Carpe Diem

Five examples of the Law of Unintended Consequences

Back in November on CD, I featured a post of ten examples that illustrate the important economic concept of the Law of Unintended Consequences (the unanticipated or unintended effects of government policies). Here are five more great examples of unintended consequences from an article aptly titled “Five Laws That Made Sense on Paper and Disasters in Reality“:

1. Evidence shows that in the long run, gun buyback programs backfire and result in more, not fewer, guns.

2. When the British governor of Delhi, India addressed a cobra infestation by putting a lucrative bounty on cobras, they got more, not fewer, snakes.

3. After Mexico introduced anti-pollution measures, including banning a certain percentage of the city’s cars from driving each day based on the last digit in a car’s license plate number, pollution went up, not down. Reason? Hint: The policy applied to cars, not people.

4. The European Union imposed fishing quotas in an attempt to prevent over-fishing and increase the supply of fish. Fines and penalties were assessed when fishing boats came to shore with a catch that exceeded their quota. In the long run, the policy may have ended up reducing, not increasing, the overall supply of fish in the ocean.

5. Following an intense lobbying effort by the big banks to address rising loans defaults, the Bankruptcy Abuse Prevention and Consumer Protection Act was enacted in 2005, which made it more costly for people to declare bankruptcy. And yet, that legislation may have led to more, not fewer, loan defaults, especially defaults on home mortgages.   

26 thoughts on “Five examples of the Law of Unintended Consequences

  1. Wait! I thought if you TAXED something you got LESS of it!

    Are we using the wrong techniques with the “unintended consequences”?

    why don’t they just figure out what they want less of and tax the hell of it?

    even thuggery has to be done correctly…

    ;-)

      • Why bother, GMF? If he wants to broadcast to the whole world he doesn’t have a clue what’s going on, let him.

        He’s just weakening his own case and making himself look like a fool. It’s so much fun to provoke him.

    • What got taxed did get consumed less. The very point is that what politicians thought they were taxing wasn’t actually what was being taxed.

      • re: ” What got taxed did get consumed less. The very point is that what politicians thought they were taxing wasn’t actually what was being taxed”

        yup..but they get another swipe at it, right?

        • so incompetents
          who show that they have no sense
          get another swipe?

          i have never seen
          anyone make so much fun
          of himself as lar.

          • you do realize
            not a single one of those
            was caused by a tax?

            those who do not read
            yet blather incessantly
            tend to miss the point.

          • yup.. and that’s a fail.

            if you taxed them instead.. you’d get the desired result.

            guns should be taxed, the more you buy, the higher the tax, and the taxes used for buybacks so – you tax high and buy back low….

            if you bring too many fish to the dock you tax the hell of the excess so that profits actually lower than if you brought in fewer.

            if you want less pollution – then you tax the polluting stuff…

            if you want less loan defaults – penalize the hell of it like you do for early withdrawals on 401(k)s..

            what most folks don’t realize is that when you default on a mortgage – and the company writes the loss off, you are responsible for the amount written off – as income.

            It’s called cancellation of debt… look it up. you pay taxes on it.

          • a very high gun tax
            supports more black market sales
            and does not stop crime

            a low buyback price
            entices fewer sellers
            and thus works poorly

            taxing on the dock
            does not stop over fishing
            they still just dump them

            penalize loan defaults?
            that is blood from a turnip
            they’re already broke.

            and precisely how
            is anyone suppose to
            make cobras pay tax?

          • gun buyback.. pay more than they bring on the black market ….simple

            dumping fish – that’s dumb but just cost time and money to fish them… who would do such a dumb thing? The penalty for doing that is severe… you lose your boat, your livelihood…

            cancellation of debt – it’s a fact.. you default and you owe..

            cobras – I’ll leave them to you…but the British Governor?

            Jesus Morg..we already knew the Brits did taxes and incentives wrong… right?

            perhaps putting bounties on coyotes will result in more of them also? how does that work..???

          • Mommy, why is the sky blue? Why is that man wearing a hat?

            Mommy, I like my red jacket more! Why can’t I go outside?

            Mommy who made the bears? Where do birds come from?………..

            Remind anyone of somebody here?

            This blog should have an age requirement, anyone who keeps asking questions like a 4 year old should be banned.

          • so you pay more to
            buy and more get imported
            and built. same problem.

            those fishermen are
            already dumping fish
            it’s reality, guy

            if the cost to me
            to raise one is 500
            and you pay 1k?

            it’s profitable
            for me to raise coyote
            and so i just might.

          • default and you owe
            but it matters not if you
            are already broke.

            you cannot tax me
            and get yourself that money
            if i ain’t got it.

            and you may well lose
            as the profits for default
            are losses for banks

            if i do not pay
            this i will say: you know the
            banks will write it off.

            i get the sense that:
            unintended consequence
            story of your life

          • when you owe the IRS tax money – it has big time consequences Borg Morg.

            those consequences last a long time…

            anything you have in the way or assets or earnings will be attached…

            some might find that okay but most, especially those that are married with kids will not…

            change the law so that mortgages companies can go after your assets and future earnings and defaults will go away.

            you’re defending people taking money from others.. this is where regulations come from Morg.. this is how you get them.

            when you sign a contract – you say that’s one of the purposes of govt – to enforce contracts and here you hare advocating people defrauding others..

            shame on you guy.. so much for your pious bleatings about the govt protecting your rights.

          • “naw.. only in Morgs wet dreams.. which is already way too much info!”

            unable to cope
            with a reasoned discussion
            ad hominem spews

            just proving once more
            that which we all knew before:
            larry is a dolt.

          • the money for tax
            is not there if you are broke
            that’s why you default.

            magic little elves
            do not come pay your tax bills
            it’s blood from a stone

            i fully agree
            that a mortgage contract should
            be for full recourse

            but i also think
            those terms should be up to the
            buyer and lender

            regulation? no.
            the freedom of contract? yes.
            let people decide.

          • then you support full recourse for loans? let those companies go after all assets and future earning ability?

          • when you sign a contract – you say that’s one of the purposes of govt – to enforce contracts and here you hare advocating people defrauding others..

            the government made
            the mortgage lending rules. you’re
            blaming the victim.

          • “then you support full recourse for loans? let those companies go after all assets and future earning ability?”

            i support freedom
            of contract around home loans
            let people decide.

          • “so you support the govt enforcing contracts?”

            why ask dumb questions
            to which you know the answer
            little wacko bird?

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