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Quotation of the Day…

… is from page 321 of the late University of Washington economist Paul Heyne‘s undated and previously unpublished manuscript titled “Teaching Economics By Telling Stories,” as it appears in the 2008 collection of Heyne’s writings, Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.):

[W]hen legislators make special rules for favored groups, they produce a lot of consequences that no one had anticipated and that few would want.

DBx: Cost-benefit studies of this or that proposed regulation, as useful as these studies might be, very often miss much – and perhaps even most – of what is relevant, namely, consequences not only that are unintended but that also are unpredictable. Among the great errors of the “man of system” (as the social engineer was called by Adam Smith) is his or her assumption that government can change a handful of variables in reality – such as, for example, the terms of labor contracts, or the prices at which domestic consumers can buy imports – and individuals will respond in, and only in, the ways that the man-of-system’s theory predicts.