There Will Be Consequences

Recognizing trade-offs encourages humility in policymaking

In economics, it’s known as the “law of unintended consequences.” It isn’t new. It’s had a place in economic theory for at least a couple hundred years, and you can find instances of the idea going back a lot farther than that: a group of Jewish philosophers in the time of Alexander the Great considered the mark of wisdom to be foresight, the capacity to consider carefully the consequences of actions. Like most ancient wisdom, however, the law of unintended consequences—the fact that our action will have effects beyond those that we explicitly intend—must be proclaimed repeatedly in every age. As the obverse of the aphorism “Good intentions are not enough,” the law is especially relevant to policy debates, where the overweening tendency is to pander to populist clamor and be seen to be “doing something.” If we want to actually do something good, then we need to resist that temptation. We must instead stop and think about the consequences.

The history of public policy is rife with examples of well-intended measures that had negative effects. In a recent book on parking in American cities, Henry Grabar recounts the history of parking mandates, whereby cities required developers to provide a certain amount of parking with every building. The result was “an extinction-level event for bite-sized, infill apartment buildings like row houses, brownstones, and triple-deckers; the production of buildings with two to four units fell more than 90 percent between 1971 and 2021.” In a ham-fisted attempt to make cities more livable, regulators suppressed development of the most livable residential spaces.

Parking mandates are but one example of regulations that drive up the costs of housing, which in turn has an array of other consequences. Craig J. Richardson reflects on the impact of zoning on the “bucolic town” of Great Barrington, Massachusetts, highlighting the connection between labor and housing supply shortages. Strict zoning laws designed to maintain aesthetic appeal make it difficult for relatively low-wage service workers to live near the companies with job openings. “In cities run by residents intent on preserving the beauty of the environment,” Richardson points out, “an unintended outcome is discrimination by social class.” In contrast, “jurisdictions that have more relaxed and flexible zoning laws are keeping rent in check.”

Richardson also mentions environmental regulations, which are a miasma of unintended consequences. Everyone wants to preserve the integrity of the natural environment, this place that Pope Francis calls “our common home.” Exactly how to do it, it turns out, is not so simple. Germany’s headlong rush away from nuclear power and toward “safer” and “greener” sources has ended up making it more dependent on fossil fuels and on geopolitically problematic providers such as Russia. With similarly green intentions, the state of New York also abandoned nuclear power, resulting in a situation where it “burns more fossil fuels than ever before.” The unintended consequences of a government-coerced shift to battery-powered vehicles will continue to pile up for years to come, but some are already evident and predictable. When government favors one kind of company, industry, or technology over another, it distorts the market and incentive structure, which creates the possibility (or likelihood) that the better option will lose out. Anthony Gill describes just this problem in the field of vehicle fuels, pointing out that promising advances in alternative fuels could be stymied by the government-mandated rush to electric cars.

Recognition of unintended consequences should not paralyze us into inaction. (That would be an unfortunate unintended consequence of promoting the consideration of unintended consequences.) Almost every policy measure will entail some mixture of good and bad effects—or effects that are good for some while bad for others. Even initiatives that enjoy bipartisan and popular support, such as the United States’ recent strictures against China’s microchip industry, can yield unpredictable and even counterproductive results. In our quest to address the problems of the world, we do well to remember Thomas Sowell’s proverb, “There are no solutions. There are only trade-offs.” Prudent judgment involves weighing the trade-offs and making the best choice in an imperfect world.

Policy proposals garner support by emphasizing the positive results to be enjoyed. That is to be expected. But recognizing that there will be consequences beyond the purported ones produces at least two beneficial impulses. First, it encourages deliberation rather than rash action. Policies rushed into effect are rarely helpful in the long run. Second, it fosters humility. If I recognize that my favored policy is likely to have some negative effects, I’m less likely to think of myself as a savior ushering in utopia through my benevolent social program. Instead, I’m merely an imperfect human doing my best to choose a less flawed policy over a more flawed alternative, with the caveat that I could well be misjudging the situation. This is a healthy way to view ourselves, our political officials, and our world.