Firms are actually better than governments at internalizing costs across time. Asset values incorporate the potential future flows. For example, consider a retiring farmer. You might think that they have an incentive to run the soil dry in their last season since they won’t be using it in the future, but this would hurt the sale value of the farm. An elected representative who’s term limit is coming up wouldn’t have the same incentives.
Of course, firms incentives are very misaligned in important ways. The question is: Can we rely on government to improve these incentives.
Maxwell Tabarrok
Karma: 678
Tax Cuts and Innovation
Low Fertility is a Degrowth Paradise
Is There Really a Child Penalty in the Long Run?
Against Student Debt Cancellation From All Sides of the Political Compass
Two Vernor Vinge Book Reviews
Daniel and I continue the comment thread here
https://open.substack.com/pub/maximumprogress/p/ai-regulation-is-unsafe?r=awlwu&utm_campaign=comment-list-share-cta&utm_medium=web&comments=true&commentId=54561569
That’s not a part of any of the plans to cancel student debt that have been implemented or are being considered. That would definitely change a lot of the arguments but I don’t think it would make debt cancellation look like a much better policy, though the reasons it was bad would be different.