The third season of critically-acclaimed superhero show Invincible is all about economics.
Okay, yes, epic battles between superpowered people dominate scene after scene, but the recently concluded season also emphasizes the importance of pragmatic trade-offs. We would be wise to take this lesson seriously.
Invincible follows teenager Mark Grayson, who discovers he has superpowers and becomes the titular hero. In a society beset by myriad worldly and otherworldly threats, Mark establishes a moral code for himself so he doesn’t stray from the kind of hero he wants to be.
The third season centered on Mark confronting the practical limitations of that strict moral code. His refusal to kill dangerous people, or work with anyone he considers ethically compromised, ends up hurting those he swore to protect. Cecil Stedman, the pragmatic head of the Global Defense Agency, knew Mark’s absolutism was unworkable. “We can be the good guys,” he said to a colleague, “or the guys that save the world. We can’t be both.”
In other words, Mark had to learn the danger of the nirvana fallacy. Politicians and voters would be wise to learn it, too.
The Nirvana Fallacy
Everyone wants to save the world while being the “good guy.” The sentiment is an enduring fixture of our best stories and in these comforting tales, the heroes win in spite of (or because of) their closely-held beliefs. In fantasy, we can have everything we want without having to make any annoying compromises.
Economist Harold Demsetz named such fallacious thinking the nirvana fallacy. Perpetrators of this fallacy compare the inevitably flawed real world to an imagined but impossible alternative. Finding the real world irredeemably wanting, they reject practical reform while people suffer (or they pursue perfection with disastrous consequences).
The nirvana fallacy saturates politics because it’s cheap for voters to believe that their cherished fantasies are attainable. We can achieve our perfect world just by slaying the Bad Guys and doing the Good Thing, like a comic book superhero — uncompromising and victorious. In the battle between fantasy and fact, fantasy wins. Society loses.
The Fantasy of an Easily Balanced Budget
Take the ballooning federal debt, a problem COVID-era spending and rising interest rates exacerbated. Both parties cling to their respective fantasies.
Republicans’ fantasy answer is cutting waste, fraud, and abuse. Solving America’s existential threat simply requires getting rid of things everyone hates, especially, as it turns out, things Republicans hate.
Too bad the numbers don’t work. If the Department of Government Efficiency somehow cut spending by half a trillion, three-quarters of the deficit would remain untouched. And half a trillion is hopeful: the DOGE counter at US Debt Clock tracks the organization’s goals, not accomplishments. At the time of this writing, DOGE is optimistically about $110 billion shy of its mark. Cutting “wasteful” spending is not a realistic solution.
Democrats’ favorite fiction is no less ridiculous: just tax the greedy rich. But balancing the budget this way would require taxing the rich at over 100 percent. No one even paid those super-high rates of the 1950s — at 90+ percent marginal tax rate, the incentive to avoid and evade taxes was too high to result in any revenue gains. It’s an unworkable strategy.
Wealth taxes would not do the job, either. A two-percent wealth tax on the top 0.1 percent would yield roughly $500 billion — far short of what’s needed, and that is before factoring in the incentive effects which would be strong (there’s good reason why countries that adopt a wealth tax tend to repeal it). Add in the legal challenges and it’s clear this solution is just a fantasy.
Balancing the budget requires some combination of much higher taxes on the middle-class and entitlement reform; neither will happen. If they thought about the deficit at all, Presidents indulged in the same fantasy that the budget could be balanced without doing anything unpopular.
Lawmakers can be the good guys, or they can be the guys who balance the budget. They can’t be both.
The Fantasy of Quick Housing Solutions
The nirvana fallacy interrupts our best intentions in housing policy, too. Few things hit Americans as hard as housing prices, straining budgets and causing all kinds of spillover problems. Deregulating the housing industry would go a long way to solve this problem, but the parties prefer to play superhero.
Although former President Obama encouraged Democrats to consider deregulation last year, rent control remains the preferred solution of more recent party leadership. They claim it immediately solves this major problem, while punishing greedy developers and price-gouging landlords. Never mind that rent control creates far more problems than it solves and any short-run gains are overwhelmed by the long-term damage. No wonder economists overwhelmingly consider it bad policy.
President Trump, like Obama, seemed to know better. Citing the danger of regulatory barriers, Trump issued an executive order directing agencies to find ways to lower the cost of housing. But the EO focused on “emergency” relief, and the benefits of deregulating the underbuilt housing sector won’t be felt for many years. It’s unlikely the EO will do much anyway because the damaging zoning and parking laws were put in place not by the federal government, but by city governments which tend to be run by Democrats.
Real improvements require cooperation and compromise with people constituents prefer to vilify, whether they be landlords, developers, or the opposing party. And it will take a long time — hardly the stuff of heroic victory.
Lawmakers can be the good guys, or they can be the guys who lower housing prices. They can’t be both.
Politicians (and Voters!) Need to Grow Up
The examples go on and on. Environmentalists’ rejection of nuclear power in the 1970s and 80s in favor of an impractical mass adoption of renewables led to more coal power plants, which are far deadlier and dirtier.
Nativists romanticize deportation of illegal immigrants as mitigating problems ranging from unemployment to crime to welfare use. Those claims are false and mass deportations aren’t realistic, but that doesn’t stop them from daydreaming about this panacea instead of working towards practical reform.
Both parties embrace industrial policy—tariffs for Republicans, subsidies for Democrats—in a misguided attempt to engineer a world that brings prosperity without suffering. But actual progress requires a discovery process of creative destruction that includes good people losing their jobs. Engineering a better world without trade-offs is the stuff of fairy tales and fantasy flicks.
Invincible is a coming-of-age story about a teenager learning how to use his powers for the betterment of humanity. Mark is young, so his sophomoric views of good and evil can be forgiven. Our political leaders do not have that excuse.
We are lousy with “good guys.” We need guys who will save the world.