How bad policy often trumps good policy

I think if you asked most people what happens when a politician tries to pass legislation only to find that the legislation is too unpopular to pass, they'd say that the politician either gives up or tries to make the legislation more popular. But there's a third option that most people don't know but that happens an awful lot: the politician figures out how to do the same thing in a way that's much less efficient, but also much more complicated and thus harder to oppose.

Taxi medallions are a great example of this. Vince Gray, the District?s mayor, was elected in part because the taxi drivers hated Adrian Fenty. Now, however, Gray needs to pay them back for their support. But raising taxi fares ? which are much lower in D.C. than in other large cities ? would be unpopular. So it looks like he's going to move to a "taxi medallion" system, which has the benefit of being totally unfamiliar to 99 percent of people who hear about it but the drawback of being insanely bad public policy.

As Josh Barro explains, the point of a medallion system is to help taxi drivers make more money. But unlike raising fares, which increases profits for drivers by increasing how much people pay to ride in a taxi, medallions increase profits for drivers by setting a tight cap on the number of taxis in the District. The restriction of supply means more demand for any particular cabdriver, but fewer available cabs for any particular cab customer. Whereas increasing fares can be win-win for customers and drivers, as it can mean more and nicer cabs for customers even as it means more money for drivers, a medallion system is win-lose-lose, as it means more money for drivers with a medallion, nothing for drivers without a medallion and fewer cabs for customers.

But you see this sort of thing all the time. Take the excise tax in the Affordable Care Act. I support the policy, but as I wrote at the time, it's much worse than the policy it replaced, which was a simple cap on the deductibility of employer-provided health-care insurance. But the excise tax could be sold as taxing "insurers," whereas the cap was taxing "workers," or maybe "businesses." Of course, in the end, they're both taxing workers, as that's who?ll ultimately pay. We're just doing it less intelligently now.

Here's my impossible proposal to deal with this problem: What we need in politics is some sort of fail-safe provision where, if you?ve managed to pass your second-best policy, there's a final vote on converting it back to the first-best policy that you originally proposed. If that vote fails, then your revised policy passes as is. But it at least gives everyone an opportunity to consider whether they really would prefer to achieve your end through means that don't make sense rather than means that do.

Source: http://feeds.washingtonpost.com/click.phdo?i=1eab47fb6a018f3a03b853cbf352d3d2

Financial crisis CVs Sheffield United International criminal justice Lake District Australasia