Monday, May 9, 2011

more volatility: pain in transition

I have a theory about the social order, and the generally glacial pace of change in societal institutions that need change.  I would posit that most people in the US believe the public education system needs reworking, and that the same people would agree that health care / insurance is broken in the current model; it is not a stretch to claim that many people find the tax regime in need of accelerated evolution.

The problem with changing any of these macro level societal constructions is not necessarily with the alternative version (let's call it the "end point" of the change) but in the transition period.  Take the tax regime change as an example.

Tax assessment and collection policies affect every last bit of the economy, in varying degrees of explicit visibility.  A wholesale change of those policies would have severe immediate and long term effects, some of which would necessarily be unexpected.  But consider a circumstance where sufficient political will and public support rallied behind an idea to change the US tax regime from the current multi-tiered, highly stratified and nuanced set of rules to a fixed percentage flat tax on net worth accretion (I'm not advocating for this system, just making an example.)

I have come to believe that one huge obstacle to making this sort of change, even as an experiment, is that we cannot stomach the volatility, or the pain in the transition from the status quo to the new end point.  It's a fear of the unknown, on a societal scale.  If the tax example is too impersonal in its effects to make a good example, consider the debate over reworking social security.

The upshot of that argument is that the economics of the current system are unsustainable and that if some of the mechanics are not tweaked, the system will go "bankrupt" in the near future.  Opponents to change tend to argue that changes in medias res are not fair to those who have been paying into the system under a given set of assumptions; further arguments might suggest that we cannot know the ultimate effects of changes for those most in need of the safety net provided by social security.  The solution to the problem at hand may be clear, but we are hemmed in by fear of the volatility in the transition.

I'm still working through these thoughts and trying to form a cogent and coherent narrative about humans and volatility.

No comments:

Post a Comment