Saturday, March 14, 2009

Unintended consequences

I have been thinking about unintended consequences recently. First came up with this government stimulus plan, which includes a lot of road work. Roads generally have finite lives (let's say 20 years, for easy math), at which time major repair work would be needed. I wonder if 20 years from now there will all of a sudden be a lot of roads needing repairs, which undoubtedly we wouldn't have budgeted for?

This also came to another one of Obama's goal - universal health care. I seem to have many friends who would love to retire, have saved a bit of money and all, but aren't retired. When asked, the limiting factor appears to be there need for health coverage. So, if Obama does get universal health care of some sort in place, will we have a sudden surge of folks in their 40s and 50s retiring? Will there be so many that it would impact the economic output of the economy?



At 3:20 PM, Blogger The Sea Wind said...

Hello Peter,

I wonder if those unintended consequences that you mentioned are truly unplanned? First of all, it's surprised me that the government would ignore the maintenance cost when budgeting finance for building new infrastructure (roads in this case.) I'm not entirely familiar with local government budget, but I assume that some parts of the budget for a fiscal year must be allocated toward facility maintenance. And as far as we concern, a calculated cost is the first step toward funding.

In regards to universal health care, normal retirement age for Social Security has historically been age 65 to receive unreduced benefits, but it is gradually increasing to age 67. So, we are probably talking about a smaller population here who could manage to retire quite early on without needing Social Security benefits. Even so, I doubt if that group of population is being ignored in Obama’s calculation for universal healthcare system. Besides, do you really think people will retire in their 50s in a sense that they would stop being productive workers? I suspect if either you or I would stop working one way or the other in our 50s. I won't go further into the discussion of our Social Security system though.

On the other hand, I could see the benefits of both items. Improving infrastructure is hugely important given our growing population and the current speed of urbanization. In addition, our health care system has been creating a great deal of social cost where the insurance industry becomes the advantageous third party between health care providers and receivers. I also think that in the long run universal health care will further improve consumption and stimulate investment as less money is saved to pay for the tremendous health care cost as it is at the moment.

I could be wrong all along. Take it as I may, this is my current view.




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