Time-inconsistency in Utah

June 10, 2013

One of our rules of thumb in the Global Economy class is that policy should be “time-consistent”: people need to know not only current policy, but what policy will be in the future. The problem is that policymakers often have an incentive to pull a bait and switch — to be time-inconsistent.

Via Kim Ruhl, here’s a great example from Utah. It seems the state went out of its way to attract a $1.5b NSA data center operated by the federal government. Once the feds agreed and the project neared completion, the state passed a new law taxing electricity usage — and data centers use lots of electricity. More here.

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