Posted on 09 September 2014.
Sometimes it’s hard to see the big picture in terms of how public policy is put into place, and then how that actually affects the economy as a whole. Sometimes, very minor and even seemingly insignificant changes can add up to make a huge impact overall, whether it’s a small bump in taxes or decrease in funding for a program, or anything else. It’s important to understand how this happens and what it’s all about.
Small Decisions Can Snowball
The economy is very much an evolving, living organism. It’s not the same today as it was yesterday or will be next week. It’s certainly not the same a year ago as it will be next year. In this kind of environment, small decisions end up affecting people, businesses and organizations many steps removed from where that original decision was made.
To think of an oversimplified example, let’s say that an education cut is made, and there’s less funding available for schools in a certain area. This may save money today, but what’s the long-term cost? It may create increased unemployment, because qualified teachers can’t find jobs. Maybe more kids drop out, and the crime rate goes up. Maybe teen pregnancy goes up at the same time.
Longer term, it could lead to people moving out of a region, to find both better jobs, and better education for their children, elsewhere. Even longer term than that, it could lead to reduced opportunities and growth for the country, because there aren’t enough educated, bright young adults getting out there to think of that next great idea or develop a wonderful new advancement.
Again, this is an exceedingly oversimplified case. But it shows the impact that one decision can have in so many different ways beyond what was the original and immediate intention – saving money on the budget by reducing funding.
In any area of the economy, and any type of public policy decision, the same kind of snowball effect has to be taken into account. It’s never as simple or easy as it appears on the surface, and changes compound and multiply at every step down the road.
Think About Your Own Health
To think about this in another way, think about how small lifestyle changes can lead to huge dividends for you personally if you’re trying to get into better shape. One less soda or latte here, one extra work out there, ten more minutes walking instead of watching television, and all of the sudden you’re losing weight and these separately minor changes add up to a very large impact.
That’s because taken together, you’re creating momentum and the whole ends up being greater than the sum of its parts. You’re burning more calories each day than you’re taking in, allowing you to lose weight. Instead of looking up the best pizza joint in town, you’re looking for information about the best protein shakes and powders available online to learn how you can supercharge your breakfast smoothie. Instead of taking the elevator, you’re taking the stairs.
Every Detail Counts
Again, these are all very small changes on their own. But combined, they make a huge impact. The same thing goes for the economy and for public policy.
You may not understand at first how something which seems like a very small change can then lead to a drastic, whether for better or worse, difference into the health of the economy. But small changes snowball one after the other, from person to person and day to day.
That’s why it’s important to carefully evaluate even the smallest of details and to consider the potential impact they could have. You do it for your own health, you should do it for the health of the economy as well.