Make decisions with an eye on the future, not just what is good for today
In the department of
economy, an act, a habit, an institution, a law, gives birth not only to an
effect, but to a series of effects. Of these effects, the first only is
immediate; it manifests itself simultaneously with its cause — it is seen. The
others unfold in succession — they are not seen: it is well for us, if they are
foreseen. Between a good and a bad economist this constitutes the whole
difference — the one takes account of the visible effect; the other takes
account both of the effects which are seen, and also of those which it is
necessary to foresee. Now this difference is enormous, for it almost always
happens that when the immediate consequence is favourable, the ultimate
consequences are fatal, and the converse. Hence it follows that the bad economist
pursues a small present good, which will be followed by a great evil to come,
while the true economist pursues a great good to come, — at the risk of a small
present evil.
Frédéric Bastiat
In Portugal the government decided to impose a VAT tax of 23%. The receipts went up. however Spain has borders with Portugal and their VAT is 21% and for electricity is 10% vs 23% in Portugal. Now everybody near the border goes to Spain to buy. This is the unseen result of the policy.
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