Knowledge And Decisions

Time is especially important in economic decisions involving “fixed costs” — that is, costs that do not vary in the short run. Bridges, bus lines, and hospitals, for example, have large fixed costs for their basic structure and equipment relative to the other kinds of costs — such as labor costs — which vary with the use of the facility or service. Municipal bus lines can continue to operate without adding to taxpayer’s burdens, as long as the fares cover the short run costs, such as the cost of gasoline and the bus drivers’ pay. For the longer run, however, the fares would also need to cover the fixed costs of replacing the buses as they wear out. At a given point in time, the need to raise bus fares to cover both kinds of costs can be politically denied without fear of feedback within the elected officials’ time horizon. As long as the existing fares continue to cover the cost of gasoline, bus drivers’ salaries, and similar short run costs, fare increases can be postponed without any immediate reduction in the quantity or quality of bus service or any increase in taxes — regardless of how inadequate the fare may be for replacing the buses themselves when they wear out. That is a problem for future bus riders, future taxpayers, and future administrations. For the present, there are obvious political gains to be made from a humane stance of protecting the public (or the poor) from higher fares. When the buses age and begin breaking down, leading to more overcrowding in the remaining buses, longer waits between buses, and less comfortable buses, this affects not only the transportation system but the whole social ecology of the city. Those who find the municipal transit system intolerable have incentives to use their own automobiles and/or move out to the suburbs. Seldom will the voters who elected a champion of the bus riders’ cause in a given year connect that event with an accelerating exit to the suburbs and a shrinking municipal tax base a decade later.

INHERENT CONTINUITY AND ARBITRARY DISCRETENESS

Time increases the cost of political knowledge in many other ways. The inherent continuity of time must be arbitrarily broken up into discrete units for political decision making and voter assessment purposes. This means that what happens within those arbitrarily discrete units of time assumes an importance in a given system of incentives and constraints out of all proportion to its importance in the longer, continuous stream of time. Other, nonpolitical institutions suffer similar problems, but often also contain mechanisms for bringing the weight of the excluded future to bear during the arbitrarily selected current period. Corporate stockholders, for example, not only consider the annual dividend but the current price of the stock itself, which reflects future prospects of the company as evaluated in the market. A mother not only considers the current fact that a piece of candy will stop her child’s crying; because she is going to be the child’s mother for the indefinite future (i.e., socially and emotionally responsible for the same unit over time), she also has to consider the longer run effect of giving him candy on his nutritional, dental, and psychological future.