Four Year From Now Plans By Bryan Caplan

In the thirties, governments had Four Year Plans. Today, they have Four Year from Now Plans – big policies that basically don’t kick in until the next election. Waxman-Markey lets emissions grow normally until 2012. When I criticized the House’s health care plan, several defenders quickly pointed out that its payroll tax doesn’t kick in until 2013.

Why would politicians push Four Year From Now Plans, instead of “immediate action”? At first glance, retrospective voting provides a good explanation. In the retrospective voter model, citizens vote on the basis of recent economic performance. In this framework, it seems natural for politicians to delay costs until the next election.

But that’s not quite right. At least in the standard version of retrospective voting, benefits and costs are symmetric. So politicians who delay get neither credit nor blame for their actions. This might make sense if a politician favors a policy that costs more than its worth – and is willing to spend his valuable time pushing legislation with no electoral benefit.

Maybe that’s what’s going on, but I think I’ve got a better story: Voters give politicians immediate credit for “doing something” about a problem, but only get upset about negative side effects when they actually happen. (Added bonus: The longer you wait, the less likely voters are to realize that “doing something” had negative side effects). In this setting, politicians want to delay whether or not a policy costs more than its worth. It’s a nice way to get the political gravy without the political grief – or at least delay the grief until it’s too late for electoral punishment.

You might call this a “voter ignorance” story, but as usual, I call it full-blown irrationality. If you’re going to do retrospective voting, it’s crazy to support politicians who willfully increase the lag between action and consequence. When your agent blatantly tries to game your rules to win your favor, the rational response is to punish him for his opportunism, not reward him for his “statesmanship.”