I just gave a talk on market-based strategies for growth at the Institute for Emerging Issues conference in Raleigh.  I talked about a lot of things, but one of the things I brought up, which seems particularly appropriate given the TARP and the stimulus debates going on right now:  it's the idea that a compromise is always better than nothing.

Let's say that TARP proponents are right and that some program to pump a great deal of money into banks is better than just letting them fail.  It does not then therefore follow, as night to day, that this package--or any politically feasible package--is better than nothing.  It can be true that Ideal>0 without being true that 1/2ideal+compromise>0.

We are all guilty of formulating some ideal policy, and then acting as if whatever crippled version of that ideal policy survives the political process will necessarily be better than the status quo.  But the pressures of the political process often require vast and counterproductive alterations.  To take but one example, energy market deregulation can work very well.  But energy market deregulation as screwed up by California's various interest groups (including the moronic consumer groups that proposed forcing all the utilities to always buy their power on the spot market!!) was much worse than sticking with the boring, inefficient old system.

It is not necessarily true that doing nothing would be better than either of these plans, of course.  But I'd like to see 0 included in the solution set a lot more often.