unintended consequences Archives - Page 2 of 2 - Common Sense with Paul Jacob

Some “unintended consequences” aren’t.

The order of the market is an unintended consequence of market participation. By buying and selling, we’re just trying to get what we want. But we also send signals that help other folks accommodate our values and plans, which then allows markets to form some semblance of orderliness.

In government, on the other hand, laws get advanced to help this person or that, or whole groups of people. But economists often note that the actual consequences of many policies are at great variance with their advertised benefits. These often negative outcomes we term (following F.A. Hayek) the “unintended consequences.”

It’s worth noting that sometimes politicians do intend those hidden, bad consequences.

Economist David Henderson brings up an instance of this:

One insurance agent I spoke to speculated that politicians and other government officials who support these regulations not only understand these effects, but also like them. Why? Because they cause more people to go without insurance and thus create a demand for government-provided insurance.

Henderson then cites a provision of Obamacare, now kicking in: Regulations mandating medical insurance companies to spend a prescribed percentage of premiums “on actual medical care.” The result will be, almost certainly, the demise of whole hunks of the health insurance industry.

Thereby increasing political demands for government-provided insurance.

Some of the folks who concocted this regulation, and some who voted for it, certainly knew the likely result. And welcomed it.

Politicians are not equally clueless.

This is Common Sense. I’m Paul Jacob.

Wind Turbine Blues

I’m all for alternative sources of energy . . . providing that they actually produce enough to cover their costs.

Sad to say, it’s beginning to look like wind power is for the birds, if not the bats.

One big fear some people had about wind turbines was that they might kill too many birds. Think giant food processors in the sky.

But it turns out that the bigger danger is to bats. Dead bats are found all around wind turbines. Why?

Wind pressure. The poor little creatures can’t stand the quick change in air pressure around those spinning blades.

Meanwhile, the Massachusetts Technology Collaborative, the government agency overseeing the state’s rebate programs for alternative energy, has put a halt to subsidizing small wind turbines. No more bucks for housetop windmills, folks.

The agency sponsored a study that has calculated that the average energy output for the turbines reviewed was no more than 27 percent of what installers had projected. It could be worse, and sometimes is. In Britain, a study found that some poorly placed turbines sucked up more energy converting current from DC to household AC than produced, making them economic and energy sink holes.

We should remember, when activists start talking about revolutionizing things, that subsidies are for the birds, and technology based on hope alone, bats.

It’s from successful business operations that future revolutions come, not from mere wishful thinking. Or any amount of government subsidy.

This is Common Sense. I’m Paul Jacob.