Political Issues Have Gotten Too Complex

Many critical political issues are so complex that they are incomprehensible to even the best-educated voters. Moreover, well-educated voters also realize that, to influence lawmakers, they require so much effort that they disengage, rather than fighting. Leaving a state, or even causing a global company to reincorporate outside the United States is often easily the course of action that best meets the fiduciary goal of maximizing shareholder value, which is what Boards and CEOs of large public companies are required to do. Exceptionally wealthy people who have dual citizenship can also stop living in America completely, and move to the other country in which they are citizens.

Many people have complained about the power of the public sector unions. However, union leaders master complex issues, and are single-minded and organized, and have continuity, whereas their potential opponents, although intellectually high-powered, have little comparable ability to master those same issues.  The system works if both parties are equally informed and the government officials negotiating collective bargaining agreements are keenly attuned to the public interest and unions occupy that point at which the interests of their members and the public intersect.  However, when one side knows far more than the other and has a single-minded objective of gaining maximum advantage for its constituents, and the other is relatively uninformed, the result is not going to be optimal for the broad public interest.

On every issue, there are academic and independent think tanks that do a superb job analyzing issues, but a well-educated individual has to take the time to read and understand these analyses, and to figure out a way to make his or her voice heard. In the past, advocacy would be accomplished through the business community or through the party out of power. Those options are increasingly ineffective.

The business community in Connecticut and the party out of power used to be powerful voices in Hartford, but several things have happened in the last few decades that make very large businesses a non-factor in Hartford and the Republican Party less of a check-and-balance:

There is another big issue. The pathologies that make Connecticut an increasingly hostile place to do business are buried in hundreds, if not thousands, of non-transparent budget line items, regulations, collective bargaining agreement and civil service rules, and federal mandates that accompany the federal funding on which Connecticut is increasingly dependent.  There is no single individual or stakeholder who is at fault, and, indeed, looking for someone to blame is counterproductive.  If no one steps up and points out the problems with these many budget decisions, regulations, collective bargaining provisions, and civil service rules, then decisions will be made on a narrower and sub-optimal basis.

Let’s use the huge and unfunded pension liability as an example. Union negotiators understand pension accounting and cash flow exceptionally well; few others do in most states: 

A pension obligation is usually determined by the following factors:

 

In most public sector pension plans, the details matter greatly. For example,

The typical well-educated private sector CEO delegates much of this work to benefits specialists and outside actuaries. Pitney Bowes had some of these provisions in its pension plan until the Financial Accounting Standards Board required more precise pension accounting in the late 1980’s. Over time, companies abandoned these plans because they were too costly, but public sector unions used their superior knowledge, continuity, and focus to maximize every one of these rules for their members’ benefits.

The average American believes that government is rigged. More accurately, the issues are so complex that only those with the focus and knowledge of a special interest advocate will master them. This mastery should not be confined to labor unions or the specialists who negotiate with them.  

Pitney Bowes succeeded, in part, because it mastered the Postal Service’s complex rules for postage meters. In France, our leading competitor Neopost advocated for and mastered rules about postage meter licensing which gave it a huge advantage over us for decades. We saved money for ratepayers and taxpayers, but we succeeded because we mastered a voluminous set of complex rules and procedures, just as our competitor did in France.

Many well-educated Americans articulate the problems we face as a handful of big, easy-to-describe decisions, based on clear solutions. The mess in which we find ourselves comes from millions of small decisions, which cumulatively have big impacts and contain significant trade-offs.

If we learned that the Governor of Connecticut had written a single $20 billion check in 1997 to future State employees for their retirement benefits, we would probably have quickly responded to the decision and considered it fiscally irresponsible. However, that is effectively what happened in a collective bargaining negotiation that took place in that time, except that the $20 billion obligation resulted from the many small decisions and actions that agreement enabled.

When we look at almost any dissatisfying political outcome, there is usually an accumulation of multiple small decisions, as opposed to one big one.

The solution: we need to shrink the complexity and reach of government’s role in our daily lives. However, we need for well-educated people to re-engage with government, not disengage or focus on insulating themselves from the effect of bad government decisions.  If they fail to re-engage, they should stop complaining.