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  1. Ron19 says

    Several things recently remind me of Thomas Sowell’s writing on One Stage Thinking:
    ONE-STAGE THINKING
    When I was an undergraduate studying economics under Professor Arthur Smithies of Harvard, he asked me in class one day what policy I favored on a particular issue of the times. Since I had strong feelings on that issue, I proceeded to answer him with enthusiasm, explaining what beneficial consequences I expected from the policy I advocated.
     “And then what will happen?” he asked.
     The question caught me off guard. However, as I thought about it, it became clear that the situation I described would lead to other economic consequences, which I then began to consider and to spell out.
     “And what will happen after that?” Professor Smithies asked.
     As I analyzed how the further economic reactions to the policy would unfold, I began to realize that these reactions would lead to consequences much less desirable than those at the first stage, and I began to waver somewhat.
     “And then what will happen?” Smithies persisted.
     By now I was beginning to see that the economic reverberations of the policy I advocated were likely to be pretty disastrous— and, in fact, much worse than the initial situation that it was designed to improve.
     Simple as this little exercise might seem, it went further than most economic discussions about policies on a wide range of issues. Most thinking stops at stage one. In recent years, former economic advisers to Presidents of the United States— from both political parties— have commented publicly on how little thinking ahead about economic consequences went into decisions made at the highest level.2 This is not to say that there was no thinking ahead about political consequences. Each of the presidents they served (Richard Nixon and Bill Clinton, respectively) was so successful politically that he was re-elected by a wider margin than the vote that first put him in office.
     Short-run thinking is not confined to politicians but is often also found among the population at large. Nor is this peculiar to the United States or even to Western societies. When the government of Zimbabwe decreed drastic cutbacks in prices to deal with runaway inflation in June 2007, the citizens of Zimbabwe “greeted the price cuts with a euphoric— and short-lived— shopping spree,” according to the New York Times. But, just one month later, the Times reported, “Zimbabwe’s economy is at a halt.” This was spelled out:
       Bread, sugar and cornmeal, staples of every Zimbabwean’s diet, have vanished… Meat is virtually nonexistent, even for members of the middle class who have money to buy it on the black market… Hospital patients are dying for lack of basic medical supplies.
       That suppliers do not usually supply as much at a lower price as they do at a higher price is not a complicated economic principle, but it does require stopping to think, and especially to think beyond stage one. Price controls are essentially lies about supply and demand. In the case of Zimbabwe, the artificially low prices created the impression of an affordable abundance that was simply not there. As with other lies, political or otherwise, time may be required for the truth to come out, and it may be too late when it does.
     
    Sowell (2008-12-09). Applied Economics (Kindle Locations 145-174). Perseus Book Group-A. Kindle Edition.
     
    This does not apply to economics or politics only.  Many times in discussions with my wife, she can only see the result she wants to see.  When the actual results go beyond that to some of the things I had pointed out to her, she has no idea how that could have happened, even in retrospect.
    Apply this Stage One Thinking concept to everything you read.  The consequences will soon pop out at you whenever you come across thinking that stops at Stage One.
     

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