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Want to Understand the Madness in Washington? Look at the Incentives

July 13, 2011

    by Jerry Robinson | FTMDaily Editor-in-Chief

    The stooges in Washington continue to fumble the ball on a debt deal as they keep one desperate eye on the polls and their own hopes for re-election, and the other eye on America’s economic mess. The simple goal for Washington right now is to pass a deal that will reduce the deficit. What has turned this task from a basic one into a virtual impossibility?

    It all boils down to incentives.

    Our leaders in Washington currently only have one incentive: re-election.

    How do you get re-elected in America? Keeping the status quo on government spending.

    For example, those who dare to touch the “third rail” topic of social security will find themselves in the private sector so quickly that it will make their head spin.

    And with virtually no term limits imposed upon most of our leaders, why should they rock the boat?

    And who’s to say that you or I would either, if we were in their same shoes? Sure, we would like to think that we would, but remember, the entire population moves in accordance with its current incentives.

    If we were to impose strict term limits on our leaders in Washington, the incentives would almost automatically change. All of sudden, the holy grail of “re-election” would give way to something else: Legacy.

    Legacy is a good incentive for a politician. Why? Because if a politician is first and foremost concerned about his/her legacy, then they actually may think twice about their decisions, and may even attempt to use their brain for the benefit of future generations.

    After all, who wants to be the “former” politician who has served his full term and is now despised in his own hometown for being a lame-duck on the issues that matter most to this country?

    It’s the incentives that guide our leaders. And today, they only have one; namely, re-election. And they will say and do anything to get re-elected.

    To illustrate, wave a fresh piece of meat in front of a dog. Watch how he will block out everything else around him until he gets what he wants.

    Our political leaders are the same. Don’t be surprised when they go out of their way to appear brainless. They have only one goal. And until we change the system, don’t expect them to change their ways.

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