Today we talked more on the Law of Unintended Consequences. This is when unintended things, usually bad, happen as a result of a law or something that was supposed to be good for society. Last post I talked about the seat belt example. Today we talked about the Endangered Species Act and how landowners who were paying the cost of the act just cleared their lands and now more animals are endangered.
Unintended consequences happen when we use simple rules to try and regulate complex systems.. We have limited information, little feedback, misleading incentives, and short time horizons.
We also talked about how when regulations push against incentives, incentives push back. For example, the Disability Act caused less disabled people to be hired because it would cost the company more.
"Sometimes the devil you know may be preferable to the devil you don't."
We ended the lecture by talking about how trade is NOT zero-sum. There is the pie fallacy - there is a fixed amount of wealth in the world.
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