Friday, August 15, 2014

time inconsistency and the evolution of policies

Just something random came to my mind.
Imagine there is a National Park that is open to public. Every year some visitors ran into accidents. The public begins to demand a rescue team to help out. Sure, no problem. The government set up a rescue team. To cover the cost, every one must pay an insurance fee before entering the National Park.

"That is not fair!" some protested, "We don't need that stupid rescue team! We are never like those stupid duechbags, we stay in line and we know our stuff!" Yeah yeah, why should those cautious hikers subsidize those reckless fools?

No problem, the coverage is voluntary. But one must make up his mind before entering the National Park. Either covered or not. One cannot get himself into deep sh*t and sign up for the insurance.

All is well for a while. Then some day, one guy got into big problem. Fell from a cliff and broke his leg. What is worse, he chose NOT to have the insurance. The rescue team did not help, and he died. The public was furious. How could this government agency stand by to watch a life disappear when it could deliver the help! When a life is at risk, the stupid government agency is still thinking about the stupid money! We need CHANGE!

Sure, you want change, and you are granted a change in a democratic government (though it is never guaranteed if it is for better or for worse). So the director of the rescue team was sacked and publicly humiliated. The new director was careful, and when this happened again, he sent his man.

Soon enough, fewer people want to pay the insurance fee. After all, they will still send out the men if I need help, won't they? As fewer people pay for it, to keep a balanced budget, the rescue team increased the price. Sure enough, even fewer people pay for it. After a couple of rounds, no one is paying for it. The rescue team is bankrupt.

So it is dissolved. The public was not happy, and sure enough the government bail it out. We gonna fund you.

And they live happily ever after. Except, many people never realize that now everyone is paying for the rescue team, whether you are a hiker or not. How so? It sounds condescending for me to even point out that the government money has to come somewhere. Yeah, the tax payers. No government generate its own money (though at least in China, many fail to understand this subtle point despite their high international rankings in math). Probably less well-off people in general do not go to that National Park that often. It is usually a vacation place for the more well-to-do. So we now have a more regressive tax.

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