Unintended Consequences

This is just in time.

Your linked article is today's discussion in my class.

"Does the law of unintended consequences mean that the government should never try to regulate complex systems? No, of course not, but it does mean that regulators should be humble (no trying to remake man and society) and the hurdle for regulation should be high."

Is it me or this section of the article seem weird or what? This guy says the government can't regulate then asks 'should the government then not regulate?' and then says 'no, of course not'. I mean - HUH!?!?

The law of unintended consequences therefore states that anarchism is the natural state of living. Any other living is either someone ruling for power gratification or a do-gooder who would try to good but makes things horribly worse.

I'd say the solution is to make government services voluntary to the greatest extent possible. Allowing input from both the buyer and seller will allow more elements of the risks involved to be considered, thus lessening the probability of unintended consequences.

Take highways for example. If using a highway or city street required the user to pay the full cost, they might very well choose to ride a bicycle to work and only drive a small utility vehicle when necessary to carry cargo. Imagine what cities would be like if the government had never gotten into the transportation business - or even if the funding of transportation infrastructure had been entirely voluntary. More trains, less vehicles, less roads, less polution, less urban sprawl - in other words, everything the greens say they want.

Isn't this the one thing that politicians love the most?

If every time they "fix" something, they create another problem that needs "fixed", they have a self-enforcing mechanisms that ensures they will continue to gain greater control over individual's lives.

Unintended consequences are not categorically bad or unwanted. It is worth reflecting that the results of the free market, so persistently and passionately defended here on Cafe Hayek, are one huge unintended consequence. That is the magic of the price system, nobody has to intend anything in particular, because the system learns by employing an efficient method of feedback i.e. profits and losses.

This is why we should be concerned with our own conduct, good conduct, toward others. It is enough to simply respect others, their liberty, as long as they return that respect in kind. The remainder is an unintended consequence for which nobody is responsible, and nobody can control.

However, many like to personify these unintended consequences by names such as "America", "France", or "China". They claim that we, as a society, a collective, bear responsibility for these unintended consequences, the emergent product of countless individuals choices and actions.

What do we bear responsibility for? The difference, the difference between how they think society should look, and how society actually is. Unfortunately, the unintended consequences on which civil society thrives, and cannot exist without, are feared and loathed by some.

The desire is to take control, and by presumptuous confidence in their own knowledge, a conceit, some would seek to steer society toward the end which they prefer, as though it were as simple as adjusting the dials of a machine.

The problem for such people, rarely seen until too late, is that unintended consequences are ubiquitous, and it is beyond the limits of knowledge and virtue to avoid them. In their attempt to destroy unintended consequences they fail, but inadevertantly destroy civil society, and unleash the darkside of this unbreakable law.

Bravo, Lee Kelly.

I always love your eloquent posts.

I think it is interesting to remember that Hayek used the term, unintended consequences,in a different sense. For Hayek the emergence of money, for example, was the result of unintended consequences, in the sense that no one sat down to design a money economy.

You and I stand at the boundary of a territory I claim, and I say, "See this line. Downtown there's a building, and in the building, there's a piece of paper describing this line and naming me. Because the paper names me, if you cross the line, I may force you back. I'll call men at the building downtown. These men have guns, and they'll harm you if you will not step back."

That's a simple regulation of a complex natural system. The natural situation is very different. If you do not accept my claim, you and I do battle until one of us concedes. Lions settle disputes this way all the time, and they get along alright. They don't often kill one another in these disputes.

In nature, we have no Kings or Presidents, and we have no Bill Gates or Warren Buffet, and though we don't have what some imagine as ideal "equality" (because it's utterly imaginary and could never exist), we don't have extremes of relative wealth and poverty either, in terms of entitlement to govern resources and to consume the fruits of productive activity.

So maybe all of this economic organization and the extremes of wealth and poverty, in terms of entitlements, like my name on the piece of paper downtown, is a terrible, unintended consequence of government intervention in the natural order of things.

So why not a progressive consumption tax? Why not tax away all inherited wealth and burn the tax revenue? If you want to govern resources your father governed, you may apply for credit and bid at the estate sale with everyone else. If your father raised you well to govern the resources, creditors likely will favor you. We have a banking system for this reason, but the politics of economic history is such that we don't even know the history anymore.

"It'll have unintended consequences" is no answer to this question. It's no answer to any question, because it applies to every question. Every systematic enactment has unintended consequences, so let's stop all of this terribly intrusive policing of property rights? That's not what you mean. "Unintended consequences" is a generic, one-size-fits-all argument. It's non-unique. It applies to every conceivable reform, and we selectively apply it to whatever reform we happen to oppose for whatever reason.

Martin Brock,

I don't think you can rule out unintended consequences as an objection. Unintended consequences are not necessarily unpredicable consequences. And it is important to show that some people's pet policy recommendation will actually have the opposite result that they intend. For instance, some people say "oh, we need rent control to have more housing available for low income people." That person doesn't intend to actually halt new building construction, to watch landlords stop maintaining their properties, etc., etc., all predictable, but important unintended consequences that need to be brought to the attention of the policy proposer.

The idea may apply to every possible reform, but it has important implications for many of the proposed reforms, implications that need to be aired and explored.

I believe Mark Twain was accurate when he observed : All of our problems are derived from our solutions.

Unintended consequences are not necessarily unpredicable consequences.

People always intend wonderful consequences. We can agree to this extent. We can also focus selectively on the not so wonderful, unintended consequences of reforms we oppose, but we might grow more by at least trying to focus our skepticism inwardly.

Martin Brock | Jan 24, 2008 8:48:44 PM.

In the above post you ask why don't heirs have to bid for their parents' wealth? You imply that in nature, nothing is passed on. You are wrong. The strongest lion pride supplies better nutrition to their offspring, and (probably) teaches better hunting skills. This inheritance, in addition to the pride's hunting domain, is passed on to the offspring. They are not stripped of their parents' wealth and tossed aside. This is true of all parents in nature. Those with the best parent(s) get the best nutrition and training and in some cases inherit the best areas.

Having read the referenced article I looked at some of the comments.

This one spurred my own thought.

"Critic, I might rephrase that with something from Marginal Revolution and one of its friends earlier this month: markets make unfortunate decisions all the time, but governments have even worse records. Markets usually do well and rarely do worse than the leading competitor, hence the last paragraph of the post.

Posted by: Zubon at Jan 24, 2008 9:03:07 AM"

This sentence in particular was what caught my eye:

"markets make unfortunate decisions all the time, but governments have even worse records."

That is as true as it gets and for the very simple reason that yes markets make unfortunate decisions, but they are incentive driven and unfortunate decisions will be recognized because of the "bottom line", and generally very quickly, so the market has incentive to rectify their mistake.

Government on the other hand makes fortunate and unfortunate mistakes in virtually everything they do and they have no incentive to change; therefore, change if ever forthcoming is extremely slow and painful.

Meanwhile the wealth creators are stripped of portions of their wealth to pay for the mistakes "that won't die".

The simplest reason for why we should prefer markets or government is that markets have an incentive to fix a problem immediately(profit motive) and governments don't(power motive). The only people agitating otherwise are dyed in the wool Socialists who would be more at home in 1933 America then 2008.

In the above post you ask why don't heirs have to bid for their parents' wealth?

I suggest that a person's assets could be auctioned at his death. I already know why heirs inherit. Because that's the law. It's not great economics, and it certainly isn't the market, but it is the law, the will of armed men.

You imply that in nature, nothing is passed on. You are wrong. The strongest lion pride supplies better nutrition to their offspring, and (probably) teaches better hunting skills.

I'm happy for parents to provide their children good nutrition and teach them skills. This process is not remotely like hereditary title to property. It's far more like raising children to compete for credit, and this competitive system is what many of the libertarian founders of our republic had in mind, but we've never realized the system.

Lions don't inherit their father's territory in fact. The father often loses it before they're fully mature.

This inheritance, in addition to the pride's hunting domain, is passed on to the offspring.

The pride's territory is not passed to offspring except insofar as the offspring successfully defend it by their own efforts. Male cubs typically leave a territory as they approach maturity. The dominant male, even their own father, runs them off. This process is far more like the auction than it is like hereditary title. Females more likely remain in a territory between generations, among lions anyway. They also share a territory communally. In other species, females vie more with other females for territory.

They are not stripped of their parents' wealth and tossed aside.

You know little about lions. Frequently after a territorial struggle, the newly dominant male simply kills all of the formerly dominant male's cubs, if they're young enough. Maturing males almost invariably leave the pride.

This is true of all parents in nature. Those with the best parent(s) get the best nutrition and training and in some cases inherit the best areas.

It doesn't happen in nature, only in your idealistic imagination. Progeny don't remain on the same territory generation after generation. Nothing could be further from the truth. Each generation vies for its own territory, and this struggle is the source of nature's dynamic creativity. It's why males typically are larger and stronger than females.

I'm not proposing any return to the state of nature, but market organization is like natural organization in fact. Hereditary title to property is unlike any natural order, and it's also unlike the organizational principles of the market.

The system of progressive estate taxation that we have is very defensible from a liberal (market economics) perspective, except that I prefer title expiration to taxation, i.e. I'd like the monetary proceeds of an estate sale removed from circulation and not delivered to central authorities for expenditure. We could build a bonfire with all the cash to celebrate the deceased's success. Value of the title is not delivered to central authorities. That's ill-advised and inflationary. Instead, the title expires, and creditors award the new title. This sort of thing already happens routinely.

A wealthy lord needn't fear for this children in this event, as long as the market provides ample opportunity, and I expect a sufficiently free market to provide ample opportunity. If children with little hereditary entitlement have much to fear, we should be killing wealthy lords, as almighty God intended, and I'm all for that.

Martin Brock:

Take your psuedo-religious garbage and head for the exit. That has more to do with 15th century Inquisitions and less to do with hard-core economics. But I've come to expect that from you.

Boink!

[nice, Freedom]

That has more to do with 15th century Inquisitions and less to do with hard-core economics.

It has more to do with lions, and you don't address a single point. A germane reply might dispute some assertion about lions or critique title expiration or something. You can try that after church on Sunday.

Half a League;

Half a league….

People always intend wonderful consequences. We can agree to this extent.

Martin Brock

No, you presume this. And you are wrong.

This is your fundamental economic undoing, Martin.

Mesa Econoguy:

No, you presume this. And you are wrong.

Sarcasm is obviously lost on some people.

Martin,

While FreedomLover could most likely shoot holes in your little soliloquy about lions above, he may not want to take the time.

However, I have a little time on my hands, so I shall.

Martin, you are not even close.

Mature male lions rarely leave the pride even after losing a constest for the position of Alpha Male.

A pride with only one male lion is in deep shit in reference to claiming and defending a hunting territory. It would be very lucky to exist more than one season before being taken over by another stronger pride.

True, as male lions mature it is inevitable that one will challenge the existing Alpha Male, it might even be one of the sons of the Alpha Male. But, that is hard to determine since the Alpha gets first crack at the lioness in heat but not the exclusive crack. Nor do newly crowned Alpha Males ritually kill the cubs of the deposed Alpha Male, since some of them may have his lineage, and he might, as stated previously, well be the sire of all the males in a litter where the old guy sired only the females.

Lion prides have pecking orders just as do flocks of chickens. There is an Alpha Male and an Alpha Female, a Beta Male and a Beta Female, etc. etc. And, in almost all cases all the males in a single pride are related. Where females may be able to switch prides, it is virtually impossible for males to do so. That male that did it would have to be an incredibly strong and visious fighter and most likely would wind up defeating the old Alpha Male and so come in at the top.




Furthermore, while the lionesses do the killing they do not necessarily do the hunting alone. The males frequently participate by waiting until the lionesses are in position and then going upwind of the prey and urinating to create strong lion odor, which frightens the game into stampeding directly into the trap of the lionesses.

However, when it comes to defending territory against all comers, other prides of lions or from the harassment of Hyenas, it is virtually always true that that task goes to the males, led by the Alpha.

vidyohs - I appreciate the compliment, but I never would have come up with that brilliant little essay about lions! I just hate religious fervor invading economics. It's ugly and hateful to me.

FreedomLover,

:-) You're welcome.

My problem with martin is that he places more faith and weight in theory than in reality. And, he seems incapable of understanding that theory does not replace action.

Some people do it, and some people theorize about it.

The people that do it don't worry about what some ivory tower pinhead said about it, they just do it. The ivory tower pinhead tries to explain how and why they did it but that doesn't change a single fact about what the doer did.

Like I told my kids, "you want to know how to change a tire, go to someone who changes tires and learn; don't go to a professor for a theoretical lesson on how it should be done."

I have to warn you though that I have a religious fervor in my anti-communist/socialist/democrat/liberal/progressive stance, not per se for God, Mom, and apple pie, but for reason, rational, and freedom. Put up with me, please.

vidyohs: no problem. I don't have anything against religious beliefs, just it has nothing to do with hardcore economic analysis of Wal Mart's supply chain management system...

Martin, you are not even close.

Mature male lions rarely leave the pride even after losing a constest for the position of Alpha Male.

Male lions sharing a territory don't contest the territory. These lions typically are brothers who won the territory together, and they may contest mating priority. Mating priority is a separate issue and is not germane. We're discussing "inheritance" of territory by a male's offspring.

Wikipedia

"Females form a stable social unit in a pride and do not tolerate outside females; membership only changes with the births and deaths of lionesses, though some females do leave and become nomadic. Subadult males on the other hand, leave the pride when they reach maturity at around 2–3 years of age." [my emphasis]

Review the record. That's exactly what I asserted.

Wikianswers

"If a wandering male lion stumbles on the pride without facing the territorial male, then the lionesses will most certainly try to chase it away in fear that this visitor will kill the cubs. This 'nomad' has not earned the right to be on this territory. The noise of this encounter will bring the territorial male back to the pride in a rush and a fight will break out.

"If the 'nomad' lion wins the fight then he will find any other competition (other male lions in the pride) and chase them away, and will also kill the cubs. Lionesses can not hold off a fully grown male lion. In this situation, the new male will protect the territory and the pride from then on."

A territorial contest occurs when a male or males from outside the pride challenges the dominant males, and the winner drives off the loser. If the invader wins, he often kills the young cubs. Maturing males leave the pride regardless.

Now, I'd like to see some authority for your assertions. If you don't like the wikis, I'll find you something from the edu domain. These descriptions are completely standard.

A pride with only one male lion is in deep shit in reference to claiming and defending a hunting territory. It would be very lucky to exist more than one season before being taken over by another stronger pride.

Irrelevant. The issue is "inheritance" of the territory.

True, as male lions mature it is inevitable that one will challenge the existing Alpha Male, it might even be one of the sons of the Alpha Male.

No. This rarely happens. The dominant males drive off the younger males, including their own progeny, as they mature. They want their progeny to spread out, and they don't want to contest them for dominance. Dominance contests involve other males.

But, that is hard to determine since the Alpha gets first crack at the lioness in heat but not the exclusive crack.

Irrelevant. Mating priority is a separate issue.

Nor do newly crowned Alpha Males ritually kill the cubs of the deposed Alpha Male, since some of them may have his lineage, and he might, as stated previously, well be the sire of all the males in a litter where the old guy sired only the females.

See above. Invading males kill the cubs. Males sharing a pride typically are brothers. Contests between them for mating priority are not territorial contests.

Lion prides have pecking orders just as do flocks of chickens. There is an Alpha Male and an Alpha Female, a Beta Male and a Beta Female, etc. etc. And, in almost all cases all the males in a single pride are related.

True and irrelevant. Males in a pride are related, because males leave a birth pride together and contest new territory as a team.

Where females may be able to switch prides, it is virtually impossible for males to do so.

False. Females typically remain in a pride for life. They leave a pride occasionally but not typically. Males typically leave at maturity. Far from being impossible, it's the norm, and it makes perfect sense as an evolutionary strategy.

That male that did it would have to be an incredibly strong and visious fighter and most likely would wind up defeating the old Alpha Male and so come in at the top.

No. Males typically don't fight their fathers. They find other males to fight. Of course, they'll look for older males to fight, but these males are not members of their birth pride. They've left their birth pride. From an evolutionary perspective, sons fighting their father for dominance makes no sense. The genes don't want this fight. It's self-destructive. The genes want to spread out.

Furthermore, while the lionesses do the killing they do not necessarily do the hunting alone. The males frequently participate by waiting until the lionesses are in position and then going upwind of the prey and urinating to create strong lion odor, which frightens the game into stampeding directly into the trap of the lionesses.

Females do most of the hunting, but both males and females hunt. It's irrelevant to the issue anyway.

However, when it comes to defending territory against all comers, other prides of lions or from the harassment of Hyenas, it is virtually always true that that task goes to the males, led by the Alpha.

Males also kill large game, like buffalos. I've seen video of a male lion holding a buffalo by its throat while the pride females and young devoured it. The male ate last in this scenario. It's not the usual order, but it happens when the game is large enough to justify it. Anyway, it's irrelevant. This male is not on his father's territory. That's not the usual situation at all.

I'm not in my father's territory either. I moved. My sisters didn't. My ancestors are Europeans. I'm an American. Hereditary title is artificial, not natural. You can argue that it's useful, but you can't effectively argue that it's natural. I don't think it's very useful either.

In the Second Treatise on Government, Locke discusses hereditary title not in the chapter Of Property but in the chapter Of Paternal Power. Locke's Property essentially ends with his labor theory of value. A man's property is the land he farms himself by his own labor.

In Of Paternal Power, Locke is very clear that hereditary title to an estate is a means of governing the land, i.e. the heir does not simply inherit a right of possession. He inherits obligations of the common-wealth. See section 73.

If you don't like the idea of a "common-wealth", your argument is with Locke's history, not with me.

Well Martin,

I will acknowledge and compliment you on your ability to generate huge arguments on virtually anything; but, that ability is over-shadowed by its sheer consistency.

It is seconded only by your ability to generate huge answers to claims and questions no one has written, yet phrase them as if you are indeed rebutting. And, inevitably these diversionary tactics are what are irrelevant to that being discussed though they do serve to expand the discussion into even more confusing and increasingly worthless nattering. (The mulberry bush of irrelevancy, so to speak) Like muirduck, you are very skilled at darting off to hide behind the mulberry bush and inviting others to chase you.

And, last is your worthwhile contribution to proving the old adage, "You can take a horse to water, but you can't make him drink." You have been "drugged(sic) to the creek over and over and you ignore the water."

About the time one thinks one knows all there is know on a subject, along comes further research and things change. Lions, like humans, just don't always follow the same script.

Last shot, I never fail to remember Wikkipedia is created and editied by the Martins of the world, therefore is not my chosen source for final fact on anything.

Martin,

This:

http://www.maniacworld.com/Lions-vs-Buffalo-Cro...>

URL does not settle a thing, but I thought you and others would like to see it if you haven't already.

It can also be found by simply typing "Lions, Buffalo, and Crocodiles" in your search engine. It will come up on youtube as Lions, Buffalo, and Crocodiles battle at Kruger Natl Park.

Well worth the time it takes (about 10 minutes)to watch it.

One thing though, notice there are six lionesses and no visible male in the entire action, though we would normally expect one to show up somewhere in view.

Maybe they are modern feminist lionesses and use artificial insemination to breed. Ya think?

Well Martin,

I will acknowledge ...

You mischaracterize the territoriality of lions. I correct you. You respond with nothing.

Last shot, I never fail to remember Wikkipedia is created and editied by the Martins of the world, therefore is not my chosen source for final fact on anything.

Like I said, if you want something from the edu domain, I'll find it for you. Wikipedia is often a great resource. Your post on lions preceding mine is every bit as long and pedantic, only less substantiated and largely your own invention, but you don't apply the same critique to yourself that you apply to me, because ... well ... you just don't do that.

One thing though, notice there are six lionesses and no visible male in the entire action, though we would normally expect one to show up somewhere in view.

Awesome video. The social instincts of the buffalo are very interesting, the way they attack as a group to defend the calf. In the video I say, a male and several females attacked an adult buffalo and brought it down. Don't know about the lesbian lions ...

Martinduck(SFB),




I guess I am just too aware of the mulberry bush and I have seen way too much of your enticements to others, as well as myself, to do the chase thing. Not interested.

You begin a side issue about lion prides, I respond with disagreement about your version of lion prides being the only facts.......and you slay me with solitary lion activity. Okay now we want to go round the mulberry bush chasing a solitary lion. It is the same technique I watch you use over and over again in your pontificating on everything. Enough, not interested.

You offer tons of words, none of which mean shit to the man on the street who is engaged in "doing it". Like muirduck, not an original thought comes out of your fingers, it's all quotes from theorists. Enough, not interested.

In 1983 when I established my first independent business I didn't pick up a single book by the past masters of economic theory, nor any of the classical liberals. I learned how to provide service to customers and adopted the my own theory that I needed to offer equal or better quality service and charge appropriately for the time and place. Then sell sell sell. Doing those things I was confident of success, and I was right. I also understood that I did not serve "the people", I served individuals and that individual in front of my face at any particular moment was the most important individual to my success.

My knowledge of capitalism and business has come a very very long way since then and I still haven't read a single thing the past masters of economic theory have written. Instead, I took my own knowledge and experience and developed my own theories. But, my theories aren't about "the people", "the markets", or "the economy", they are about an individual (me the business owner), a market (me the market with service to sell), and my personal economic status.

When a prospective business owner does his start up and he understands those things he will be successful.

I couldn't care less and it is entirely meaningless to me what John Locke, Adam Smith, Hayek, or Freidman wrote as theory or as explanations for "the economy", or about the nature of property, or about the nature of liberty. When I get up in the morning and get dressed for my day as a market, I do so with my street level knowledge as my tool and it has never let me down.

I don't give a shit about your past masters, and you don't give a shit about my theories. Equality, by God, equality at last!

You have your valid points and I have mine and from past observation never the twain shall meet or even be settled.

As you start around the mulberry bush, look back, I won't be there.

Awesome video. The social instincts of the buffalo are very interesting, the way they attack as a group to defend the calf. In the video I say, a male and several females attacked an adult buffalo and brought it down. Don't know about the lesbian lions ...

Posted by: Martin Brock | Jan 27, 2008 6:47:21 PM

Yes I consider the fact that people with cameras to document that action were actually there and were able to preserve it was a true stroke of luck. Something like that might happen in a lifetime or two, but definitely not the outcome one expects with the beginning it had, eh?

So much for the status of "king" of the beasts. Buffalo did a little "Magna Carta" on the king, eh?

If you caught the conversation the tourists were having with their South African guide you picked up on the fact that he was as surprised as anyone at the behavior of the Buffalo. He had written the calf off.

Fascinating stuff.

... not an original thought comes out of your fingers, it's all quotes from theorists. Enough, not interested.

If title expiration as an alternative to an estate tax is not an original thought, google for it and show me.

If parental support as an alternative to Social Security is not an original thought, google for it and show me. Most people think that Social Security substitutes for investment or "saving for retirement", but it clearly doesn't. It substitutes for the support of aging parents by their children, the furthest thing imaginable from invest, the opposite of investment in fact, a return on investment.

You won't find these ideas when you google for them; otherwise, you'll easily prove me wrong, and you want to prove me wrong.

A progressive consumption tax is not original. It's just an idea I like. It's a recently proven useful idea in fact. Most people today just don't know that marginal income tax rates in the fifties exceeded 90%, and we had robust growth regardless, because investment was exempted. We just don't talk about it anymore. It's like a bit of history that's been erased, like Trotsky after Stalin.

Public education as a credit extended to students and repaid through taxation is not an original idea, but it's unusual and very widely misunderstood. Most people think that public education subsidizes parents rather than students, but the idea is absurd. It clearly subsidizes students, not their parents. The history is irrefutable.

Creating a property in children to finance education, as an alternative to taxpayer financed education, is an original idea, in modernity at least. If it's not, you'll google for it and prove me wrong.