Why Does Government Encourage Some Risks and Discourage Others?
You know the risks that are discouraged: smoking, eating trans fats, fast driving, etc. Tyler Cowen points out these nudges in the direction of greater risk-taking:
- QEII and activist monetary policy more generally; investment tax credits and upbeat Presidential speeches.
- Military recruitment campaigns and ads.
- Social norms encouraging people to pursue the love of their life, propose marriage, have children, and so on.
Entire post is worth reading.
Clearly, the government is schizophrenic.
The answer, in my opinion, has nothing to do with risk-seeking. This may be a little paranoid, but risk-seeking distracts from the bigger picture: control. Having a big mortgage forces you to go to work every day. The government encourages behavior that distracts the public from all of the other stuff that is going on. That may be a bit of an exaggeration, but I think it is a better explanation than random risk-approval by government.
I think Joe is right. They’re schizo.
Bureaucrats like to meddle. Whether they are encouraging risk or discouraging it, they are not happy unless they are trying to push you around and change whatever it is you are doing.
A confounding factor is that there are numerous constituencies for risk aversion, while there are also constituencies for risk-taking. Public health advocates want to discourage unhealthy behavior. Yet, advocates for the poor want the government to provide free food to the poor even though obesity is a bigger problem among the poor that hunger. This is a paradox of competing advocacies.