Short-Term Palliatives And The 5 Terrible Tendencies Of Government

Excerpted from Seth Klarman's Baupost 2012 Letter to investors, Absent an immediate crisis - and sometimes in the face of one - governments will often struggle to meet great challenges. Michael Boskin, former chairman of George H. W. Bush’s Council of Economic Advisors, recently described five tendencies of governments that should sound familiar. They include: (1) Waiting until forced to act, often too late and with great harm; (2) Systematically ignoring long-run costs to provide short-term benefits; (3) Trying unsuccessfully to circumvent the laws of economics; (4) Ignoring the laws of arithmetic, selectively counting some effects while excluding others; and (5) Enacting programs or spending money in a crisis or boom where especially large unintended consequences become apparent only when the economy returns to normal. This is a truly damning indictment of government arrogance...