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.