Wednesday, April 13, 2011

Quote of the Day - Economics Cassandra edition

Megan McArdle looks at the deficit, at how Congress works, and at Roth IRAs, and makes a (sort of) prediction:
Ultimately, Congress is going to be faced with penalizing people who didn't save adequately for retirement by cutting their benefits, or penalizing people who did save, by raising taxes on their savings.  For a lot of reasons, I expect them to err on the side of penalizing savings.  This may have some very ill effects on capital formation in the US--but by the time they're making this decision, everything they do is going to have some very ill effects on something.
So if you defer current consumption in an attempt to ensure that you do not live in poverty in your old age, the Fed.Gov is likely (?) to slap you with some big old penalties, because you're "rich" (for some more or less arbitrary value of the word "rich").  If, instead, you go all Charlie Sheen and blow all your dough on whiskey and fast women, then you'll be a "victim" and get Ma Gubmint to bail you out.

I guess that's called "winning".

You hear a lot from the left side of the political spectrum about "externalities" in the market as a justification for government intervention.  The market, it seems, is less than perfect, and the tragedy of the commons sadly persists.

Well, one could say that Good Government is a "public good" as well, and that the tragedy of the commons applies no less to the workings of Congress as to the grazing of livestock.  Strange how you never hear this from the left side of the political spectrum.

1 comment:

Lissa said...

They've been re-writing that "Ant and Grasshopper" fable for a while now. Last I checked, the ant had to turn over a quarter of his food stash and build the grasshopper a winter den.