Stage One Thinking

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The black American economist, Thomas Sowell, called the inability to see where policies are likely to take you ‘Stage One Thinking’. You think so far and no farther.

An instance of Stage One Thinking is the way we try to combat inequality by taking money from people who have made good decisions in their lives and giving it to people who have made bad decisions in theirs so as to make things ‘equal’. Other people witness this and conclude that there is absolutely no penalty to be paid for making bad decisions. After all, why bother making an effort to educate yourself when you can mess around all day in class? Why choose a reliable marriage partner over an exciting lover who will leave you when he gets bored? The government will underwrite all your bad decisions and instead of you having to face the consequences of your bad decisions, other people will pay for both you and your unruly offspring.

In this way the irresponsible thrive, the welfare system gets bigger, responsible people are burdened with ever higher taxes and start to resent the fact that they are working while others sit around on their arses all day. In such a society some people who perhaps would have made more of an effort decide it is just not worth it. A minimum wage is introduced to try to persuade the lazy ones that it is indeed worth their time and energy to work and companies decide that someone they might have employed at a lower wage is not worth employing at the raised minimum wage. Unemployment rises, companies stop expanding and the economy stalls.

Workers end up financing both the lazy and the army of public sector workers that administer to them. Neither the unemployed nor those who work in social services has any interest in changing the situation since this would involve the former getting off their backsides and the latter losing their cushy government jobs with a terrific pension and other perks. Both groups therefore always vote for the party that has no intention of changing this awful state of affairs, namely the Labour party in Britain and the Democrats in America.

In this way the economy worsens until either a strong politician comes along to sweep away the whole rotten system, or the country slowly collapses due to a reluctance to bring in austerity measures. Occasionally a conservative party comes to power with the intention of implementing these measures but they are so unpopular among the lazy, the public sector workers and the social justice warriors that the protests soon force the government to drop the proposed cuts. It seems that some people believe it’s right for the government to force citizen A to transfer some of his wealth to citizen B’s bank account.

Anyway, that is an example of Stage One thinking; the consequences of an apparently benevolent action goes predictably wrong in a later stage.

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