also impeded by the kinds of solutions we choose to enact.

Seeing is Believing

People in need like it when you help them, but they also need to know that you helped them if you want to receive credit for doing so. Incentive-driven policies can be incredibly harmful to the political wing that uses them precisely because they're opaque and their effects are, by nature, difficult to trace. Opaque policy outcomes often confound policy thinkers and economists, and cloud the wonk-world discourse, but invisible or opaque policy outcomes are also bad for the people at large. Since their outcomes are invisible to those who actively judge the performance of the politicians that enact them, voters can be easily convinced to heap praise or blame on the wrong group of policymakers.

Rent relief policies offer a good example of this. A renter can obviously see the benefits of a stimulus check from Uncle Sam when they’re unable to pay rent. That same renter would never be able to accurately estimate whether her rent has gone up or down due to subsidies given to her landlord’s insurance company. In a more acute example, people speculate whether higher than expected turnout for Donald Trump among certain populations was due simply to the fact that people received a check with his name on it. Those payments were negotiated by a broad coalition of bipartisan lawmakers, but it seems the president got credit for the policy because his name was on it.

Good politics can be good policy, as they say.

In order to restart the feedback loop of democracy and build trust in our institutions, we need to ensure that people can directly tie the success of popular policies to the politicians that enacted them. Signage is good, but we'll need more than a few plaques to rebuild trust in democracy.

A sign dedicating the Pine Valley City Hall construction to the PWA in 1939

Ideally, we should start considering solutions that directly address the problems we're trying to solve. Homelessness has been a useful example of how policymaking can be done under this paradigm. Multiple cities in California, in tandem with Governor Gavin Newsom, have been buying up unused hotels and motels and turning them into housing for people experiencing homelessness. This solution directly targets the problem being solved. Importantly, it also doesn't unnecessarily hand the keys to private firms. Cities, with funding from the state, have simply purchased these properties and converted them into housing. These policies are visible, and their effects are obvious. This was good politics and good policy-making.

The only downside to the program at this stage is that is should probably receive a lot more funding; though a few plaques would also be nice.

Hidden Costs for Hidden Policies

The tax code is full of deductions and special credits designed to encourage specific behavior. The problem with these programs is that they're largely invisible. Tax credits are easy to administer and distribute because the infrastructure for doing so already exists; there's no need to start up a separate set of government offices before the program can get off the ground. This makes tax policy changes incredibly appealing to legislators and to efficiency-minded policy writers. The problem with such policies is they can be invisible to those who benefit from them. Even if people do notice the effect of a given policy on their tax bill, they might not tie that effect to the government that enacted them the previous year.

Fluctuations in tax policy don't advertise themselves; they don't come with a plaque. In this case the people who need help still get it, but those same people aren't able to easily heap praise or blame on a given party or politician.

This breaks the democracy feedback loop.

In some cases it might be easier or more expedient to use tax breaks to provide relief (especially if the policy is targeting businesses not individuals), but it's very important to seriously consider if direct cash transfers are better politically if not financially. Sometimes smart politics is also smart policy, and we shouldn't overthink it. Cheaper isn't always better.

Go Big, Be Obvious

Governments don't often an spend an appropriate amount of money advertising their success. Such things are often left to candidates or elected officials at election-time. Some programs don't need advertising. Bridges, roads, and parks are obvious and readily understood as beneficial to society. Tax breaks and incentives are not like bridges and roads; they're largely invisible to the average voter.

Programs like Social Security, for example, are a much more visible and direct form of government assistance, and since the program is obvious, explicit, and direct, it enjoys significant approval ratings across the political spectrum.

The economy and society are both complicated and intricate systems that can be difficult to model, and policy solutions for real-world problems can be tricky to design. But while modern American politics has gotten very good at designing targeted and efficient ways to spend public money, the system seems to omit the possible political benefits from its design criteria.

Luckily some policy thinkers have started to see that oftentimes, what's big, obvious, and popular is also a better policy. Let's do more of that.

tl;dr Sometimes it's better to just go really big and slap a plaque on it.


Filed under: essay