the (negative) sum of the parts

I like my accountant.  He’s a really nice guy and does a really good job – for which I pay him a fair fee.  But the sad fact is he really doesn’t do anything that contributes, in a meaningful way, to anything important.  He does my taxes.  That’s not the most complicated thing in the world – and, yeah, I can buy some inexpensive software that will probably do much the same thing for less than I pay a CPA.  The issue isn’t the cost.  It’s that there is a whole industry (tax preparation) that is based on doing things that, if you think about their inherent value, are pretty meaningless.

In point of fact much of our economy is based on people doing things that add no value – or very little – to the overall quality of the products and services we need and use in our daily lives.  Car dealers could be substantially replaced by on-line, manufacturer-direct, ordering systems.  Insurance agents do very little beyond taking information you provide and submitting it to underwriters.  They could do more – like help their clients minimize risk – but I have never had an agent propose anything like that to me.

Much of the debate about health care isn’t really about health or care.  It’s about preserving jobs and revenues attached to a model that, rationally, makes little sense.  Health insurance companies don’t add anything of value in terms of health.  They don’t even mitigate costs because of the (similarly irrational) fee-for-service model employed by the health delivery system.  At the end of the day, they are a net negative.

You can find other disconnected dots in other industries.  The ski industry is bemoaning the effects of climate change (one recent report says that Aspen will have the same climate in near future as Amarillo enjoys today).  It is also bemoaning the fact that many ski resorts are located in states in which the elected leaders have the most fossilized environmental outlook.  But the industry fails to understand that, regardless of how green it wants to make itself and its surroundings, the act of getting to and from the slopes puts it on the list of dumb things to promote if you want to reduce GHGs.

Don’t get me wrong.  I like to ski.  But it’ll be a cold day in Amarillo before I buy into the notion that flying from Newark to Steamboat and back is, somehow, part of the solution to Climate Extinction.

To bring this full circle, Paul Krugman recently published a really dumb idea in the New York Times.  Using tax policy to adjust behavior just gives the lawyers and accountants who, nice guys though they may be, another opportunity to contribute nothing of value to the world.  There is no reason to have a complicated tax policy that spawns and supports an entire, pointless, industry.  In fact, what Krugman is proposing is, essentially, a cop-out.  If financial speculation is the problem he is making it out to be, a better policy would be to increase the risk penalties to speculators.  Make them insure their bets, top to bottom, personally – without any backstop from government programs or institutions.

Krugman wants to hand out clean syringes to the addicts.  That won’t solve the problem – and it’s apt to have other unintended consequences.