Tuesday, September 8, 2009

Hurting the few to help the many

Today's Times reports on eminent domain and the 2nd Ave Subway in Manhattan, which will displace renters and maybe some property owners (they weren't mentioned in the article). The article illustrates a not-uncommon theme in public policy: change that is expected to be beneficial to many may be very costly to a few.

I'm thinking of trade policy, Social Security reform, and so on, but the best example is probably trade or industrial policy. Workers (and capital) displaced by trade suffer greatly, while consumers benefit.

Another parallel is that as an outside observer it's often hard to sympathize with the afflicted. The renting deals cited in the article, the most egregious being $1,120 a month for 5 rooms, sound like a real public policy boondoggle. A similar feeling was pervasive when the bailouts of Detroit automakers (and their unionized workers) were being discussed in December 2008. The public was stunned by the sweetheart deals the unions had originally had with the automakers.