Economist Brian Easton says it is too easy to react to a problem rather than to tackle it thoughtfully

This is a re-post of an article originally published on pundit.co.nz. It is here with permission.

It’s Friday night. You plan to have a couple of drinks with friends. Saturday morning you can’t remember how many you had – was it seven? – but you wish you hadn’t. What you are showing in economic terms is ‘time inconsistency’ in your decision making. Each step seems rational and yet, with hindsight, you made decisions which don’t seem rational in total. (And yes, you will do it again the next Friday.)

What appears to be happening is that there seems to be two parts of the brain making your decisions – remember Daniel Kahneman’s Thinking Fast, Thinking Slow? – and they make decisions through time quite differently. The ‘thinking-fast’ bit reacts in the very short term as when you chose to have that extra drink; the ‘thinking-slow’ bit is more concerned with the long-term consequences – like the possibility of a hangover the following morning. Too often short-term thinking dominates. It appears rampant among adolescents; some adults seem never to grow out of it.

I am not an expert on a psychological research so I offer this explanation of the source of time-inconsistent decision-making very tentatively. The point for this column is that sometimes we seem to operate with a short horizon when a modicum of reflection or hindsight suggests a longer-term perspective might be more sensible. We grab the cookie now rather than wait to get two cookies in the near future.

The same seems to apply for society as a whole. Time and time again we see the focus on the short term without reflecting on the long-term context.

Oh, you say, ‘what about greenhouse emissions? We are thinking long term there, aren’t we?’ Are you sure? It took decades to take action after we were alerted to global warming and climate change. Even today, that action is short term; we focus on trees as carbon sinks ignoring that they cannot be a long-term solution because eventually that has them covering the entire land. Meanwhile, we are doing little about the emissions from transport, which build up in the warming cloud for a hundred and more years.

Some of you will say ‘well, I am a greenie; I always think and vote long term’. Are you sure? The Green Party advocates rent controls. They receive much criticism from economists. The issue is that rent controls work in the short term; in the long term they cause havoc to the rental housing market (economists more politely say they ‘distort’ the market). In this case the Green Party are thinking fast; economists are thinking slow.

(In my view, rent controls may make sense to deal with a short-term shock but they make no sense for long-term management. A big issue is when and how to unwind them. Short-term thinkers – and adolescents – rarely pay attention to exit strategies.)

It is not only on economic issues that we think fast. The national reaction to a spate of crimes is to punish the criminals with little attention as to why the crimes are happening. If there is any account of the reason it amounts to ‘it’s the government’s fault’; a strange argument given that similar outbreaks are happening overseas under different sorts of governments.

I was moved by Tony Blair’s ‘tough on crime; tough on the causes of crime’. I have no background in criminology, so I must be cautious. But I don’t see any serious national discussion on the causes of crime. I was impressed by a paper by retired Government Statistician Len Cook, which showed dramatic reductions in incarceration rates by more recent Māori cohorts. Because older generations who have been to prison, tend to be repeat offenders – are our prisons training grounds for criminality? – the fall-off is not yet so evident in the aggregate prison population. (Cook’s paper Insights from Statistical Trends and Patterns Relating to Youth Justice:1911-2021 is here. Notice that he explores over a century of data.)

Before you jump to the conclusion, dear fast thinker, that the Māori decline is the result of changes in sentencing practice, observe that the teenage Māori incarceration rate has fallen from eight times the non-Māori rate for those born between 1946 to 1970 to thrice for those born between 2001-2005, which suggests that there is a social structural change going on among Māori.

I have very tentatively suggested that the first generation of Māori who migrated to the cities were unprepared for urban life and experienced severe social disruption but that as they settled in, later generations have become better adapted to living in cities – including by evolving specific Māori institutions. (Here.)

What is sad is that we don’t seem to have sufficient anthropologists, criminologists and sociologists to lay the foundations for a think-slow, analytic, public debate about being tough on the causes of crime. So we think fast and react.

Without those foundations, matters of major public concern get reduced to trivia. There is a proposal for a $13.7b pumped hydro-scheme at Lake Onslow. It is essentially a way of storing electricity in good times for use when the standard production is low – a kind of national battery. I have worked in the economics of energy for many decades and would love to understand what is going on – even write a column about it. But there are so many related issues – such as the rise of intermittent wind and solar provision, local battery storage, the role (or not) of the aluminium smelter, better coordination of the existing system to use existing hydro-storage (which may involve renationalisation of some kind), reducing the use of coal, climate change ... – that we cannot have a serious discussion without a system model. We are flying blind, yet again.

You may say, aren’t you proposing a covert ‘plan’, Brian? Depends what you mean by ‘planning’. I am reminded of the chairman of the Beattie Commission on science policy in the 1980s asking a Treasury official about a science plan. He stuttered, and stumbled and mumbled and I realised that p*** was a four-letter word that you did not use in polite Treasury circles at that time. The role of p***ing in public policy had collapsed, and we were left with short-term thinking and the faith that the market will provide.

You see the same problem elsewhere. For instance, we gave up thinking systematically – what I mean by ‘planning’ – about the future labour force at about the same time. Now we are in labour force muddles all over the place – especially in the health sector. I am comfortable with the government’s announcement of increasing the number of places in medical schools but, for heaven’s sake, it takes up to 13 years to get a fully trained doctor. We should have been thinking about the issue in 2010.

I am not arguing that we should have another Planning Council or Commission for the Future which Muldoon’s government established in the 1970s. Neither was particularly successful, in part because governments have a propensity to stack boards with the politically correct and politicians’ pets rather than the competent and thoughtful. Instead, we need a change in the nation’s culture to move away from thinking fast to thinking slow. I doubt you will see any such move in the run up to the election. It will be more like Friday night’s drinkies.

*Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian. He was the Listener economic columnist from 1978 to 2014. This is a re-post of an article originally published on pundit.co.nz. It is here with permission.