Lack of Accountability Hurts the Economy

After writing my last post, I thought to myself “no wonder nobody trusts the government anymore”. But that has real world consequences.

The lack of accountability makes average folks lose trust in the system. The mechanism for this is pretty clear. A CEO makes a bad decision and runs his company into the ground, and as a result he gets a multi-million dollar bonus. The guys making $40,000 a year, who did not make a bad decision, get laid off. They do everything right, and are rewarded with a potentially long, not necesarily successful job search. The CEO does everything wrong and makes more money than our recently unemployed friend will ever see. And so these folks lose faith in authority. They held up their end and got screwed. And that lack of faith spills over into government.

Or it can be more direct. They get laid off while their bosses get government bailouts. But where’s my bailout? I think I’ve seen that on some protest signs.

And when no one in power is held accountable for causing (actually or perceivedly) suffering among those without power, everyone loses faith. The system just doesn’t work for regular folks, as the experiences of the past decade show. The extent to which this is true or justified or reasonable is debatable, but my point is that people lose faith. And thus they become more receptive to anti-government arguments. We should have less regulations! Government employees are the problem! They’re skeptical, and rightly so, and so they want to “shrink government”, because it didn’t work for them. That’s fine, but while “shrink government” may be great rhetoric what it typically means in terms of policy is austerity. So that’s what we get, when we should have stimulus.

Then the suffering continues while the economy remains stagnant, with no policy help in sight. The cycle continues.

(And to pre-empt the comments section, no I am not arguing that if we just all trust the government then everything will be ok. Rather, my point is that we can’t be blind to policy realities and our own best interests)

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