Inverted Interest Rates

Our modern world is full of distractions.  Beeps, buzzes, custom ringtones, and dings interrupt thoughts daily.  These intrusions often keep us from completing tasks at hand because they consistently cause our interests to change.  In other words, our rate of interest grows for the present distraction while declining from a relatively longer-term goal, possibly sacrificing posterity.  If our interests were plotted on a Cartesian plane, the curve would slope from the upper left to the lower right.  In fact, one might say these distraction cause human interest rates to become inverted.

Our society is full of macro-versions of this type of behavior as well.  Corporate America comes to mind.  Every three months, the heads of multinational companies worth billions of dollars are forced to prove they should remain at the helm of a firm by reporting earnings.  At first glance, this seems reasonable; after all, these are publicly traded entities and disclosure is appropriate.  However, the heads of firms are becoming hyper-focused on these “distractions,” and spending significantly less time on another worthwhile endeavor, serving society.  Companies may have started out wanting to improve the human conditions, but attention draining, financial engineering interruptions crowd out the broader and even longer-term thinking. 

Politicians seem to suffer from  a similar ailment.  Getting reelected has become their primary focus, often pushing difficult decisions off on some future elected official.  Statesmen have been replaced with firemen, governing with an extinguisher as one flame after another ignites the kindling left behind by a prior politician.  Elected officials’ interest in the more distant future issues seems much lower than desirable as they place their primary focus on various immediate crises (whose genesis may have come during another short-term thinking leader’s term) like negotiating the debt ceiling (again), urgent infrastructure fixes, or their need to remain incumbent.

Atlas would argue the nation, and therefore the world, would be better off if this type of inverted interest rate was corrected.  Would there be some short-term disruptions?  Probably.  For instance, if firms weren’t optimizing their income statements every quarter, it might hurt profitability short-term, but there could be a positive knock-on effect for the people working there; communities in which the employees live might be better off as well.  Of course, this is not knowable until it is tried.  But doesn’t a world in which leaders look out beyond their own interests seem like something worth exploring?