Thomas Sowell Asks What Happens After the Policy Passes

Anyone who has ever raised a toddler knows the most powerful question in the English language. It is "why?" and it can bring a grown adult to his knees in four rounds. But there is a second question, less cute and much more dangerous, that grown-up policymakers almost never ask. It is "and then what?"

The bill passes. The ribbon is cut. The senator gets his picture taken with a pen. And then what? Who changes their behaviour? Who finds a way around the rule? Who ends up paying for it? What happens in the third year, when the people who wrote the bill have moved on to something else?

If there is a single thinker who made a career of that question, it is Thomas Sowell. This is a profile of a man, but mostly it is a toolkit, because his questions work on bills from either party, including the ones you like. I will tell you who he is, give you the three questions I take from him, and then run three policies through them so you can see the method at work.

Who he is

Thomas Sowell is an economist and writer who spent much of his career at the Hoover Institution at Stanford. His shelf of books is wide: Knowledge and Decisions (1980) on how societies use scattered information; A Conflict of Visions (1987) on the competing assumptions behind political argument; and Basic Economics, a plain-English textbook for the general reader. He has written on race, culture, history and education too. He started his adult life as a Marxist, a position he abandoned after seeing how government actually worked up close, and the evidence-over-theory habit that came from that shift runs through everything he writes.

I am keeping the biography short on purpose. His books are the point, and you should read them rather than take my summary.

Two visions of the world

The single most useful idea in A Conflict of Visions is that political disputes are often disputes about assumptions long before they are disputes about facts. Sowell called the two sets of assumptions the constrained vision and the unconstrained vision.

• The constrained vision holds that human nature is limited and fixed, that people are mostly self-interested and mostly short of knowledge, and that the best a society can do is build processes, such as markets, courts and traditions, that make the most of imperfect people. It looks for trade-offs.
• The unconstrained vision holds that human beings are capable of far more wisdom and virtue than they usually show, that the right people with the right intentions can solve the great problems, and that what stands in the way is mostly bad institutions or bad motives. It looks for solutions.

Sowell placed thinkers like Adam Smith, Edmund Burke and, in a later generation, Friedrich Hayek and Milton Friedman on the constrained side, and thinkers like William Godwin and Jean-Jacques Rousseau on the unconstrained side. You can see how those categories connect to other posts here: Hayek Explained Why the Smartest Planner in the Room Always Loses is the constrained vision applied to information, and Edmund Burke and the Case for Changing Things Slowly and Carefully is the constrained vision applied to change.

Notice a point of fairness. Sowell was not saying one side is full of bad people and the other of good ones. Both visions come from sincere people. He was saying that you will understand the argument better if you know which vision each side is working from. Define the terms before you debate, and half the shouting goes away.

The line that explains him

A sentence attributed to Sowell in interviews and speeches gets repeated so often it has become the shorthand for his whole outlook: there are no solutions, only trade-offs. He is also widely quoted as saying that the first lesson of economics is scarcity, there is never enough of anything to satisfy everyone fully, and that the first lesson of politics is to disregard the first lesson of economics.

Think about what that implies. Every choice has a cost, because the thing you did not choose is the cost. If a government spends a dollar on one thing, that dollar cannot be spent on another. If a law makes one group better off, the question is who bears the burden. The price of a policy is not the number on the bill. It is everything you gave up to get it.

Notice also the phrase "no solutions." He does not say nothing can be improved. He says that a "solution" in the sense of a permanent end to a problem is rare, and that treating policy as a hunt for solutions makes people ignore the costs. The honest question is not "does this solve the problem?" but "is this the best trade we can make?"

The three questions

I take three questions from his work. Sowell has described the same kind of test in different forms, and I have put them in my own words.

1. Compared to what? Every program looks good against nothing, and every market looks bad against perfection. The fair comparison is against the real alternatives that were available. A policy is not good because it helps someone. It is good if it helps more than the best other use of the same resources.
2. At what cost? Not just in dollars, but in incentives, freedoms and the things people stopped doing. A cost that falls on someone who has no seat at the table is still a cost.
3. And then what? Follow the effects beyond the first round. People respond to the new rule, and their response is the part nobody put in the press release. This is what economists mean by unintended consequences, and it is why so many well-meant laws produce results their authors would not have chosen.

Three simple questions. An eighth grader can ask them. I have rarely seen a politician who liked hearing them.

Test one: rent control

This is the standard example, and it works because the logic is plain. A city caps what landlords can charge for apartments at a level below what the market would set.

• The promise: Rents stay affordable. Tenants stay in their homes.
• Compared to what? Compared with no cap, the people who already have apartments are better off, at least for a while. Compared with more housing, the picture changes.
• At what cost? A landlord who cannot raise rents with costs has less reason to maintain the building and less reason to build new units. Some owners convert apartments to condominiums or take them off the rental market.
• And then what? The supply of rental housing shrinks or stops growing, so newcomers face a tighter market. The people with the lucky leases stay put, even when the apartment no longer fits their needs. In the long run, the people the policy was meant to help, young families and newcomers, find it harder to find a place.

Sowell wrote on this subject for decades, and the pattern he found, across cities and countries, was consistent with that reasoning. Economists on the left and right broadly share the view that rent ceilings reduce the quantity and quality of housing, though they disagree about how much to weigh the benefits to sitting tenants. If you want to see how the same logic plays out in a related area, read zoning may be the biggest price control you never got to vote on.

Test two: the benefit cliff

Now a case with numbers. This is a hypothetical, with simple figures, but the structure is real and shows up in many income-tested programs.

Imagine a single mother in a small city. She earns $30,000 a year and receives $6,000 a year in benefits that phase out as her income rises. Her employer offers her a raise to $32,000. She is delighted, until she runs the numbers. Suppose the raise costs her $3,000 in benefits.

• Gain from the raise: $32,000 minus $30,000 is $2,000.
• Loss of benefits: $3,000.
• Net change: $2,000 minus $3,000 is a loss of $1,000.

Her effective tax rate on that extra $2,000 is $3,000 divided by $2,000, which is 150 percent. She is $1,000 poorer for earning more.

The program was designed with a good intention: to target help to people who need it most. But apply the third question, and then what? The incentive is to turn down the raise, to cut hours, or to avoid marrying a partner whose income would push the household over the line. Nobody planned that. It is simply what a sensible person does with those numbers.

I use this example because it shows the constrained vision at its best. It is not an argument that the help should never exist. It is an argument that the design needs to account for the way people respond, and that a smoother phase-out, a work credit, or a consolidation of programs might do better. You can see a related argument in Milton Friedman Took Free Markets Out of the Classroom and Into the Kitchen, where Friedman proposed a way to keep the reward for work.

Test three: a tariff on imported steel

Here is one from the right, because the method has to cut both ways or it is worthless. Suppose Congress imposes a tariff on imported steel to protect steel mills.

• The promise: Jobs in steel are saved. Domestic production is stronger. The country is less dependent on foreign suppliers.
• Compared to what? Compared with no tariff, the steel producers are better off. Compared with a world in which the money was spent some other way, the picture is mixed.
• At what cost? Every business that buys steel, from car makers to construction firms to a small fabrication shop, pays more for its input. That cost shows up in higher prices or lower profits or fewer hires, and it falls on people who never appear in the press conference.
• And then what? Trading partners may respond with tariffs of their own, hurting exporters. The protected industry gets used to the shelter.

Please notice that I am not telling you tariffs are always wrong. There are national security arguments, and the Republican Party has a long tariff history of its own, covered in Republicans were the tariff party first, from Lincoln to McKinley. The point is that Sowell's questions do not belong to a faction. They apply to a tariff, a border measure, a drug law, a defence contract and a tax credit the same way they apply to a welfare program. Where the answer to "and then what?" is unpleasant, a conservative should say so, even about his own side's idea. For the arithmetic of who pays, see who really pays a tariff, following the dollar from dock to shelf.

The strongest objection

Now to the other side. A thoughtful critic of Sowell would say:

"This is a convenient philosophy for people who already have what they need. 'No solutions, only trade-offs' can be used to excuse any cruelty, because every hardship can be described as the price of something else. History shows that big, bold programs, like Social Security, the end of legal segregation or the polio vaccine campaign, did solve real problems, and the people who said 'and then what?' were often the ones in the way."

That is a strong point and I do not want to wave it away. Here is my answer.

1. Trade-offs are not an excuse. They are an obligation to count. Saying that a policy has costs does not mean the costs outweigh the benefits. Social Security, for all the arguments about its finances, made a trade that most voters have accepted for generations. See How Social Security works and the promise built into its 1935 design.
2. Sowell's questions can approve a policy. If the policy is better than the alternatives and its costs are acceptable, "compared to what?" is answered. The method tests ideas. It does not automatically sink them.
3. The big successes passed the test. The vaccine campaign had a clear mechanism, measurable results and a cost that was understood. The failures tended to be programs where the stated goal was noble but the mechanism was vague.
4. Silence about costs is also a policy. The person who refuses to ask the question has not avoided the trade-off. He has just made it without looking.

I think the objection lands in one place, and Sowell's admirers should admit it. Counting costs is only fair if you count the cost of doing nothing as well. A person who says "and then what?" about every proposal and never about the status quo is being lazy. The status quo has consequences too.

Putting it on the refrigerator

If you remember nothing else, remember the card: compared to what, at what cost, and then what. Use it next time a bill is described as a "fix". Ask about the incentives of the people it affects. Ask about the people who are not in the room. Ask whether the thing is measured by what it intends or by what it does.

For a longer checklist built on the same instinct, Ten Questions to Ask Before You Support Any New Government Program is a good next step, and Why Spending Restraint Keeps Losing in Washington, Whoever Is in Charge explains why the costs so often get ignored when the benefits are concentrated and visible.

The bottom line

• Ask "and then what?" about every bill. The first-round effect is what the sponsor wants you to look at. The second and third rounds are what you will live with.
• Run the three questions on your own side too. A conservative who applies them only to the other party's ideas is playing politics, not thinking.
• Check for cliffs. If a program takes away more in benefits than you earn from a raise, the design is working against the family. Ask your legislators about it.
• Compare against real alternatives. "It helps someone" is not enough. The test is whether it helps more than the best other use of the money.
• Read one of his books. Basic Economics is written for the general reader and can sit on the kitchen shelf next to the cookbooks.