From my friend David Hirshleifer at Psychology Today
Our cognitive limitations often debase political debate, making politics a battle for voters' attention. Hence, the power of soundbites and slogans, such as "Cash for clunkers." The way to make a policy attractive is to hide the damage it does, and make its alleged benefits salient. This point was made vividly by Frédéric Bastiat in his 1848 essay "What is seen and what is not seen." He points out, for example, that even a nutty policy like going from house to house breaking windows can seem attractive as a way of providing employment to glaziers. What is not seen is that the resources people spend getting their windows repaired might otherwise have been devoted, for example, to buying shoes. So even in the short run breaking windows is not a stimulus, because it puts the cobbler out of work. And in the long run, it reduces the total wealth of society. . . .
Labels: cashforclunkers, stimulus