Latest news with #Goodhart'sLaw
Mint
07-07-2025
- Business
- Mint
Italys Bridge to Nowhere Shows Defense-Boom Risks
(Bloomberg Opinion) -- The defense boom in Europe is as close to a tech-style gold rush as the Old Continent can offer. Armaments stocks are outperforming Nvidia Corp., and defense-themed funds are amassing billions in anticipation of rising military spending in a more dangerous world. NATO allies have agreed to more than double defense spending goals to 5% of gross domestic product in the coming years. But with so many countries already struggling to stump up the billions needed to keep up in artificial intelligence, reindustrialization and the energy transition, where's the cash going to come from? With the notable exception of Germany, many European countries are already near the limit of investor and voter patience with borrowing and taxation. And good luck shrinking the welfare state. Italy, a serial defense under-spender with the second-highest debt ratio in the euro area, has one answer: Stretch the definition of 'defense' to breaking point. Officials are reportedly looking to reclassify a proposed €13.5 billion ($15.8 billion) bridge linking Sicily to the mainland as a defense investment. You almost have to applaud the chutzpah. This is a bridge that has been a field of political dreams for decades, if not centuries, and attracted plenty of criticism for its cost, lack of utility and riskiness. To say that this is about rearmament is tantamount to defense-washing a pet political project — one beloved by populist Matteo Salvini, who, ironically, is one of the most vocal critics of the North Atlantic Treaty Organization. One MEP from the opposition Five Star Movement called the plan a 'mockery' of military spending. Of course, this isn't to say that only things that go bang should count as defense. NATO's 5% targets include 1.5% for infrastructure and interoperability. We live in a world of deadly drones, AI and cyberattacks — which require tools other than bullets. And governments want to make sure wide swathes of society benefit from military-spending spillovers, which means casting nets wider than usual. 'Defense is the new Keynesianism,' says Richard Aboulafia, managing director of consultancy AeroDynamic Advisory. Still, Italy's plan should set alarm bells ringing. Slapping the label 'defense' on national boondoggles would further exacerbate differences between European countries at a time when defense is already too fragmented. It would make Europe weaker, not stronger. It would also prove Goodhart's Law: When a number becomes a target, it ceases to be a useful measure. NATO's previous 2% targets already included some eyebrow-raising outlays on railways and firefighters, according to Der Spiegel. If this is how the 5% era is set to go, credibility will wither. Clearer definitions, better coordination and ultimately more leadership are needed to ensure the blurred lines between military and civil infrastructure don't vanish completely. The EUISS think tank recommends focusing on disruptive research and innovation via a European version of Darpa, the US Defense Department's advanced research projects agency, more measures to attract top scientific talent and putting more European funding to work. And the Bertelsmann Stiftung think tank also says that Germany's unique position as top spender means it should also step up when it comes to the framework for defense-related infrastructure. Nobody wants yet more box-ticking that stops money getting out the door, but voters deserve better than a defense twist on greenwashing. This isn't about preventing the real economy from getting some of the rewards of a defense boom, but ensuring those spillovers actually happen. Italy has other more positive examples of supporting a more defense-oriented Europe, such as Fincantieri SpA's plan to refocus some shipyards on just making warships. The defense boom is worth celebrating, but a bridge to nowhere isn't a good outcome. More From Bloomberg Opinion: This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Lionel Laurent is a Bloomberg Opinion columnist writing about the future of money and the future of Europe. Previously, he was a reporter for Reuters and Forbes. More stories like this are available on
Yahoo
22-04-2025
- Business
- Yahoo
Mike Braun's property tax cut lost the plot
As a surprisingly semi-regular contributor to IndyStar Opinion, I feel compelled to offer some thoughts about this legislative session's marquee debate over property taxes. It's a little tricky, though, because of how we deeply misunderstand the nature of time. We judge our personal lives by minutes and days, when we'd be better off thinking in weeks and months. We assess career success in weeks and months, when we should probably be thinking in years. When it comes to public policy, we try to evaluate immediately, even though the real-world impacts often take decades to fully reveal themselves. So, while I do have thoughts and opinions on this Indiana General Assembly session, I find myself in more of a reflective mood. Rather than diving deep into the policy weeds, I want to ask a bigger question that underlies the entire debate, and has shaped Indiana politics for the last two decades: What is the goal of state government? For my money, one of the most fair and clear-eyed observers of the Elon Musk-led Department of Government Efficiency DOGE experiment is Santi Ruiz. Ruiz, a right/libertarian-leaning commentator, was initially hopeful about the idea of a Musk/Vivek Ramaswamy-led federal efficiency commission. His March '50 Thoughts on DOGE' Substack post remains the most balanced and insightful thing I've read on the topic. Briggs: Mike Braun got suckered into a tax-cut promise he couldn't keep The short version: Ruiz sees flashes of good, but ultimately argues that the chaos of the execution has undermined the project's stated purpose. On the Ezra Klein Show, Ruiz diagnosed a core flaw in the effort: Goodhart's Law, which is the idea that 'when a measure becomes a target, it ceases to be a good measure.' In other words, once you fixate on the number, you lose sight of the reality it's supposed to represent. In DOGE's case, Ruiz argues, cutting government headcount and contracts, rather than improving government efficiency, became the metric of success. Instead of making the federal government more efficient, DOGE may be making things worse, because it has lost sight of the goal. In my view, this is precisely what happened with property tax reform in Indiana. Cutting property taxes was Gov. Mike Braun's top priority going into session, and from the start, there were clear divisions between him and legislative fiscal leaders. Local governments, for their part, warned that the proposed cuts would gut key services. You know what happened: Everyone dug in. The result was a compromise that made nobody happy: cuts too modest for the hardliners, yet deep enough to jeopardize local services. And to plug the hole, local governments were given the option to raise income taxes. The complexity of this issue was apparent from the outset, and it should have been clear to any observer that doing nothing, or something like punting this to a summer study committee, would have been far better in the long run. But ultimately, the measure (the highest possible dollar amount of property tax cuts, this session) became the goal, and our leaders ended up passing something that no one is happy with. When the measure becomes the mission, we tend to make decisions that don't hold up over time. All of which brings us back to the bigger question: What is the goal of state (and local) government? The core argument of the property tax cut hardliners is one that much of Indiana's political class seems to share, or at least publicly proclaim: that the goal of government is simply to be as small as possible. I saw this up close during the 2023 mental health funding debate. We had broad, bipartisan support for investing in our state's mental health system. During session, a legislative leader pulled me aside. He reiterated his support, but said he needed help avoiding the perception that this was just another 'big government' solution. Never mind that, since the days of English common law, caring for people with mental illness has been a core function of government. Never mind that failure to invest in mental health just shifts the cost to other government-funded systems like jails and emergency rooms. Never mind that, without government, there is no one else to pick up the slack. This legislator understood all this, but he was feeling pressure, not about whether the policy was right, but about whether it looked like too much government. Hicks: Braun cut taxes for businesses, but most Hoosiers will pay more We figured out a path forward, but the conversation stuck with me. Why is government such a loaded word? Why is it an insult instead of a neutral tool we can choose to use (or not use) depending on the problem? Why is the size of government any kind of goal at all, especially at the state and local level, which tend to be much more responsive to constituent needs and feedback than the federal behemoth? At the end of the day, government size and spending is a measure, and an important one, but it is not the goal. Instead, the goal should be whatever contributes to the best conditions for thriving families and communities. Sometimes that means getting the government out of the way, like removing regulatory barriers to innovation. Sometimes it means making government work better, like Mitch Daniels' legendary BMV turnaround. And, yes, sometimes it means investing more in the kinds of services and infrastructure that improve lives and expand opportunity. The irony is that almost every serious legislator and government official in Indiana knows this, but they are often paralyzed by the outsized influence of a small but loud chorus of folks who treat any additional investment as a betrayal. Ultimately, though, if we want better outcomes from our government, our leaders need space to act on what most of them already understand: that good governance (at any size) is about advancing the common good. Jay Chaudhary is the former director of the Indiana Division of Mental Health and Addiction and chair of the Indiana Behavioral Health Commission. He writes the Substack, Favorable Thriving Conditions. This article originally appeared on Indianapolis Star: Indiana's new property tax cut turned measure into misssion | Opinion
Indianapolis Star
22-04-2025
- Business
- Indianapolis Star
Mike Braun's property tax cut lost the plot
As a surprisingly semi-regular contributor to IndyStar Opinion, I feel compelled to offer some thoughts about this legislative session's marquee debate over property taxes. It's a little tricky, though, because of how we deeply misunderstand the nature of time. We judge our personal lives by minutes and days, when we'd be better off thinking in weeks and months. We assess career success in weeks and months, when we should probably be thinking in years. When it comes to public policy, we try to evaluate immediately, even though the real-world impacts often take decades to fully reveal themselves. So, while I do have thoughts and opinions on this Indiana General Assembly session, I find myself in more of a reflective mood. Rather than diving deep into the policy weeds, I want to ask a bigger question that underlies the entire debate, and has shaped Indiana politics for the last two decades: What is the goal of state government? But first, a DOGE detour For my money, one of the most fair and clear-eyed observers of the Elon Musk-led Department of Government Efficiency DOGE experiment is Santi Ruiz. Ruiz, a right/libertarian-leaning commentator, was initially hopeful about the idea of a Musk/Vivek Ramaswamy-led federal efficiency commission. His March '50 Thoughts on DOGE' Substack post remains the most balanced and insightful thing I've read on the topic. Need a break? Play the USA TODAY Daily Crossword Puzzle. The short version: Ruiz sees flashes of good, but ultimately argues that the chaos of the execution has undermined the project's stated purpose. On the Ezra Klein Show, Ruiz diagnosed a core flaw in the effort: Goodhart's Law, which is the idea that 'when a measure becomes a target, it ceases to be a good measure.' In other words, once you fixate on the number, you lose sight of the reality it's supposed to represent. In DOGE's case, Ruiz argues, cutting government headcount and contracts, rather than improving government efficiency, became the metric of success. Instead of making the federal government more efficient, DOGE may be making things worse, because it has lost sight of the goal. Goodhart's Law in action in Indiana In my view, this is precisely what happened with property tax reform in Indiana. Cutting property taxes was Gov. Mike Braun's top priority going into session, and from the start, there were clear divisions between him and legislative fiscal leaders. Local governments, for their part, warned that the proposed cuts would gut key services. You know what happened: Everyone dug in. The result was a compromise that made nobody happy: cuts too modest for the hardliners, yet deep enough to jeopardize local services. And to plug the hole, local governments were given the option to raise income taxes. The complexity of this issue was apparent from the outset, and it should have been clear to any observer that doing nothing, or something like punting this to a summer study committee, would have been far better in the long run. But ultimately, the measure (the highest possible dollar amount of property tax cuts, this session) became the goal, and our leaders ended up passing something that no one is happy with. When the measure becomes the mission, we tend to make decisions that don't hold up over time. 'Smaller' government is a measure, not a goal All of which brings us back to the bigger question: What is the goal of state (and local) government? The core argument of the property tax cut hardliners is one that much of Indiana's political class seems to share, or at least publicly proclaim: that the goal of government is simply to be as small as possible. I saw this up close during the 2023 mental health funding debate. We had broad, bipartisan support for investing in our state's mental health system. During session, a legislative leader pulled me aside. He reiterated his support, but said he needed help avoiding the perception that this was just another 'big government' solution. Never mind that, since the days of English common law, caring for people with mental illness has been a core function of government. Never mind that failure to invest in mental health just shifts the cost to other government-funded systems like jails and emergency rooms. Never mind that, without government, there is no one else to pick up the slack. This legislator understood all this, but he was feeling pressure, not about whether the policy was right, but about whether it looked like too much government. Hicks: Braun cut taxes for businesses, but most Hoosiers will pay more We figured out a path forward, but the conversation stuck with me. Why is government such a loaded word? Why is it an insult instead of a neutral tool we can choose to use (or not use) depending on the problem? Why is the size of government any kind of goal at all, especially at the state and local level, which tend to be much more responsive to constituent needs and feedback than the federal behemoth? At the end of the day, government size and spending is a measure, and an important one, but it is not the goal. Instead, the goal should be whatever contributes to the best conditions for thriving families and communities. Sometimes that means getting the government out of the way, like removing regulatory barriers to innovation. Sometimes it means making government work better, like Mitch Daniels' legendary BMV turnaround. And, yes, sometimes it means investing more in the kinds of services and infrastructure that improve lives and expand opportunity. The irony is that almost every serious legislator and government official in Indiana knows this, but they are often paralyzed by the outsized influence of a small but loud chorus of folks who treat any additional investment as a betrayal. Ultimately, though, if we want better outcomes from our government, our leaders need space to act on what most of them already understand: that good governance (at any size) is about advancing the common good. Favorable Thriving Conditions.
