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“The law of unintended consequences, often cited but rarely defined, is that
actions of people—and especially of government—always have effects that are unanticipated or unintended. . . .
politicians and popular opinion have largely ignored it.”
“Most often, however, the law of unintended consequences illuminates the perverse
unanticipated effects of legislation and regulation.”
(Ref. 1)
Two pervasive sources of unintended consequences are ‘ignorance’ and ‘error.’
“The law of unintended consequences provides the basis for many criticisms of government
programs. As the critics see it, unintended consequences can add so much to the costs of some programs that they
make the programs unwise even if they achieve their stated goals. For instance, the U.S. government has imposed
quotas on imports of steel in order to protect steel companies and steelworkers from lower-priced competition.
The quotas do help steel companies. But they also make less of the cheap steel available to U.S. automakers. As
a result, the automakers have to pay more for steel than their foreign competitors do. So a policy that protects
one industry from foreign competition makes it harder for another industry to compete with imports.”
- - -
“The law of unintended consequences is at work always and everywhere. Government
licensing of electricians, {for} example, keeps the supply of electricians below what it would otherwise be, and
thus keeps the price of electricians’ services higher than otherwise. One unintended consequence is that people
sometimes do their own electrical work, and, occasionally, one of these amateurs is electrocuted.”
(Ref. 1)
“The law of unintended consequences is what happens when a simple system tries to
regulate a complex system. The political system is simple, it operates with limited information
(rational ignorance), short time horizons, low feedback, and poor and misaligned incentives. Society in contrast
is a complex, evolving, high-feedback, incentive-driven system. When a simple system tries to regulate a complex
system you often get unintended consequences.” (Ref. 2)
When the Law of Unintended Consequences is applied to governmental actions, there are
all-too-often no or too few penalties for the ignorance or errors of those that institute the actions. Government
agencies do not go out of existence, government employees do not lose their jobs, and even the actions that caused
the consequences frequently are not reversed. In contrast, in the world of private business, the adverse results
of the Law of Unintended Consequences to the company that instituted the action are: loss of revenue and/or profit,
bankruptcy of the business, or loss of reputation. The employees that caused the adverse results of the Law of
Unintended Consequences are frequently demoted, lose their chances for advancement in the company, or lose their
jobs.
Let's take a look at some examples of the application of the Law of Unintended
Consequences in our real world.
FDA Regulation of pharmaceutical Drugs
The Food and Drug Administration (FDA) regulates the development, introduction and
production of pharmaceutical drugs with the objectives of ensuring that the drugs be safe and efficacious for a
particular use. But “The Food and Drug Administration … creates enormously destructive unintended consequences with
its regulation of pharmaceutical drugs. By requiring that drugs be not only safe but efficacious for a particular
use, as it has done since 1962, the FDA has slowed down by years the introduction of each drug. An unintended
consequence is that many people die or suffer who would have been able to live or thrive. This consequence,
however, has been so well documented that the regulators and legislators now foresee it but accept it.”
(Ref. 1)
OBJECTIVES: Ensure that drugs are safe and efficacious for a particular use.
THE UNINTENDED CONSEQUENCES: Slowed down by years the introduction of each drug; caused many
people to die or suffer who would have been able to live or thrive with the timely introduction of a new
drug.
The Electric-Gas Hybrid Chevrolet Volt
GM’s Chevy Volt will be hitting the dealers’ showrooms in the near future with a
sticker price in the vicinity of $41,000, about as much as the average American worker makes in a year. The
objectives of the Volt is to: eliminate the need for fossil fuels; reduce American dependence on foreign oil;
provide a cleaner environment; to reduce carbon emissions and thereby reduce global warming; and reduce the
operating cost of the vehicle. The gasoline only version of the Volt which is called the Cruze {and} costs only
$17,000, or $24,000 less than the Volt. The market for the volt is reported to be the “young, very high income”
segment of the population. Because of the supposed environmental benefits and reduction in the consumption of
gasoline, the federal government is offering a subsidy of up to $7,500. The $7,500 federal subsidy to the “young,
very high income” segment of the population who will supposedly be the ones that buy the Volt will be coming out
of the pockets of every other American who pays taxes, i.e., the Volt will be “a vanity car for the well-off that
will be subsidized by the less well-off taxpayers at all stages.”
(Ref. 3)
OBJECTIVES: Eliminate the need for fossil fuels; reduce American dependence on foreign oil;
provide a cleaner environment; reduce carbon emissions and thereby reduce global warming; reduce the operating
cost of the vehicle.
THE UNINTENDED CONSEQUENCES: Subsidize the “young, very high income” segment of the population at
the expense of every other American who pays taxes.
HOV Lanes
The High Occupancy Vehicle (HOV) lane concept arose during the Arab oil embargo of the
early 1970’s when there was a shortage of gasoline. Some of us remember the long lines at the gas stations and the
rules imposed that allowed a car owner to buy gasoline only on odd or even days, depending upon his/her license
plate number. The objective of HOV lanes at that time was to encourage ride sharing to reduce the number of cars
on the road, thereby reducing gasoline consumption. Today, while gasoline prices have risen, there is no major
gasoline shortage. Most significantly, HOV lanes do not encourage ride sharing! It's easy to
observe that there is no increase in car pooling. Today, people do not join commuter pools simply to ride in the
HOV lane. People car pool whether or not they can drive in the HOV lane. Today, HOV lanes increase gasoline
consumption, inconvenience the majority of commuters and increase atmospheric pollution. At rush hour, the HOV
lane is unavailable to the majority of commuters, resulting in fewer lanes to carry the increased commuter traffic.
This causes commuters to crawl along in rush hour traffic, burning additional fuel and slowing down their commutes
to and from work, while the HOV lane is virtually empty. When a breakdown occurs in the HOV lane, HOV lane traffic
comes to a halt since there is no way to exit the HOV lane, resulting in still more fuel consumption and more delays
for HOV lane drivers. When a breakdown occurs in the non-HOV lanes, traffic must also slow down or halt there,
since there is no way to use the HOV lane, again resulting in additional fuel consumption and more delays. It
would behoove our government traffic planning personnel to bring their thinking and planning into the 21st century.
Conditions in 2010 are different from those in 1972. Elimination of HOV lanes would; reduce gas consumption;
speed up commuting traffic; eliminate the costs of maintaining separate HOV lanes; and improve road safety, since
drivers would not have to worry about running into Jersey barriers or about other drivers switching lanes to get
into or out of HOV lanes.
OBJECTIVES: Encourage ride sharing to reduce the number of cars on the road, thereby reducing
gasoline consumption.
THE UNINTENDED CONSEQUENCES: Increased fuel consumption; higher atmospheric pollution; greater
delays for all drivers; more accidents; higher maintenance costs.
Gulf of Mexico Deepwater Drilling Ban
The federal government has imposed a six-month ban on deepwater drilling in the Gulf
of Mexico. An earlier ban was struck down by a federal judge, but the Obama administration issued a new ban in July.
The objectives of the ban are to: determine the cause(s) of the recent BP oil rig explosion; tighten existing rules;
decide upon new regulations; and provide for greater government oversight and inspection. It’s reported that the
six-month ban on drilling “would directly put more than 9,000 people out of work and indirectly affect another
14,000 jobs” (Ref. 4) in the already economically impacted Gulf
region.
OBJECTIVES: Determine the cause(s) of the recent BP oil rig explosion; tighten existing safety
and environmental rules; decide upon new deep water drilling regulations; provide for greater government oversight
and inspection.
THE UNINTENDED CONSEQUENCES: Has put more than 9,000 people out of work; indirectly affected
another 14,000 jobs; negatively impacted the economy of the Gulf states.
Nuclear Power in the United States
The U.S. nuclear-power industry has effectively been stagnant since the late 1970’s.
There have been no new nuclear power plants in the U.S. since then. Regulatory restrictions, political opposition,
and the increased costs and delays caused by these factors have stopped the American nuclear-power industry in its
tracks. The objectives in destroying this industry are to: reduce or eliminate the possibilities of a nuclear
accident; and avoid the problem of spent fuel disposal.
The unintended consequences of shutting down the American Nuclear power industry have
been to: cause an increase in fossil fuel consumption, with the attendant continued dependence on foreign oil and
the continuing release into the atmosphere of harmful greenhouse gasses; turn over leadership in nuclear power
plant design and construction to overseas companies, resulting in the loss of American jobs and the loss of income
to help offset the unfavorable balance of foreign trade; and cause the deaths of thousands involved in coal mining,
oil drilling, and natural gas transportation.
While nuclear power generation has stagnated in the United States, nuclear power
has flourished overseas. As of October 2005, there were some 442 operating nuclear power plants (NPPs) worldwide,
with only 4 of these in the United States. Worldwide, 41 new NPPs were under construction, 92 were in final stages
of planning and 34 were in the early stages of planning - none of these in the United
States. While the U.S. only gets some 20% of its electricity form NPPs, in 2005, France got 75%,
Lithuania - 73%, Belgium - 58%, Sweden - 47%, Ukraine - 44%, South Korea - 43%, and the only country in the world
to have suffered the effects of nuclear bombing, Japan - 36%. America’s 4 operating nuclear power plants reflect
the designs of the 1960s and the technologies of the 1970s. Nuclear power plant design in other parts of the world
reflects the technologies of the 21st century.
Currently, power from older nuclear power plants is cheap, since the costs of
the plants themselves have already been written off. Their cost of fuel is miniscule. Nuclear plants today produce
power at less than half the cost of plants that burn natural gas or oil.
Based upon the thousands of operating years of experience with commercial and
military nuclear power reactors, safety has proven to be better than with just any other power generation
technology. Compared with deaths from: the mining of coal, exploring for and extracting oil and gas, transporting
fossil fuels, as well as the cancers resulting from the pollution produced by fossil-based fuels, the nuclear power
industry has done, and continues to do, exceedingly well. Up to October 19, 2001, there were more than 10,000 years
of nuclear power plant operation. Significant accidents with NPPs can be counted on the fingers of one hand. The
same cannot be said of fossil fuel power generation – coal mine disasters, the BP Gulf drill rig disaster, and so
forth. There is a clear message here - while there is no power producing technology that is 100% safe,
with proper design, maintenance, training and operation, nuclear power generation can be (and has proven to be)
extremely safe has proven to be safer than power generated with hydrocarbon-fueled Plants.
OBJECTIVES: Reduce or eliminate the possibilities of a nuclear accident; avoid the problem of
spent fuel disposal.
THE UNINTENDED CONSEQUENCES: Caused an increase in fossil fuel consumption, with the attendant
continued dependence on foreign oil and the continuing release into the atmosphere of harmful greenhouse gasses;
turned over leadership in nuclear power plant design and construction to overseas companies, resulting in the
loss of American jobs and the loss of income to help offset the unfavorable balance of foreign trade; caused the
deaths of thousands involved in coal mining, oil drilling, natural gas transportation, etc.
MassHealth – the Public Insurance Option for the Poor
The Commonwealth of Massachusetts spent about $32 million in 2010 to enroll
people in MassHealth, the state’s public insurance option for the poor. The objectives of the state’s health
insurance program, which went into effect in 2006 and which was the nation’s first mandatory health-care program,
are to: provide health care for all citizens of the state; ensure that the state’s poor have access to affordable
health care; and reduce the cost of health care. However, since 2006, “the wait for healthy people to get in and
see a doctor has skyrocketed to an average 50 business days for an appointment with a family doctor. Assuming you
can find one. … More doctors are simply refusing to see new patients because they say they can barely do enough to
treat their current ones.” The added paperwork is another killer. Doctors report that reimbursement is inadequate.
Said one, “I lose about $70 every time I see a MassHealth person.” In addition, “With MassHealth, payment is a real
problem. Sometimes there’s no reimbursement, and when we do get checks, sometimes you can’t tell who it relates
to.” (Ref. 5)
ObamaCare advocates take note.
OBJECTIVES: Provide health care for all citizens of the state; ensure that the state’s poor have
access to affordable health care; reduce the cost of health care.
THE UNINTENDED CONSEQUENCES: The wait to get in and see a doctor has skyrocketed to an average 50
business days; many doctors are refusing to take on new patients; doctors' costs have exceeded the state's
reimbursements; sometimes there is no reimbursement; sometimes doctors can't tell who the reimbursement is
for.
Gaza Strip
Israel removed all Israelis from the Gaza Strip and relinquished control to the
Palestinian Authority (PA) in order to: move the peace process forward; give the Arab residents of the Gaza Strip
the opportunity to govern themselves with their own democratically elected government; allow the Arab residents of
the Gaza Strip to develop and improve their own economy; and allow the Arab residents of the Gaza Strip the
opportunity to demonstrate that they could live in peace, side-by-side, with the State of Israel. Once Israel
turned over control of the Gaza Strip to its Arab residents, the Arabs destroyed the hothouses given for them by
the Israelis, thereby depriving themselves of the means to improve their economic position. They voted to be
ruled by the terrorist organization, Hamas. They allowed Hamas to launch mortar and rocket attacks against the
State of Israel. They brought destruction and ruin to themselves and their infrastructure. They destroyed their
economy and deprived the residents of the Gaza Strip the opportunity to earn a living both in the Gaza Strip and
within the State of Israel.
OBJECTIVES: Move the peace process forward; give Arab residents of the Gaza Strip the opportunity
to democratically govern themselves; allow the Gaza Arabs to develop and improve their own economy; allow the Gaza
residents the opportunity to demonstrate that they could live in peace, side-by-side, with the State of
Israel.
THE UNINTENDED CONSEQUENCES: The Gaza Arabs destroyed the economic opportunities given them by the
Israelis; they deprived themselves of the means to improve their economic position; they voted to be ruled by the
terrorist organization, Hamas; they allowed Hamas to launch mortar and rocket attacks against the State of Israel;
they brought destruction and ruin to themselves and the Gaza infrastructure; they destroyed their economy and
deprived the residents of Gaza the opportunity to earn a living both in the Gaza Strip and within the State of
Israel; they once again demonstrated that they do not want to live side-by-side in peace with Israel, but instead
only want to see Israel destroyed; they set the Utopian "peace process" concept back by uncounted
years, if not forever.
DDT
In 1962, environmentalist Rachel Carson wrote a book, Silent Spring,
about how DDT persists in the environment and affects not just insects but the whole food chain. Shortly thereafter,
DDT was banned from use worldwide. In the early 1960s, several developing countries had nearly wiped out malaria.
After they stopped using DDT, malaria came raging back and other control methods have had only modest success. The
objectives of the DDT ban were to: stop the harmful effects of indiscriminate DDT spraying on insects, birds, and
other wild life. Africa Malaria Day, April 25th, commemorates the 1.2 million people lost each year to a preventable
and curable disease. Malaria is the biggest killer of African kids. Half a billion people suffer from it annually,
reducing economic productivity around the world. (Ref. 6) Why does
this disease continue to exist in the 21st century? The reason - social and environmental activists got the world to
ban DDT some 40 years ago. The result - over 50 million people, primarily in third world countries, have died of
malaria and countless more millions have been sickened and incapacitated.
The African American Environmentalist Association (AAEA) believes that DDT should be
used to prevent deaths from malaria in African countries. According to U.N. estimates, malaria kills one child
every 30 seconds and more than a million people each year. AAEA believes that DDT should be used in African
countries as it was in the United States for decades until malaria is eradicated. DDT is the best way to eliminate
the parasite. (Ref. 7)
Where DDT is used, malaria deaths plummet. Where it is not used, they skyrocket.
For example, in South Africa, the most developed nation on the continent, the incidence of malaria had been kept
very low (below 10,000 cases annually) by the careful use of DDT. But in 1996, environmentalist pressure convinced
program directors to cease using DDT. One of the worst epidemics in the country's history ensued, with almost
62,000 cases in 2000. Shortly after this peak, South Africa reintroduced DDT. In one year, malaria cases plummeted
by 80 percent. Next door, in Mozambique, which doesn't use DDT, malaria rates remain stratospheric. Similar
experiences have been recorded in Zambia and other African countries.
OBJECTIVES: Stop the harmful effects of indiscriminate DDT spraying on insects, birds, and other
wild life.
THE UNINTENDED CONSEQUENCES: Over 50 million people, primarily in third world countries, have died
of malaria and countless more millions have been sickened and incapacitated; half a billion people suffer from
Malaria annually, reducing economic productivity around the world.
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References:
- The concise encyclopedia of economics - Unintended Consequences, Rob Norton,
Library of Economics and Liberty;
http://www.econlib.org/library/Enc/UnintendedConsequences.html, Accessed 10 August 2010.
- The Law of Unintended Consequences, Alex Tabarrok, Marginal Revolution;
http://www.marginalrevolution.com/marginalrevolution/2008/01/the-law-of-unin.html,
24 January 2008, Accessed 10 August 2010.
- Better call it the dolt-wagon, Jonah Goldberg, Boston Herald, Page 15,
9 August 2010.
- Drilling ban called big threat to jobs, Associated Press, Boston Sunday Globe,
Page A6, 22 August 2010.
- Rx needed for Mass. Doc shortage, Christine McConville, Boston Herald, Page 6,
3 August 2010.
- Africa Fighting Malaria, 23 April 2007.
- DDT, Use It To Stop Deaths From Malaria In African Countries, African American
Environmentalist Association Web Site, 1 May 2007.
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