It boggles people’s minds how Congressman/women can ignore fixing Social Security and Medicare even though we have predictions of them heading for certain bankruptcy, and in the case of Medicare, doing so in a matter of a few short years. Not only are they NOT trying to fix these programs, they’re blocking anyone else’s attempt to fix them.
This seems like the most irrational behavior ever, doesn’t it? However, these politicians are actually acting very rational, and that Paul Ryan guy who’s presenting a plan to save Medicare and Social Security is the irrational one in this scenario. In fact, I don’t believe there’s any possibility these programs will be fixed because by the time it does become rational action by politicians to fix them, it will be too late.
So how do I see this fiddle-while-Rome-is-burning behavior by politicians as rational? Easy, I see them responding to the incentives in place that help them achieve their most important goal - getting re-elected. That is survival to them, and like any organism, survival is its highest priority. All others are secondary.
With that in mind, how would does win re-election? The most effective way is to deliver largesse, whether it be to your constituents that vote for you or special interests’ that raise money for you, or even another entity that can deliver you more power or media support. Giving out largesse is far more likely to gain your support than denying it does, so your incentives are clear.
What about how much your constituents hate politicians who waste tax payer money on pet projects for their home states. A bridge to nowhere comes to mind. They detest this, right? Yes and no. Yes when it’s the other guy doing it, no when it’s their congressman doing it. No congressman ever lost votes for using tax payer money to build a new plant/factory/building in his home district. There’s little or no incentive to show fiscal restraint, but a large one to do the opposite.
But why wouldn’t constituents demand that their reps. fix these soon to collapse programs like Medicare and Social Security ASAP? They are popular programs, after all. So the politician has every incentive to jump right in and re-work the program, right? Not so fast. Let’s say the program goes bust in 8 years. That’s could be up to 4 election cycles for a Congressman. If he dives right in and starts tinkering with the program (read slashing benefits), his chances of winning re-election are slight. Voters have made one thing clear - mess with their sacred cow entitlement programs and you lose your election. So tinkering with the program would be irrational since it would cost him re-election (prime concern above all others), so doing nothing would be the rational choice.
And it would continue to be the rational plan of action until the point where the next election is AFTER the collapse date of the program. Since doing nothing = the program failing, acting to fix the program now to fix the program is now desirable choice course of action for the politician because, even benefits are greatly reduced, he’ll get more support/votes by delivering reduced benefits than he will delivering no benefits.
Now if the program can’t be saved and collapses (my prediction), he may not necessarily lose his upcoming election, especially if he can find a scapegoat (like they did in 08 blaming the free market). If, however, he does lose his election, he was still better off for it, even if he could have saved Medicare by taking action 8 years ago. He won re-election 4 extra times using this strategy, so his constituents can’t blame him for letting Medicare collapse because he acted in exactly the way they wanted him to.
When you can identify incentives correctly, it makes politicians’ behavior easier to understand and ultimately predict. You also start to understand why things like special interest groups will never go away, no matter how many bills politicians pass or how loudly voters protest over it. The incentives in place ensure the continued power of special interests. Only stripping the government of all its power and money could change that, nothing else.
Thoughts?