Incentives for Politicians, Incentives for the Poor
Since the Iraq Study Group released its report on December 6, 2006, many of its recommendations have come under fire from the Bush Administration. Prominently among the attacked recommendations, the report recommended revoking the blank check that’s been extended to Iraqi Prime Minister Nouri al-Maliki and replacing it with promises that continuing support will be contingent on measurable progress. Put differently, the Iraq Study Group (led by James Baker and Lee Hamilton) advocated creating incentives for the Iraqi political leadership to solve the problems they face. These incentives have been decried by the Bush Administration.
Economists and conservatives generally believe that people respond to incentives. Following this line in many other cases, the Bush Administration has advocated sharp reductions in social welfare programs and spending. For example, in simplified form, the main argument for Social Security privatization is that private accounts would increase incentives for private saving. Opposition to welfare also emerged from the logic that entitling the poor to perpetual government support problematically removed incentives for them to figure out how to make it on their own.
As I see it, we have here a question for economists and a potential opportunity for Democrats: Is there good reason to oppose tough incentives for Iraqi politcians while advocating incentives for America’s poor, or is the Bush Administration being hypocritical?
