Incentives for Apple Inc. and the Chocolate Cake Theory of Public Policy | Eastern North Carolina Now

    Publisher's note: The author of this post is Joseph Coletti, who is senior fellow for the John Locke Foundation.

    Imagine you are a middle school student called on stage in front of 75 of your friends and peers. Your teacher offers you a piece of chocolate cake but, in his version of the marshmallow test, tells you not to eat it for five minutes. He then takes a piece and eats it in front of you, telling you how and everyone wonderfully moist and tasty it is. He says it's the best chocolate cake he's ever eaten. In between bites and ecstatic descriptions of the flavor and texture of the cake, he reminds you not to touch your cake. "Don't look at it. Don't even think about it. But I really have never eaten chocolate cake as good as this." How easy was it to read that without wanting a piece of cake? How would you have handled the situation?

    As the latest round of economic incentives for Apple has demonstrated, it can be harder for politicians to restrain themselves from making bad choices than it is for a hungry teenager. The legislative session is underway again, which means we will be debating policy choices, and food choices are much easier to talk about even if they make us hungry, but all our choices are basically of three types.

• A or not A (eat the slice of cake or go without)
• A1 or A2 (eat the slice of cake with your hand or with a fork)
• A or B (eat the slice of cake or get something better)

    The first option (A or not A) is hard. If someone offers you cake and your only alternative is to go without, especially if it is around meal time, you are likely to eat the cake. It takes willpower to go without something that looks good. Many bad policies get adopted, and many diets get broken because people feel compelled to do something even if they acknowledge it is not the right thing to do. Once a bad policy is in place, this is the "just stop" argument. In social services, especially, many will agree that current policies have harmful consequences, but the policy is seen as the best way currently available to achieve a goal and ending it is giving up on the goal, not finding a better way. It is not enough to say, "A is bad."

    That leads them to the second option (A1 or A2). It is Bill Clinton's "mend it, don't end it" approach to affirmative action. From the cake story, if you don't have a fork, it is easier to put the cake aside. In policy questions, it contends that the problem is not the policy but its application. The stimulus would have worked if it were larger or the intervention could better target needs, that is, cover more (or fewer) people, have different people in charge, or eliminate waste, fraud, and abuse. This is the heart of incrementalism. We can attenuate the bad consequences while we continue to search for alternatives.

    In the end, only something better (A or B) will lead to a better choice. To choose the alternative, you first have to see the alternative as better. If you do not like chocolate, the better alternative might be a slice of strawberry cake. Maybe all you need is a piece of fruit...or bacon. We replace bad habits with good habits or the bad habits return. The unplanned alternative to government policy is exciting to supporters of free markets, but to most people, it looks more like "not A" than like "B." It is not surprising that people who hear it react as if they were offered a snake when they asked for a fish. From health care to foster care and job training, unplanned alternatives are working better. The more of them that exist and the more they are seen, the less demand there will be for government interventions.

    Without alternatives, we are stuck with the policy equivalent of this scene: When the time is up, your teacher offers you the whole cake because you went without the one piece. He then asks, "Would it have been easier not to eat the one piece if you had known you could have a whole cake?" And you respond to a piece of cake in your mouth, "Of course it would have!"