"Good Intentions - Unintended Consequences"

Sydney M. Williams

swtotd.blogspot.com

Thought of the Day

“Good Intentions – Unintended Consequences?”

September 25, 2017

“Concentrated power is not rendered harmless

 by the good intentions of those who create it.”

                                                                                                 Milton Friedman

Governments face myriad challenges. Among them are natural disasters: hurricanes, earthquakes, tsunamis, volcanic eruptions, tornados, blizzards, mudslides, floods, cyclones and wildfires – at least those not set by humans. Other challenges include changes wrought by technology and the disruptions they bring – changes that government feels, because of their significance, require their involvement: space travel, renewable energy, transportation and farming. But, do good intentions always achieve intended results?

Massive problems (and opportunities) do demand government involvement. For example, while businesses and individuals sent millions of dollars and hordes of supplies to help disaster victims in Houston and Florida, only government had the size, scope and authority to bring order to the chaos that ensued – to repair streets, harbors and buildings, and to protect the innocent from the unlawful few who take advantage of the confusion disasters unleash. Likewise, when individuals’ dreams show promise of change that can positively affect all lives, it is often governments that marshal resources to turn dreams into reality. More than a hundred years ago, Mary Shelly, Jules Verne and H.G. Wells wrote science fiction about space trips, life beneath the sea and time travel, but it took NASA to put a man on the moon. It was World War I that turned submarines into effective weapons. Time travel remains a dream.  

In its desire to help, government is not driven by the calculus of profit and loss, but by intentions that are noble in conception, but, at times, inferior in execution. Government is fallible. It is composed of armies of bureaucrats led by elected officials. It is in the self-interest of bureaucrats to protect their turf, to expand their departments, to achieve personal goals. It is in the self-interest of elected officials to attract funds, expand their bases of support and win re-election. It is left to the electorate – often gullible, swayed by rhetorical skills and promises of Nirvana – to determine whether an elected official remains in office. Too often, promises made become unrealistic expectations. There is a wide girth between what we want and what we can have. James Boswell quoted Samuel Johnson as saying, “Hell is paved with good intentions.” Aldous Huxley went further: “Hell isn’t merely paved with good intentions; it is walled and roofed with them. Yes, and furnished too.”

In providing below-market-cost flood insurance, governments help those living in low-lying coastal areas continue to live in exposed, unsafe areas. It is not right to forcibly move people, but is it right to encourage them to stay? Does government unintentionally abet human suffering by removing the “risk” from risk insurance? If the true price of living in coastal Florida, Texas, New Jersey, etc. – the real costs, including insuring to rebuild – were reflected in home prices, would as many people populate flood-prone zones? If towns and cities taxed residents for the true costs of investing in damage-mitigation measures, would those communities be abandoned, or would residents ante up? I don’t pretend to have answers. It is right we help our neighbors, and it is true that everyone is susceptible to the unexpected, but some places are more vulnerable than others.

Another example of government interference: Tesla’s sales have been built with taxpayer support. When Hong Kong cut back its electric-vehicle tax credits in April this year, sales dropped to zero from 3,000 the month earlier. When Denmark scaled back incentives last year, sales of electric cars dropped 70%. Now, in California, the $2,500 rebate Tesla buyers receive is at risk because of union pressure.

Government’s interference in the renewable energy industry has negatively impacted consumers – at least over the short term. Taxpayers, according to Forbes in February 2015, had invested $150 billion over the previous five years in renewables – for 2.6% of electricity production. One consequence has been higher electricity costs, despite coal and natural gas prices – the two principal fuels used in electricity generation – having fallen between forty and fifty percent over the past decade. Coal prices declined as demand abated. Gas prices fell because fracking and horizontal drilling increased supply. Wind and solar are not economically feasible without government support. Is it government’s role to pick winners? Are they supporting cronies? We can be skeptical without being cynical.

Commodities have long received government help – supporting farmers, but at the expense of consumers. These problems are not exclusive to the United States. A recent article in The Wall Street Journal described how the European Union capped local production of sugar, keeping prices high, thereby benefitting exporters from poor African nations, like Swaziland. Reversing that policy, which the EU is now considering, will bring hardship to farmers in Swaziland. Was this an unintentional consequence of good intentions? When markets are essentially free, prices and production adjust. When tariffs and other forms of protectionism are employed, prices trend higher; and adjustments, when policies change, are more abrupt and disruptive to producers and consumers. Other industries, like construction and technology, are examples where government must balance societal needs against costs and entrepreneurialism. Lobbyists protect the status quo-favored at the expense of the consumer. Also, are good intentions behind the welfare and entitlement mess, or the dependency of government on regressive lotteries?

There is no way to protect everyone against nature’s devastation, or against technological advances. In that sense, our lives are a form of Russian Roulette. But we can mitigate those affects with commonsensical approaches. Whenever and wherever we can, we should avoid building on fault lines, in flood zones, or in areas subject to mud slides. Or, if we must do so, the price we pay should reflect the added risk. Likewise, we cannot be protected – nor would we want to be – against all technological changes, and the Schumpeterian effect of creative destruction in manufacturing and services. Improved living standards, after all, rely on bettering the way we do things. Embedded in the theory of the survival of the fittest is that we adapt or we die. Government can help ease the adjustment, but we must be careful lest their heavy hand in allocation of resources or in pricing, hampers productivity and hurts consumers.

It is natural for organisms to grow. What is true for weeds in our gardens is true for bureaucracies that infest our politics. In concentrating power in a few government agencies, composed of the unelected and unaccountable, the people are not better served. In fact, they are often penalized. It is the needs of the people that should be our guiding light, not policies to support a political ideology.

A Trumpet for Reason, is a short book, formatted as a debate between youth and age and written by Leo Rosten, a humorist and journalist, forty-seven years ago. As the dust jacket reads, the book is “…a ringing, cleansing answer to the New Left and the New Right, the militants and the extremists and romantic demagogues who have been tearing our country apart.” It was written at a time when the Vietnam War was rendering the fabric of American culture – not dissimilar to today, with White Supremacists and Antifa polarizing our politics. Reading the book is a reminder that life doesn’t change so much as reinvent itself. When emotions rule actions, reason is wanted, and honesty sought: “…Nothing is more sacred,” Rosten wrote, “than the unflagging pursuit of truth, whomever it may disappoint, or contradict, or upset.” It is a truism worth remembering.