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When a politician enacts a policy that ignores some big tail risk, they won’t be in office when it eventually blows up. Who foots the bill in that case? Certain

When a politician enacts a policy that ignores some big tail risk, they won’t be in office when it eventually blows up. Who foots the bill in that case? Certainly the politician and maybe their party won’t suffer election losses from it.

jonplackett 6y ago
I think this is the reason politicians all around the world have been so ill-equipped to deal with Covid - they are used to their decisions having 10 / 20 year repercussions, by which time they're well out of the blame-zone.
- simonh 6y ago
  This is one reason why having well managed, capable institutions matters so much. Don't get me wrong, democracy is vital to ensure accountability, but it often worries me when elected politicians interfere in the management of specialist institutions unless they are clearly mismanaged. These things can take generations to develop but only a few months years to cripple.
- IgorPartola 6y ago
  The thing that I find surprising about the US government is that everything is a bill/law. Like instead of the transportation agency deciding to build a bridge, Congress has to pass a law to build a bridge. Does anyone know exactly why it’s set up this way?
  - jonsen 6y ago
    In my country I think it is so when the agency will need some kind of financial backing from the government.
  - tssva 6y ago
    The short answer is your idea of how things work in the US is incorrect. Building a bridge certainly doesn't require an act of Congress. Explaining transportation funding in the US is complicated because the responsibility for road building is mostly a state and local government issue and there is a variety of systems from state to state. Federal funding to help states usually involves two methods. The first is transportation block grants where the federal government gives states money to use towards transportation at their discretion within certain constraints. The other is funding for specific projects. This funding generally involves the state applying to the federal department of transportation for funds toward a specific project. The department of transportation provides these funds out of a pool of money allocated by Congress each year. Congress plays no formal role in how these funds are disbursed. The department of transportation decides using defined set of criteria. In the past Congress would sometimes earmark funds toward specific projects. This is rare these days as most earmarking of funds is against current congressional rules.
  - curryst 6y ago
    It's funding. If the transportation agency had money in their budget, they could just build it as far as I'm aware. Most transportation agencies don't have enough slush money to randomly build a bridge. Taxes are unpopular, people don't want to spend that much. It also means the cost is localized, so the tax increase would be higher since it's over fewer people. The way I rationalize it is that despite the fact that it might be a bridge in Nowhere, West Virginia, it will likely have wide-reaching impacts. More trucking routes helps almost everything. If I'm a visitor, I'm going to use the bridge, so I should pay some part of that.
croes 6y ago
You are ignoring the profit part. Public company = maybe profits, maybe losses for the taxpayer Private company = maybe losses, never the profits for the taxpayer. Is 2008 already forgotten?
- simonh 6y ago
  Private companies pay taxes, which profits other tax payers.
  - croes 6y ago
    "After two straight years of paying $0 in U.S. federal income tax, Amazon was on the hook for a $162 million bill in 2019" "$162 million is still just a fraction of the $13.9 billion in pre-tax income Amazon reported for 2019 — roughly 1.2%" How much is your income tax rate?
    - imtringued 6y ago
      Corporate income tax is too easy to game. I wish it was replaced by an enhanced income tax. Here is an article with a nice chart: https://www.taxpolicycenter.org/briefing-book/how-does-corporate-income-tax-work https://www.taxpolicycenter.org/briefing-book/how-does-corpo...
    - simonh 6y ago
      Does the fact that some people game their personal income tax make your income tax contributions worthless or irrelevant? I'm not clear what point you're making. Corporate income tax is the third highest source of tax revenue in the US, at $230bn in 2019. Shareholders also pay capital gains taxes, and companies pay other taxes as well or collect taxes for the government as well like sales taxes.
      - croes 6y ago
        State expenses have to be paid and if the wealthy don't pay, who is? I guess the one who can't afford an account in places like the Caimans. And of course Corporate income tax is a hight source of tax money. The larger the share in profits, the higher the share in tax revenue. The question is why isn't it the highest source of tax income?

jonplackett 6y ago

I think this is the reason politicians all around the world have been so ill-equipped to deal with Covid - they are used to their decisions having 10 / 20 year repercussions, by which time they're well out of the blame-zone.

simonh 6y ago
This is one reason why having well managed, capable institutions matters so much. Don't get me wrong, democracy is vital to ensure accountability, but it often worries me when elected politicians interfere in the management of specialist institutions unless they are clearly mismanaged. These things can take generations to develop but only a few months years to cripple.
IgorPartola 6y ago
The thing that I find surprising about the US government is that everything is a bill/law. Like instead of the transportation agency deciding to build a bridge, Congress has to pass a law to build a bridge. Does anyone know exactly why it’s set up this way?
- jonsen 6y ago
  In my country I think it is so when the agency will need some kind of financial backing from the government.
- tssva 6y ago
  The short answer is your idea of how things work in the US is incorrect. Building a bridge certainly doesn't require an act of Congress. Explaining transportation funding in the US is complicated because the responsibility for road building is mostly a state and local government issue and there is a variety of systems from state to state. Federal funding to help states usually involves two methods. The first is transportation block grants where the federal government gives states money to use towards transportation at their discretion within certain constraints. The other is funding for specific projects. This funding generally involves the state applying to the federal department of transportation for funds toward a specific project. The department of transportation provides these funds out of a pool of money allocated by Congress each year. Congress plays no formal role in how these funds are disbursed. The department of transportation decides using defined set of criteria. In the past Congress would sometimes earmark funds toward specific projects. This is rare these days as most earmarking of funds is against current congressional rules.
- curryst 6y ago
  It's funding. If the transportation agency had money in their budget, they could just build it as far as I'm aware. Most transportation agencies don't have enough slush money to randomly build a bridge. Taxes are unpopular, people don't want to spend that much. It also means the cost is localized, so the tax increase would be higher since it's over fewer people. The way I rationalize it is that despite the fact that it might be a bridge in Nowhere, West Virginia, it will likely have wide-reaching impacts. More trucking routes helps almost everything. If I'm a visitor, I'm going to use the bridge, so I should pay some part of that.

croes 6y ago

You are ignoring the profit part. Public company = maybe profits, maybe losses for the taxpayer Private company = maybe losses, never the profits for the taxpayer. Is 2008 already forgotten?

simonh 6y ago
Private companies pay taxes, which profits other tax payers.
- croes 6y ago
  "After two straight years of paying $0 in U.S. federal income tax, Amazon was on the hook for a $162 million bill in 2019" "$162 million is still just a fraction of the $13.9 billion in pre-tax income Amazon reported for 2019 — roughly 1.2%" How much is your income tax rate?
  - imtringued 6y ago
    Corporate income tax is too easy to game. I wish it was replaced by an enhanced income tax. Here is an article with a nice chart: https://www.taxpolicycenter.org/briefing-book/how-does-corporate-income-tax-work https://www.taxpolicycenter.org/briefing-book/how-does-corpo...
  - simonh 6y ago
    Does the fact that some people game their personal income tax make your income tax contributions worthless or irrelevant? I'm not clear what point you're making. Corporate income tax is the third highest source of tax revenue in the US, at $230bn in 2019. Shareholders also pay capital gains taxes, and companies pay other taxes as well or collect taxes for the government as well like sales taxes.
    - croes 6y ago
      State expenses have to be paid and if the wealthy don't pay, who is? I guess the one who can't afford an account in places like the Caimans. And of course Corporate income tax is a hight source of tax money. The larger the share in profits, the higher the share in tax revenue. The question is why isn't it the highest source of tax income?