We tend not to believe in grand theories

And yet there’s the beginnings of an interesting idea here:

I can’t help thinking that we have undergone a reverse transformation in cultural attitudes over the past generation or two, and the past couple of decades in particular. We live in a society where the political virtues of long-term planning and strategic patience have been replaced by an obsession with the here and now.

We tend not to think that the long term is a political virtue. We think that’s a failure in fact. For:

When the lights go off this winter, it will finally dawn on everybody that neglecting our energy requirements for the best part of three decades was probably a tad unwise, all things considered. You can put it down to the short-termism of our political system, or just to immense and consuming stupidity on the part of successive governments. Either way, because the need for a few dozen nuke plants did not seem imminently pressing in 2001, say, nobody was minded to order them to be built.

We could call into evidence Nick Clegg’s comment in 2010 that there’s no point in new nuclear as it won’t come online until 2021, 2022 or so.

Or, we could look at water systems, Jackson Mississippi:

“The nature of local politics is that city governments will tend to neglect utilities until they break because they’re literally buried,” he said. “One of the things that is a perennial challenge for governments that operate water systems is that the quality of the water system is very hard for people to observe. But the price is very easy for them to observe.”

We could even connect that to why the British water systems were taken out of direct government control. Because while government could, in theory, allocate the societally optimal amount of capital to their maintenance and upgrade, they didn’t. There was a vast backlog of repair to be done and looking forward vast bills for the desired rising standards. Government simply wouldn’t allocate that money - paying off the diversity advisors was always more important.

Government simply isn’t good at long term decisions because politics gets in the way. The only proof of that contention we need is that capital investment in the water system rose after privatisation. If government had previously been allocating the optimal amount then that could not have been the result now, could it?

We are willing to listen to the Stern analysis of discount rates. Market interest rates leading to effects many decades out carrying near to no weight in current decision making. But the solution that therefore government should be making those long term decisions seems suspect to us. For as the evidence before us insists, the government - driven as it is by politics - decision making horizon is even shorter.

Don’t forget, the Coalition seemed to think that a decade was beyond its planning horizon, as per N. Clegg. While the longest planning horizons on the planet seem to be in the large mining and fossil fuel companies - they’re regularly looking at projects with 30 and 50 year lifespans.

So, why has society become more short termist, why do we have supposedly strategic decisions made on those short term grounds? Because the political horizon is always the next election, even if that. So, the more that long term, that planning of the future, is devolved to politics the shorter term the horizons becomes.

As we say we’re usually not entirely convinced by grand theories but this one does seem to explain the world around us and also accord with Occam’s Shaving Kit as a method of analysis. Politicians are short term beings therefore decisions made by politics will be short term.

That also then provides our policy solution. Stop the government from making the plans and return them to those entities with the longest planning horizons of all human institutions. The players in the markets. Something which has one grand virtue. If market players get it wrong then they lose all their money - at least eventually. Until we institute a system of stealing back political pensions we’re not going to gain that similar long term feedback mechanism, are we?