Why does government policy so frequently run contrary to the universally agreed upon principals in my Introduction to Macroeconomics textbook from college?
The main points that come to mind are that
- incentives govern behavior
- when something costs more you get less of it
- every policy has unseen 2nd order side effects.
It seems like the majority of government policies only consider the 1st order effects.
I’m pretty sure that if only economists could run for congress and the president over the last 200 years, that through the power of compound interest on more efficient societal resource allocation each year, we’d be living in a utopia with flying cars by now.
Did you have to take macroeconomics in college? If so, do you also see tons of contractions to it in public policy? Please leave a comment!