Wednesday, 18 August 2010

A very good question

Over at TVHE Matt Nolan asks,
So if the main justification for compulsory super is that “people are too stupid to save for themselves”, how can we say that a government made up of these same people will be able to determine the “right” level of savings?
The question is a good one but I would say it is the question you should ask about many government interventions in the economy. The "people are stupid" reasoning lies behind many government actions and thus Matt's question applies more generally. Add to this the fact that the people themselves will have better information about their situation and incentives than those in government and you really do have to ask how is the government to know what is right.


bk drinkwater said...

Reminds me of a classic post by Megan McArdle:

1) People are often stupid
2) Bureaucrats are the same stupid people, with bad incentives.

Geek Vader said...

Of course, the rejoinder to this is that with their college degrees and advanced training, that the bureaucrats are more intelligent than average, and thus less likely to make these mistakes.

What I am trying to say is that argument (people are stupid and bureaucrats are people) is logically sound, but socially inept.

Having said that, it does absolutely remain the case that bureaucrats are human and subject to human failings, such as greed, selfishness, narcissism, pride, wrath, ego, lust for power, and other perverse incentives that are counter to the interest of the People, etc - and that all these failings by themselves are sufficient to look at proposed new bureaucracies and rules with a wary eye.