Unintended consequence: Screwing up the native fish population in Flathead Lake.
Method: Trying to feed them.
This is gorgeous Flathead Lake, about 100 miles from Missoula, Montana. It is one of the cleanest, most pristine lakes in the world. Bigger than Lake Tahoe, Flathead Lake is the largest natural freshwater lake west of the Mississippi River (in the lower 48.)
Flathead Lake is famous for its clear water. You know all those cool shots on Tumblr of really clear water? Many of those were taken at Flathead Lake:
Since it’s so gorgeous, as well as home to lots of very cool species of fish, the lake is a huge attraction for fishermen and brings in beaucoup tourist bucks for the state.
In 1905, TPTB (The Powers That Be ) thought it would be a great idea to introduce Lake Trout to Flathead Lake.
For decades the Lake Trout existed as a minority fish species alongside the native Westslope Cutthroat Trout:
and the (now endangered) Bull Trout:
Things went along swimmingly in Flathead Lake for most of the 20th century.
Then, about 30 years ago, TPTB had another good idea. They thought that fat fish would equal happy fish, so they introduced Possum Shrimp into Flathead Lake as an additional food source for all those trout.
The problem was that Possum Shrimp were sort of ambitious. They didn’t want to be just a trout treat. They wanted to eat, too. Their food of choice was Water Fleas.
And they didn’t eat just a handful here and a handful there, those Possum Shrimp devoured Water Fleas to the point that other smaller organisms took over the fleas’ spot in the ecosystem. This threw everything off.
It turned out that the native Westslope Trout and the Bull Trout really didn’t care too much for Possum Shrimp, but the non-native Lake Trout just adored them. Soon the foreigners (the Possum Shrimp and the Lake Trout) were taking over, crowding out the native trout, which are now struggling to survive. And what’s more, the Lake Trout have now taken to traveling up to the streams in the Glacier Park area, which is worrisome for the ecosystems up there.
The experts are attempting to extricate Flathead Lake from the decline of its native fish population, but efforts thus far have been expensive and largely futile.
Certainly this is a sad example of the law of unintended consequences.
2. Daniel Morgan
One particularly famous example is the Cobra effect.
The term cobra effect stems from an anecdote set at the time of British rule of colonial India. The British government was concerned about the number of venomous cobra snakes in Delhi. The government therefore offered a bounty for every dead cobra. Initially this was a successful strategy as large numbers of snakes were killed for the reward. Eventually, however, enterprising persons began to breed cobras for the income. When the government became aware of this, the reward program was scrapped, causing the cobra breeders to set the now-worthless snakes free. As a result, the wild cobra population further increased. The apparent solution for the problem made the situation even worse.
In 2008, Airbus made the new A380 quieter than any previously-manufacturered plane in an effort to improve passenger experience. Unfortunately, Airbus didn’t realize until after they shipped the aircraft that the quieter cabin resulted in more unpleasant sound for passengers, in the form of bathroom noise, talking and other audible sounds (e.g. coughing, sneezing, crying). The result was a worse experience for both passengers and pilots, and caused Airbus to recall some of the fleet and reengineer the A380 once more to add more sound back to the cabin.
- When San Francisco banned giving away toys with happy meals that exceeded a certain percentage of fat, McDonald’s responded by offering the toys with purchase of a happy meal and a 10 cent contribution to charity. They also stopped selling the toys without happy meal purchase, meaning you now have to buy the meal to get the toy.
- Back when hotels were struggling with explosion of dial up traffic, many implemented a $1 surcharge on local calls. The hope was to deter calls.
- Instead, where people previously would check email and logoff, they started keeping the line open indefinitely to avoid subsequent $1 charges. This ended up putting much more stress on the phone systems. (When AOL had issues with busy signals, people would likewise line camp, exacerbating those issues.)
- Colorado tried to use affiliates to create a taxable nexus for sales tax purposes. Rather than subject all Colorodans to sales tax, Amazon got rid of Colorado affiliates. Not only did Colorado not get the sales tax revenue, they lost income tax for those affiliates. This doesn’t always backfire. New York passed a similar law and Amazon still has affiliates there.
- The essential air service program was designed ostensibly to bring air service to rural communities. It subsidizes airlines for flying unprofitable routes. in order to get the subsidy, carriers must fly. Often they will fly empty planes back and forth. Not only does this waste money, it is terrible for the environment. it also exacerbates congestion at hub airports.
- The higher termination fees for rural phone companies were supposed to offset higher costs of operating in rural areas. Instead, these companies have exploited the system to offer free conferencing services, free international calls, etc. Customers in cities end up subsidizing these services that weren’t the purpose of the program.
- Use-it-or-lose it budget policies ostensibly lead to more efficient distribution of company resources. In reality, it’s not uncommon for managers to blow year end budgets on frivolous purchases so that they don’t lose it next year.
- Password policies which require people to use mixed case, special characters, numbers, not vary old passwords, etc. Passwords that follow these rules are theoretically more secure. But because people can’t remember them, they write them down or store them in a text file – both of which are less secure than letting the user pick a password he can remember.
The employer-based US healthcare market is a perfect example.
Much of the pathological healthcare system operating today in the US can be traced back to two government decisions. The first was the decision to impose wage and price controls during World War II. This had the unintentional effect of causing employers to begin offering health care as an alternative form of compensation to attract top workers. The second was a 1951 decision by the IRS to treat health insurance as a deductible business cost. This had the unintended consequence of making it cheaper (due to the tax deduction) to provide even routine medical care through an insurance model rather than a fee-for-service model.
Insurance, as a payment system, only makes sense for large unexpected costs. After 1951 the entire healthcare system was slowly taken over by insurance, to the point where we think of not having health insurance as being almost equivalent to not having access to medical care.
As a result we live with all kinds of inefficiencies and unfairness. Pricing is utterly opaque. Choices are limited. Incentives are distorted. The system is bloated with administrators whose only job is to decide who pays for what services (a moot question in either a fee-for-service or a single-payer model.) And all this from what seemed like sensible enough answers sixty years ago to wartime inflation and an arcane question of tax policy.
6. Tyson Rosage
The 1973 US Endangered Species Act imposed heavy land use restrictions on property where endangered species inhabited. These restrictions devalued the property which incentivized land owners to avoid these restrictions by killing the endangered species found on their property; masking the appearance of their inhabitence. This practice is often referred to as “shoot, shovel, and shut up.”
7. Aaron Ellis
In 1936, the giant African snail was introduced to Hawaii. These snails are very large and have pretty shells, so they make for nice garden decorations. But within ten years, the giant African snail became a major pest throughout the Hawaiian Islands.
To combat the damage caused by the giant African snail, in 1955 the Hawaii State Department of Agriculture decided to introduce the rosy wolfsnail, a carnivorous snail native to the Southern United States,
What they didn’t fully realize is that wolfsnails are not just predators, but they are voracious eaters and they’re very fast (for snails, anyway). They also have a high reproductive rate. The wolfsnail hunted the giant African snail, but they also viciously hunted all of the local species, including the Oahu tree snail. In less than a year, the wolf snail hunted many of the indigenous Hawaiian tree snails to extinction.
To date, the Oahu tree snails remain an endangered species. The rosy wolfsnails still remain a problem.
8. Gil Yehuda
My favorite example is the study of a bunch of day care centers in Israel. The day care providers were upset that parents come late to pick up their kids — thus extending their day without fair compensation. They implemented a small late fee at some of the day care centers to see if charging the parents for coming late would reduce the lateness rate.
As it turns out, those centers that charged a fee had their late-rate jump up considerably. The parents apparently felt less guilty about showing up late since they were paying the fee. Moreover, when they stopped the fee a few weeks later, the late rate at those centers remained as high, since the social stigma of being one of those late parents wore off.
Note: a better fee structure would have been to increase the charge by the minute — so rather than a fixed charge for being up to 15 minutes late, and perhaps a larger charge for more than 15 minutes — they should have experimented with $1 for the first minute, $2 MORE for the second minute ($3 total), $3 MORE for the third ($6 total), etc. This way late fees could be a revenue generating scheme as well as a punitive measure!
9. Andy Warwick
Mao Ze Dong and his Chinese Communist Party have proven themselves masters of this particular law on occasion, with several policies that started out with good intentions only to spiral out of control. Here are a few:
1. The “Four Pests” Campaign
During the Great Leap Forward Mao introduced a new hygiene initiative that targeted rats, flies, mosquitoes and sparrows. The latter were considered a pest because they fed on grain, which the farmers obviously sowed in their fields. Mao thought this was a waste and was causing yields to be reduced. He thereby ordered that all sparrows be culled. Doing so however meant that there were no birds to eat the locusts that fed on the crop as it grew. Nobody had noticed that the sparrows found them a delicacy too. By the time the CCP realised its mistake it was too late. Locust swarms had taken over the country, devouring entire crop fields as they went, resulting in mass starvation. Epic fail.
2. Backyard Furnaces
Mao insisted that steel production be increased so as to catch up with the industrialized world. Nice idea, except that in order to meet his high steel production targets ordinary people were roped in and made to melt down every scrap of metal that could be found in small furnaces. Targets were met but most of it was worthless metal, and it left people without pots and pans in which to cook, not that that mattered because they had nothing to eat anyway. Having diverted so many millions of farmers from their fields for his steel drive, crop production dropped drastically and further added to the already desperate food shortages. They’d also cut down trees and used the wood from people’s houses to fuel the furnaces, resulting in an increase in homelessness. Epic fail.
3. One-Child Policy
China’s one-child, family-planning policy may have seemed like a good idea, but it’s led to all manner of social problems since. The population was booming and resources in short supply, so a policy that could curb the birth rate was proposed. Although it was never, as is often erroneously believed, applied to everyone, it’s been widely-implemented enough to have prevented an estimated 400 million births (this is the uppermost estimate). So, it would seem to be a success, wouldn’t it? Well, it is if you disregard the fact that, owing to a cultural preference for boys, it’s led to a rise in female infanticide, dangerous backstreet abortions (and government forced abortions) and child abduction. In turn this has caused a gender imbalance of roughly 120 men for every 100 women. That’s a lot of guys who are never going to get married or find girlfriends. There’s also the phenomenon of the “Little Emperors” as Chinese kids get spoiled and don’t learn to stand on their own two feet, which can’t be good for their development, and that one child has to provide financial support for two elderly parents alone whereas previously the burden would have been shared among the siblings. Moderate fail.
Today, childbirth is a relatively routine process, with the current rate of maternal death in developed nations being a mere nine women out of 100,000.
But times weren’t always so good. In the 1840s, childbirth was extremely risky, due to a condition now known as puerperal fever. Healthy women would arrive at the hospital, contract the raging fever, and die within days. This condition flummoxed even Europe’s best hospitals at the time, including perhaps the finest hospital of the time, Vienna General Hospital.
The statistics at the time were terrifying. From 1841-1846, 20,000 babies were delivered at Vienna General, with nearly 2,000 of the mothers dying. The situation worsened in 1847, with 1 in every 6 women dying of puerperal fever.
Then a young man joined Vienna General. His name? – Isaac Semmelweis. His name might not be familiar to you now, but he probably saved billions of lives with a quick, clever change to the system.
Semmelweis was deeply distraught at all the deaths from this strange disease, and conducted an investigation in the hospital. From his early research, he gathered that while different doctors provided a variety of explanations for the condition, from foul air in the delivery wards to the presence of male doctors, none of them really knew what was going on.
So Semmelweis turned from doctor to data detective. He was attempting to solve this troubling puzzle: When women delivered babies at home or with a midwife, they were sixty times less likely to contract puerperal fever than with a trained doctor or medical professional. After analyzing data from his own hospital, Vienna General, which had two separate wards for delivery, one staffed with midwives and female trainees, and another with male doctors, he found that average death rate in the doctors’ ward was more than twice as high as that in the other ward.
Having discredited all the other ridiculous theories floating in the air, Semmelweis proceeded to establish some facts.
- Even the poorest women who delivered their babies and then came to the hospital did not contract the disease.
- Women who were dilated for 24 hours almost certainly contracted the disease, as opposed to those who were dilated for a shorter time.
- The disease could not have been contagious, because the doctors did not catch it from the mother or the newborn.
But as much credit should go to Semmelweis for his remarkable analysis, his realization came by accident. An older professor and a friend of Semmelweis suddenly died by a freak accident. As he was leading a student through an autopsy, the student’s knife slipped and cut the professor on the finger.
The professor suffered a series of grave maladies before dying, which Semmelweis noted, were almost identical to those inflicted on mothers with puerperal fever. There was no ambiguity about the professor’s cause of death. It was caused by “cadaverous particles introduced into his vascular system.
The cat was finally out of the box. In recent years, first-rate hospitals like Vienna General practiced autopsies as a method of studying anatomy. What better way to study illness than to sift through the diseased, malfunctioning organs in question? At Vienna General, every single deceased patient was taken to the autopsy room for examination.
But the doctors and medical students who came from the autopsy room went directly to the maternity ward with at best, a quick washing of their hands. The germs from the autopsy carried themselves all the way to the maternity ward, where the constant prodding and poking of the uterus by the doctors allowed them to fester and cause puerperal fever.
Semmelweis immediately ordered all doctors and medical students to disinfect their hands in a chlorinated wash after autopsies, to make sure that all germs were rid of. The rate of maternal death dropped to a whisper above one percent, saving millions, perhaps billions of live in the process.
But where does the law of unintended consequences come into all of this? It’s a piece of sheer irony that doctors, in the pursuit of medical knowledge that could save thousands of lives, conducted autopsy after autopsy, which, in turn, led to the loss of thousands of lives.
11. Adrian Stone
There is a story that Johnnie Walker Black Label was the #1 selling scotch whiskey in Japan. The marketing brains decided that lowering the price would increase volume.
Instead, sales plummeted.
It seems that, in Japan, lists are produced of the Top 10 in each category. The category is sorted by price. Whereas Johnny Walker used sit in the #1 spot on that list it had fallen down to a lower price-point on the list.
So, why did sales fall instead of increase?
Because the list serves to define social status of the customers: if you buy somebody the #1 item on one of these lists it promotes your status as well as theirs (“Look how important I think you are because I am giving you the #1 scotch on the list. Please be nice to me in return!”).
Johnny Walker quickly raised prices and their scotch reverted to the top of the list, as did sales.
12. Adam Bossy
American citizens often complain about how high CEO salaries are. The SEC attempted to mitigate this, and required CEO salaries to be publicly disclosed. As a result, they increased approximately three-fold between 1976 and 1993, going from 36 times the average worker pay to 131 times the average worker pay. “It encouraged other CEOs to demand higher pay, since now they had hard data telling them they were underpaid.”
13. Robert Rapplean
In America, we wash our eggs to clean any possible infection off of them. This also scrubs a protective layer off of them, which makes it easier for eggs to get infected.
In addition to the Hawaiian’s Snail menace, they also decided to import the mongoose to handle their rat problems. As it turns out, the mongoose is diurnal and the rats are nocturnal. The end result was that the mongooses wound up devastating the native (much easier to catch) animal population instead.
The second one is the 18th amendment to the US constitution, otherwise known as “Prohibition”. This was intended to decrease the drinking of alcohol. When it was passed in 1918, the city of New York had roughly 800 bars on record. By the time it was repealed the city had an estimated 4000 speakeasies in operation. We still haven’t learned that lesson.
14. Brian Grimmer
The Streisand effect is a primarily online phenomenon in which an attempt to hide or remove a piece of information has the unintended consequence of publicizing the information more widely. It is named after American entertainer Barbra Streisand, whose attempt in 2003 to suppress photographs of her residence inadvertently generated further publicity.
15. Lech Dharma
Off the top of my head, one of the best examples of “the law of unintended consequences” occurred in those States that made “texting while driving” against the law (with a hefty fine)—in an effort to decrease auto accidents.
The initial result was that auto accidents increased.
Further investigation revealed that “text-addicts”, who used to position their devices on top of the steering wheel while driving, began holding it in their laps where it could not be seen by passing police. Consequently, they had to take their eyes off the road more often, and caused more accidents.
16. Jack O’Connor
Back in the 90s there was some debate about requiring small children to have their own seat in airplanes. I think there had been media coverage of lap children who died in a plane crash, while some other children in the plane were saved by their seatbelts. Anyway, the idea was that if we don’t allow lap children in cars for safety reasons, we obviously shouldn’t allow them in planes.
That reasoning sounds simple, but it’s actually wrong. While child restraints would make flying slightly safer, flying is already very safe, and so the larger effect of the proposed regulation would have been to make flying more expensive for families with small children. That would have led more families to drive instead of flying, which is much less safe, and as a result more children would have died in car accidents than were saved in plane crashes. Luckily that particular regulation never became law.
17. Dustin Ho
Braess’s paradox states that adding an additional road to a transportation network can actually cause an increase in traffic congestion.
This has actually been observed in multiple major cities, including New York, Seoul, Boston, and London.
18. Brian O’Conaill
In 1919 following the end of WWI, elements among the victorious powers wanted to ensure Germany was – as they saw it – suitably punished for instigating the devastating conflict.
Among the provisions of the was a “guilt clause” whereby Germany had to acknowledge fault for starting the war; a limitation of the German army to no more than 100,000 men; financial reparations and the surrender of significant parts of its territory (the Rhineland, the Saar, the Sudetenland, Danzig among them). The overall intent was a punishment that would ensure Germany would be unable to mount a military threat for the foreseeable future.
The Germans delegation thought the treaty was manifestly unfair, but that they had no choice other than to sign. There was significant dissatisfaction and lingering resentment about it from the beginning. There spread in Germany a stab-in-the-back myth that the German army hadn’t lost the war militarily but rather had been betrayed on the home front, especially by the overthrow of the monarchy.
The economy was in ruins and failed to recover for over a decade. Harnessing resentment of the treaty and the conditions it imposed upon the nation, a particularly indignant young Corporal named Adolf Hitler manipulated and lucked his way into power in 1933.
Over the next half decade Hitler incrementally, with growing public support, ignored/eroded the terms of the treaty. Even many who had been initially skeptical of him, and indeed remained so throughout, felt a grudging admiration for the manner in which he restored German dignity and redressed the shame of Versailles – as they saw it. The stab-in-the-back myth helped undermine support for democratic political process and assuaged the process toward ultimate dictatorship.
With every breach of the treaty (up to the invasion of Poland in 1939) Hitler became further entrenched in his initially precarious position ultimately leading to the total war that was World War II, and of course the Holocaust.
So a treaty intended to neuter Germany militarily and bring about a prevailing peace in Europe, played a large part in precipitating the most devastating conflict the world has ever seen, as well as one of the most unimaginable evils ever promulgated by humanity.
As far as unintended consequences go, I would have to say that Versailles should rank pretty high on the list
Several states in Mexico have just passed laws forbidding the sale of alcoholic beverages in retail after 10:00 PM on weekdays, and 6:00 PM on Sundays. The rationale behind the new law was to reduce the incidence of alcohol-related violence and accidents.
The Unintended Consequence:
Convenience stores around the country have been held up at gun point by people looking to get drunk after 10 PM. Several clerks have been killed.
I have a few examples from the social development sector
- Micro credit / Micro finance as means of poverty alleviation in most parts of South and East Asia : The grand ‘success’ of the Grameen Bank micro-credit programme spawned replication but research (http://www.devex.com/en/blogs/th…) now shows that it did some good but ultimately did not raise people from poverty. This could be seen as a programme failure but there were some unintended consequences. (a) governments and NGOs took micro-credit / micro-finance as the panacea for poverty alleviation and ended up over (and wrongly) using it without making a dent on poverty, (b) innovation around poverty alleviation dried up and policy makers refused to see reason and programmes beyond micro-credit, (c) spurious micro-finance / micro-credit agencies (businesses) sprang up all over the place leading to over-reach and people having multiple debts from different competing agencies, (d) increased competition for the space, led to underhand actions and corruption (definitely in South Asia). All of this while the fundamental causes of poverty were sidelined.
- Banning use of DDT, intended to prevent harm to humans who consume DDT (used to prevent pest attack on stored paddy for instance) crippled the fight against malaria leading directly to millions of avoidable deaths around the developing world while, perhaps, having limited impact on human health.
- Food Aid and unconditional cash transfers over a long period of time in chronically food insecure areas in Africa have been known to deliver short term gains but resulting in long term dependence of the poor on aid. Local economies in large parts of Africa are known to be dependent on aid.
- Continued use of Reservations for socially marginalised communities in academic institutions and employment in India has just led to more and more groups ‘demanding’ to be classified as oppressed. Interestingly the architect of the Indian constitution himself had recommended that this measure be used for a short time only. Sadly it has proven to be like catching the tail of a tiger. No political party has had the courage to let go.
- Non Formal Schooling in South Asia which has been touted as a huge success. But what does it actually do? It lets the State off the hook when it comes to responsibility of delivering quality education. We end up with sub-standard teachers imparting useless ‘education’ to uninterested students. This ‘education’ barely keeps the kids off the ‘illiterate’ list and yet leaves them with no skills to compete and earn a livelihood.
- Responding to drinking water / irrigation crisis by drilling bore-holes deeper and deeper (all over the developing world) – leads to draining of ground water reserves that cannot be recharged. This ‘availability’ of water also leads to human settlements where none should be.
21. Bruce Hubbell
During the 90’s, the federal government wanted to tax the rich, so they increased the taxes on yachts. The unintended consequence was that the rich stopped buying yachts and there was massive layoffs in the yacht building industry. Instead of targeting the rich, the federal government hammered the middle class workers who built the yachts. Oh, yeah. I almost forgot. Since the rich slowed their yacht buying, the taxes that the government collected from yacht sales when down as well. Call it a twofer.
22. Sarah E. Rogers
When the drug lord Pablo Escobar was killed in 1993, it greatly weakened the Medellin cartel. Around this same time, the US had aggressively started pursuing the Miami drug trade, which was sourced via Colombia. The result of the collective weakening of the Colombian cartels was the dramatic strengthening of the Mexican drug trade, and, in turn, the complex drug war that is going on today in Mexico.
The US lifted its ban on assault weapons in 1994 because of lobbying by US groups in favor of broader gun rights. But it became easy for Mexican drug gangs to get ahold of them since there are now 6,600 gun stores in the four states bordering Mexico. In 2009, 11,000 guns were turned over by Mexican security to the US Bureau of ATF, and 90% of those were bought in the US.
23. Yalanda Medina
When airlines started implementing fees for checked luggage, carry-on luggage was exempt. However, if you brought with you a carry on bag that was too large for the overhead bins, your bag was checked at the gate and stored underneath the plane with all of the other checked-at-the-counter luggage.
So naturally, everyone started using carry-on luggage that was slightly too big for the overhead bins. Not only did you get your bags checked for free at the gate, your bags were returned to you at your arrival gate and you didn’t even have to endure the hassle of going to baggage claim.
Additionally, this also caused flight delays since gate personnel/flight attendants had to tag, store and retrieve long lines of luggage at the gate, causing passengers to miss connecting flights, etc.
24. Ning Zhang
Ethanol subsidies in the USA would be a great example. The original intention of the subsidies was to encourage ethanol production and use to lower greenhouse gas. However, use of corn to produce ethanol inadvertently raised the price for corn based products used in food production. Leading to shortages and higher prices for food staples across the world.
25. Fred Landis
20 years ago US media moved tabloid and found that stories concerning dangers to children gave the highest ratings.
A separate tabloid universe of fake statistics was invented to maintain ratings, such as 400,000 missing children and 3 million child prostitutes.
Politicians and law enforcement had to compromise with this fake tabloid world in order to remain relevant. While the FBI insists there are 80 child stranger abductions per year, the Justice department has a working relationship with the fake organizations that raise funds based on fake statistics.
Anti-communism was 50% fake, anti-terrorism 90% fake and the US version of tabloid child danger 99% fake.
Laws and law enforcement followed the tabloids.
The child obesity epidemic is the direct consequence of 20 years of parents being over-protective.
In the last year the fake child protection rackets have come out with the sanctimonious line that it is not their intent to spread fear. That in fact is their whole function.
McDonalds and fast food has been around for 60 years.
What changed in the last 20 years in the artificial climate of fear surrounding terrorism and child danger, both fabricated by the tabloids and self-styled security experts.
26. Paul Denlinger
Ten years ago China had a much smaller economy and had not yet joined the WTO.
Today it has the second largest economy in the world, and is continuing to grow, while the US, the largest economy and most powerful in the world, has a shrinking economy, and is burdened with debt. Its power is waning.
How did this happen?
Following the 9/11 attacks in 2001, the Bush administration decided to embark on a GWOT (Global War on Terror). But because the US’s economy was frail then, he decided not to raise taxes, instead relying on debt financing. To stimulate the economy and get Americans to shop, taxes were cut. In 2002, his treasury secretary, Paul O’Neill, advised against this policy, saying that it would lead to unsustainable debt for the US. Forced into a confrontation with Dick Cheney, the war hawk, O’Neill was forced to quit his position. Some of this debt was financed by China through its purchase of US treasuries.
In November 2001, China joined the WTO. This meant that the rapid growth phase of China’s export machine started, making it the factory to the world. Many of the exports went to the US, where Americans were treating their home equity as an ATM; all the pundits told them that real estate prices would continue to go up. From 2002 to 2008, China’s exports grew rapidly. Wherever you went, products had “Made in China” labels.
As more Americans bought Chinese products, American factories laid off US workers, increasing the number of US unemployed.
In the meantime, the US embarked on military adventures in Afghanistan and Iraq which cost some US$6T by 2011.
The system broke in September 2008 because subprime mortgages, which were financed by the US banks and Fannie Mae and Freddie Mac basically collapsed. The world economy very nearly ground to a halt.
China’s government injected nearly US$1T into the Chinese economy at the end of 2008 to keep the export machine growing. In 2009, the Chinese export machine continued to work, while the rest of the world slowed down. By 2011, it is showing signs of slowing down, with high inflation hitting food prices.
Here are the unintended consequences:
- Bin-laden planned to hurt the US with 9/11, but we don’t know whether he planned on hurting the US through terror attacks, or economically.
- The Bush and Obama administration had chosen to take a very narrow interpretation of the threat from al-Qaeda, looking at it only from the war POV.
- While the US govt, media and public focused on the war, they took their attention away from the financial and economic repercussions of cutting taxes while fighting a multi-front war on terror. Cheney belittled this threat saying that “Reagan taught us that debt doesn’t matter.”
- Because the US needed to keep its economy going, this opened up an opportunity for China to grow economically, and expand its influence.
- The subprime mortgage crisis was triggered by the over-expansion of debt through financial instruments no one understood, the least of all being the ratings agencies, who should have known the most.
- Indirectly, Bin-Laden and al-Qaeda made it possible for China to get breathing room and grow.
- The amount of debt the EU and US are carrying is enormous; the interest payments for future generations almost certainly can’t be paid off.
- If it was Bin-Laden’s intention for the US to become overstretched economically, militarily, and bringing about US decline in the process, he succeeded, and both US administrations since then have stumbled into the trap, while China has grown. If you accept this interpretation, Bin-Laden achieved his aims, even though he was killed in May 2011.
- Well-meaning laws requiring baby car seats to be put in the backseat, increase incidence of babies dying of exposure in a hot cars. The likely mechanism is that if the baby is in the backseat it’s easier to forget them as one is leaving the car. Note that although this may be an unintended consequence, the unintended consequence may not be greater than the harm to babies from riding in the front seat, those would have to be weighed against one another.
- Increase in incidence of malaria when well-meaning Peace Corps workers helped install new stoves in huts that alleviated smoke inside the huts. The lack of smoke presumably allowed the mosquitoes into the huts or near the huts, thus spreading malaria. I think this was mentioned in the book Guns, Germs and Steel. Traditions sometimes have a sort of collective intelligence that isn’t obvious.
- More broadly, banning products or services that are in demand creates black markets, which often come with their own problems.
- Selling products or services for less than their market value can convert cost to other forms such as long lines – the people are then “paying” by standing in line rather than just paying a greater price to begin with.
- Uber Taxi’s Gouging with Peak Fares – People seem to often not understand that Uber (company) taxis charging much higher rates on New Years Day in the early AM hours, is not necessarily a bad thing. Shouldn’t Uber be “reasonable” and altruistic by keeping the prices the same as off-peak hours instead of gouging at the peak times? If Uber was “altruistic” keeping the prices consistent, there would be the unintended consequence of long and/or unpredictable wait times, leaving many people waiting perhaps until 4AM. Wouldn’t you rather know the price up front and decide at that point if it’s worth it to pay the peak fare, or if you should find another way home?
A general point: unintended, doesn’t mean unforeseen and it doesn’t mean that the unintended consequences make the initial action overall a net poor decision. Granted, many of the answers to this question are unintended and unforeseen.
It’s not as clear that many of the answers point out situations where the unintended consequence makes the initial action a net poor decision.
28. Jon Mixon
The United States, under the Carter and Reagan Administrations, funded several groups in Afghanistan that ultimately evolved into the Taliban. This group , in turn, supported and assisted another group that later attacked the United States in Africa, Asia, as well as in the US itself. This led the US to launch a war against the Taliban and the groups that attacked them and the US is now in the process of losing a war it started to defeat a group that it created.
29. David Witz
The Black Death, which exploded in Europe thanks to religious zealots who were trying to eradicate the Devil’s servants.
Although the disease originated in China, it spread rapidly and widely, killing up to 60% of Europe’s population between 1348 and 1350. During the years leading up to the Black Death, many European Christians began killing cats because they were told that cats were vessels for Satan’s spirit. Their efforts to ward off bad luck in this manner left no defense against the black rats that came over on Asian merchant ships, bearing the Oriental rat fleas that spread the plague.
30. Prashant Ghabak
This is an example from the book Influence by Robert Cialdini.
A lady was having trouble selling a certain allotment of turquoise jewelry. It was tourist season, her store was full and she was asking a very reasonable price for the jewelry but she had no luck. She placed the jewelry in a more central area and asked her salesmen to push for it without any success. Tired of all this she wrote a note to her salesman “Everything in the display case, price*1/2”. She found out after few days that all her jewelry was sold because the employee had read the ‘1/2’ in her message as ‘2’. So the entire allotment had sold out at double the price.
The reason was that people applied ‘expensive=good’ principle since they could not estimate the intrinsic value of the jewelry.