A Second-Order Examination of Unintended Consequences - Econlib (2024)

LEAVE A COMMENT

The bottom line of this is that it is proper to advocate for marginal changes in policy that one has made some effort to assess the positive and negative consequences of. This is the spirit of cost benefit analysis of policy. Granted that the logic of this is only of infinitesimal changes. I may be on strong grounds that one more immigrant to the US would be a good thing. But how far does this go? 10 more 10,000 more 10,000,000 more?

Another problem is knowing what not advocating leads to. Maybe we think that an increase in a minimum wage will led to unemployment of the least skilled workers but there is some political momentum for such a policy. Is it better to advocate for no change or for an alternative way of transferring income to low paid workers like a more generous EITC?

Richard W Fulmer

Aug 13 2024 at 2:03pm

The relevant question here is whether technocrats, politicians, and policymakers are analogous to skilled medical professionals treating a patient whose condition and medical history they thoroughly understand, or if they’re in a position more similar to me locked in a warehouse with the hypothetical patient, or George Washington’s doctors.

There is another relevant question: What are the technocrats’, politicians’, and policymakers’ incentives? As Thomas Sowell observed:

No one will really understand politics until they understand that politicians are not trying to solve our problems. They are trying to solve their own problems—of which getting elected and re-elected are number one and number two. Whatever is number three is far behind.

If, in the marketplace, an entrepreneur comes up with a solution to a problem, he can sell it and make a profit. If, in politics, a congressman or senator solves a problem, he loses an issue and maybe a voting bloc.

Richard W Fulmer

Aug 13 2024 at 2:30pm

It’s a good question. I think certain regulations probably have had greater negative effects while others have had net positive effects. FDA regulations have almost certainly caused more harm than prevented. Probably airline regulations, too.

nobody.really

Aug 13 2024 at 3:13pm

Kevin Corcoran continues his valiant quest to articulate a principle of governance: Governments should engage in the RIGHT AMOUNT of intervention, but not TOO MUCH—a principle with which I surmise everyone agrees. The challenge arises from trying to draw the line between RIGHT AMOUNT and TOO MUCH.

I enjoy this discussion, and I like the medical metaphor—but it looks as though the answer still boils down to relying on someone’s judgment/preferences. According to Corcoran, enforcement of property rights falls on the RIGHT AMOUNT side of the ledger—an outcome that I surmise happens to correspond with his own judgment/preferences about the things governments ought to do.

We could quibble: Which version of property rights should governments enforce? Lords claimed a property right in receiving services/taxes from their vassals; slavers claimed a property right in their slaves; etc.

But consider the following actions of the US government: Rebelling against King George. Establishing a central bank and currency. Buying the Louisiana Territory. Recognizing fictitious persons (a/k/a corporations) and granting them limited liability. Freeing slaves at the point of a bayonet. Subsidizing public education and research & development. Actively participating in WWII. Imposing sanctions on private firms that discriminate on the basis of suspect categories. Financing public health projects. Sending humans into space. Developing computers and the internet. I defy anyone to say that any government agent could have anticipated even half of the consequences of pursuing these activities. If you had been in a decision-making position, would you have nixed these activities on the grounds that the results would be unforeseeable? Or would you say that, even with their unforeseeable consequences, at least some of these choices provided a sufficient degree of foreseeability that, combined with the exigent circ*mstances, justified government intervention?

A final query: What course of action would you have recommended to medieval physicians? And if they had taken your advice, what actions would contemporary physicians be able to take today? Corcoran appears to be fighting a hubristic human tendency for action. But there’s a school of thought that says that humans evolved a bias for action—not because action is always adaptive, but because action provides a better opportunity for learning, and LEARNING is adaptive.

Recall that experience is what you get by acting without the benefit of adequate experience….

Monte

Aug 13 2024 at 4:03pm

Just as the medieval practice of trepanation was occasionally successful at treating head injuries, government interventions are occasionally successful at correcting market failures, unintended consequences notwithstanding. So to say that we need another government program like we need a hole in the head can actually, if rarely, be a good thing.

nobody.really

Aug 13 2024 at 5:30pm

That’s clever, Monte! That said, if people had embraced Corcoran’s thesis in the past—would anyone really embrace Corcoran’s thesis today?

Joseph Henrich, chair of Harvard’s Department of Human Evolutionary Biology notes a distinction between WEIRD (Western, educated, industrialized, rich and democratic) people and the rest of the people in the world, who tend to be more clannish. He notes that in the Middle Ages, the Western (Roman Catholic) Church established a general prohibition on marriage to cousins, step-relatives, in-laws, godparents, and multiple wives. Marriage was the institution that provided for centralizing and maintaining property and control in the hands of a clan’s patriarch; if you died without a “nuclear family,” you would still likely have heirs within your clan with the right to inherit your property. By banning certain kinds of marriage, the Catholic Church broke up kinship lines and the property that flowed along those lines; now if you died without a nuclear family, your property would flow to the church. In effect, the church was abrogating certain property rights with a foreseeable consequence of enriching the church.

But a less foreseeable consequence was the decline of the importance of clans, the corresponding rise in the importance of the nuclear family—and a shift in the psychology of the individual. Kin-based institutions reward conformity, tradition, nepotism, and obedience to authority, traits that help shield assets from outsiders. In contrast, individualism favors independence, creativity, cooperation, and fairness with strangers.

I surmise Corcoran would have argued that authorities such as the Church should not have interfered with traditional property rights, and should not have altered marriage laws in a manner that would trigger unanticipated consequences. But if the Church had taken this advice, we might never have developed the WEIRD culture that underlies the thesis Corcoran is expounding.

In making this point, I don’t mean to make a general argument in favor of triggering unforeseen consequences. (At least, I don’t THINK I mean that.) I merely note the irony.

Richard W Fulmer

Aug 14 2024 at 11:25am

I surmise Corcoran would have argued that authorities such as the Church should not have interfered with traditional property rights, and should not have altered marriage laws in a manner that would trigger unanticipated consequences.

You highlight a key problem with the precautionary principle: every action and inaction necessarily have unpredictable, unintended consequences. A real problem with top-down action – especially at the level of a nation or a world religion – is that the consequences are widespread and often irreversible.

steve

Aug 14 2024 at 11:49am

Since you have chosen the medical metaphor we may as well continue it. You note that a doctor trapped in the room would have a better chance of treating the ill person. What isn’t apparent in that statement is that the knowledge developed over the years is only because many people were willing to risk unintended consequences in trying to figure out how to better practice medicine. If you let fear of unintended consequences freeze you into remaining with the status quo then you never move forward.

In the past safety issues were secondary or largely ignored so the risk of unintended consequences were pretty high. With better knowledge of physiology and pharmacology and an emphasis on safety the risks are lower but still remain. We still occasionally catch problems with therapies and devices after they are released. At any rate, as a result of people ignoring the risks of unintended consequences we can now diagnose and treat thousands of problems we could not in the past.

Steve

Mediaeval doctors weren’t scientifically using patients as guinea pigs, searching for real cures by trial and error. They were treating patients according to dogma.

This site uses Akismet to reduce spam. Learn how your comment data is processed.