Unintended Consequences/Perverse Incentives
Some great examples of unintended consequences from the Wikipedia listing for "Perverse Incentives":
1. In Hanoi, under French colonial rule, a program paying people a bounty for each rat pelt handed in was intended to exterminate rats. Instead, it led to the farming of rats.
2. 19th century palaeontologists traveling to China used to pay peasants for each fragment of dinosaur bone (dinosaur fossils) that they produced. They later discovered that the peasants dug up the bones and then smashed them into many pieces, greatly reducing their scientific value, to maximize their payments.
3. Opponents of the Endangered Species Act in the US argue that it may encourage preemptive habitat destruction by landowners who fear losing the use of their land because of the presence of an endangered species, known as "shoot, shovel, and shut up."
Update: Here's another example from one of James Gwartney's books:
4. In the former Soviet Union, managers and employees of glass plants were at one time rewarded according to the tons of sheet glass produced. Not surprisingly, most plants produced sheet glass so thick that one could hardly see through it. The rules were changed so that the managers were rewarded according to the square meters of glass produced. The results were predictable. Under the new rules, Soviet firms produced glass so thin that it was easily broken.
And here's another:
5. Private companies were paid to transport convicts/prisoners from the U.K. to Australia during the late 1700s and the early 1800s. The first payment schedule was based on the number of prisoners who boarded ships in the U.K. As you might imagine, there was no incentive to deliver living prisoners to Australia, and many of them died during the trip, due to overcrowding, lack of food and water, unsanitary and unsafe conditions, untreated diseases, etc. The payment schedule later changed, and was subsequently based on the number of living prisoners delivered to Australia. Result? Fewer prisoners died during transport.
59 Comments:
And this is the heart of my General Theory of Liberalism: the defining characteristic of liberals, and the reason for their consistent failures, is their inability to understand incentive effects.
Another one, albeit a not-so-favored one here:
"Right to Work" was made with the intent of choice, but the only real choice is no. Choosing yes only makes a person's performance review instantly go from good to sour(for the same performance level), they are watched for policy violations while opponents are not watched, and departments are restructured to dilute consent.
In addition, it creates the perverse incentive for employers to workers with contempt, as there is no counter-balance.
There are two choices in resolving it:
* Nullifying the law. Not likely to happen until there's enough of a critical mass of anti-RTW Northerners in both the South and North. I can only hope to live long enough to see this day happen in at least one state.
* Counting employer-side unions such as staffing agencies, consultancies, contingent/casual/temporary labor, part-time workers, and other less-than-FTE entities as labor unions for the purpose of RTW laws. This would resolve the logical inconsistency of treating employers one way while treating their workers another way.
Another unintended consequence involves price gouging legislation. The idea is to stop people from charging substantial prices for goods before/during/after a natural disaster. However, by not allowing prices to adjust, it actually causes a scarcity of the good. Either too much is consumed at the approved price, leading to a shortage, or no one is willing to risk the trip, meaning that no one gets the good.
So, what we have here is a law designed to make sure everyone gets the water they need basically ensuring no one gets the water they need.
As long as we are talking perverse incentives, how about the 'body counts' as a war strategy in Viet Nam.
The government requires all non resident aliens to have an Individual Tax Identification Number (ITIN). This is the alternate to having a Social Security number.
Having a ITIN gives illegal aliens an incentive to file with the IRS and pay income tax.
So, how has this worked out for the real U.S. taxpayers?
"In 2010, the IRS owed undocumented workers more in claimed additional child tax credits than it collected from those workers in taxes."
Illegal workers are incentivized by the Additonal Child Tax Credit to report neices and nephews in other countries. Thus, the illegal immigrant gets a full " fully refundable" tax credit of $1000 for each child listed.
This is not legal BUT the IRS has not sought documentation for the far flung child income stream.
Millions of "taxpayers" get "refunds" of billions of dollars that far exceed their income taxes paid every year. Is it any wonder why the top 10% of taxpayers pay 70% of the taxes?
Carpe Diem: Unintended Consequences/Perverse Incentives
Great post.
W.C. Varones (General Theory of Liberalism): It appears to be a mishmash of grievance, entitlement, guilt, envy, group identification, deification of elected leaders, and love of big government.
Many of those qualities are also found on the right. You are probably conflating various shades of leftism.
W.C. Varones (General Theory of Liberalism): the defining characteristic of liberals, and the reason for their consistent failures, is their inability to understand incentive effects.
As liberals generally support reform, they do tend to run up into complex incentive effects. When they do successfully navigate a reform, such as Civil Rights, it incentivizes them to more reforms, often without a firm understanding of the unintended consequences. Of course, sometimes you have to move forward and "damn the torpedos".
This is not legal BUT the IRS has not sought documentation for the far flung child income stream.
Of course. The IRS is too busy auditing high earners (which amounts to another tax, btw) to worry about billions of dollars of fraud at lower reported incomes.
I'm just so eager for more of what I legitimately earn to pass to these fraudsters. Yay.
@sethstorm
"In addition, it creates the perverse incentive for employers to workers with contempt, as there is no counter-balance."
I've lived and worked in a RTW state my whole life and have never been treated with contempt by any employer. A counter-balance is to leave a go work elsewhere.
@Zachriel
Civil rights for blacks was a successful liberal reform....that's small "l" liberal which came from what today is the right.
spotteddog: Civil rights for blacks was a successful liberal reform....that's small "l" liberal which came from what today is the right.
Sorry, that is incorrect. They advocated for a more egalitarian society, which is a hallmark of the left. They were identified as on the left and as liberals at the time. They often supported other causes of the left. King, for instance, supported affirmative action, federal help for the poor, and opposed the Vietnam War. He was shot supporting a public employees union, an issue very much in the news today.
This is where the American Right has become untethered from conservatism, when they start believing rewrites of history that are bounced around through the right-wing blogosphere.
Speaking of rewriting history, for some reason you avoided mentioning King was a Marxist. As was Malcolm X.
Henry Ford was an anti-semite. Does that negate his accomplishemnts?
It might be worth mentioning that the biggest segregationists at the time were, in fact, Democrat. LBJ went against his own party to pass the Civil Rights Act. Prior to that act, the political landscape was the complete opposite from what we know it as today: The "Bible Belt" and South were staunchly Democrat, whereas the "educated elite" North was staunchly Republican. After the Civil Rights Act was passed, you saw a mass exodus from the Democratic Party of what we now call ultra-conservatives to the GOP and unenrolled. Likewise, you saw the educated start to support Democratic platforms. It's a fascinating historical tidbit: the parties as we know them today did not exist prior to the Civil Rights Act.
um...Moe...Thomas Sowell was also a Marxist.
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"As liberals generally support reform, they do tend to run up into complex incentive effects." -- Zach
If by "reform" you mean the imposition of the state at the expense of liberty.
"When they do successfully navigate a reform, such as Civil Rights ..." -- Zach
Jon is absolutely correct, "liberals" were not the champions of the Civil Rights movement. Your assertion to the contrary is simply revisionist hogwash.
FDRs "New Dealers" were inveterate racists, supporting eugenics and making common cause with the KKK. As was the labor movement, which denied membership to blacks. ALL of the Civil Rights legislation was passed inspite of the Democrats, not because of them.
And Mickey Mouse was a steamboat captain...What has that got to do with my point?
In the end, do we judge a person by what he says or what he does?
Provide one example of King extolling Marx in his own words. King read Marx and rejected Marxism and Communism. Period.
@Zachriel
Lincoln was a (fill in the blank).
Bull Connor was a (fill in the blank).
The president who sent troops to unblock the schoolhouse doors was a (fill in the blank). Robert Byrd was a (fill in the blank). I could go on and on. LBJ, Al Gore Sr, Fulbright.....
Sowell claimed to be Marxist in his 20s and then rejected Marxism in favor of Capitalism...so once a Marxist, always a Marxist?
"so once a Marxist, always a Marxist?"
Um, not if you end up rejecting Marxism, as you admit Sowell did.
"The "Bible Belt" and South were staunchly Democrat, whereas the "educated elite" North was staunchly Republican. After the Civil Rights Act was passed, you saw a mass exodus from the Democratic Party of what we now call ultra-conservatives to the GOP and unenrolled. Likewise, you saw the educated start to support Democratic platforms. It's a fascinating historical tidbit: the parties as we know them today did not exist prior to the Civil Rights Act." -- Jon
Not quite. The liberal "educated elite", or "progressives" as they styled themselves, in the north were in bed with the KKK and shared most of their racial views. They viewed blacks and other minorities as "inferior stock" and advocated aggressive eugenic policies.
There was no "mass exodus" from the Democratic Party following the passage of the Civil Rights Acts, that's revisionist nonsense. Nor, were "ultra-conservatives" anti-civil rights.
These two articles destroy the "Republicans and Democrats switched sides as all the racists southerners became Republicans" argument:
"Conservatism does not equal racism. So why do many liberals assume it does?", Washington Post
"The Party of Civil Rights", National Review
Che:
The law would not have been considered, let alone passed if not for the marches, sit-ins, boycotts and peaceful protests. Giving or taking credit by left or right is a bit rich.
"The law would not have been considered, let alone passed if not for the marches, sit-ins, boycotts and peaceful protests. Giving or taking credit by left or right is a bit rich." -- Moe
Nonsense. The Republicans were trying to move civil rights legislation long before the "marches, sit-ins, boycotts and peaceful protests". The Republicans pushed anti-lynching laws and attempted to legislate the racial integration of the military, making the issue a plank in their party platform in 1940. Democrats including FDR and Truman resisted the racial integration of the military until 1948. Republicans fought against the labor unions attempts to deny blacks employment and initiated the first real civil rights legislation in 1957, responding to Democrat anger after the Brown v. Board of Education decision. So, please, drop the moral equivalence.
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"Mr. President, the crime of lynching . . . is not of sufficient importance to justify this legislation." -- Sen. Claude Pepper (D., Fla.), 1938, Spoken while engaged in a six-hour speech against the antilynching bill
Moe, your point was random and not worth addressing.
And, for the record, Sowell did not "claim" to be a Marxist. He was a dedicated Marxist who read all of Marx's works (rare among Marxists). He is, as a result, an expert on Marx and he wrote a very good book on Marxism, actually. Despite earning his Ph.D from the University of Chicago, where he was a student of Milton Friedman and George Stigler was his adviser, he remained a Marxist until he he went to work in Puerto Rico post upon completing his Ph.D.
This information is sourced from his autobiography and from interviews with Sowell. If you just look him up on wiki, I guess you're likely to write that he claimed he was a Marxist in his 20's.
Methinks:
Riiiiiight,
Every bit as randoom as your bringing up "King was a Marxist"
Still waiting for your proof of that random comment.
Sowell is not a Marxst - he WAS a Marxist. I know it's a subtle distinction, but c'mon.
"Giving or taking credit by left or right is a bit rich." -- Moe"
Well, that's more generous than the usual Liberal rhetoric. The Left has been taking all credit for civil rights for as long as I can remember. They've also been a fast draw to the race card anytime somebody disagrees with them.
I agree, it is a bit much.
Che: I could eat a bowl a alphabet soup and crap a better argument than that drivel.
"Che: I could eat a bowl a alphabet soup and crap a better argument than that drivel." -- Moe
Funny, I was just thinking that that must be where most of your arguments come from.
Moe, clearly you can't.
I don't think the "unintended consequences" is "left" or "right".
like other things "IT ...happens".
you restrict birth control and abortions and guess what happens?
you kill off a predator and what happens to the population the predators preyed on?
and the worst of all... you put a speed limit on a road and the idiots all line up in the left lane - going the speed limit of course.
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I'm not sure much of this discussion about who helped and who hurt blacks has much merit. 50 to 80 years ago both political parties and almost all the states were home to racist elected officials. What's the point of bringing that all up now?
"50 to 80 years ago both political parties and almost all the states were home to racist elected officials. What's the point of bringing that all up now?" -- Jet Beagle
As Daniel Flynn put it, "Seeing themselves not only apart from but above America, leftists imagine their ideological ancestors as immune from America’s historical stains. The Left has its own version of American Exceptionalism, one that sees radicals and progressives always at war with their nation’s sins ..."
The Left insists that the rest of us inhabit the world of their delusions - fuck them.
What's the point of bringing that all up now?
As far as I can tell, it's to argue that Team Democrat kicks Team Republican's ASS!!! And vice verse.
Of course, both teams are actually on the same team and they're teaming up against us, but devoted fans don't see that.
what party was Jesse Helms ?
I've lived and worked in a RTW state my whole life and have never been treated with contempt by any employer. A counter-balance is to leave a go work elsewhere.
That incorrectly presumes that the costs of doing so are not in favor of the employer.
What you suggest is the exception not the rule. RTW's designed specifically with the incentive to kill unions while it has the written intent to allow them to exist.
The employer must also be the end recipient of the cost in order to maintain balance. Leaving a company will not cause the employer to change in any meaningful way or timespan; thus balance cannot be attained. If both employer and worker-focused groups are subject to the same law, then the incentive is to establish balance as both parties are disarmed.
RTW's designed specifically with the incentive to kill unions while it has the written intent to allow them to exist.
So what you are saying is, without the ability to compel membership, unions will wither and die. So, by your own admission, unions are a bad deal for workers.
Thanks for varones for that nugget you posted...
"Another one, albeit a not-so-favored one here"...
So in other words sethstorm unless the government is proping you up with some inane and expensive legislation you can't make your own way in the world, right?
zach says: "When they do successfully navigate a reform, such as Civil Rights"...
Sucess?!?!
ROFLMAO!
Seriously you jest, right?
Because of the Civil Rights act of '64 we have the following:
Social engineering like affirmative action, hate crimes, school busing and housing projects have been a impotent replacement for the moral order...
Jon Murphy: It might be worth mentioning that the biggest segregationists at the time were, in fact, Democrat.
Sure. In those days, parties were more coalitions rather than ideologically based. The Democrats united the South, workers, and progressives. The Republican party represented business interests, and actually included many liberals, including a large number of Southern blacks.
Che is dead: If by "reform" you mean the imposition of the state at the expense of liberty.
If you consider federally enforced end of segregation to be at the expense of liberty.
Che is dead: Jon is absolutely correct, "liberals" were not the champions of the Civil Rights movement.
King, the most important leader of the movement, was considered a liberal at the time, advocated changing the entire racial culture of the American South, the end of American military involvement in Southeast Asia, subsidies for the poor, minimum wage, and was killed in support of a public employees union. Not sure how you could categorize him otherwise.
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Zachriel: When they do successfully navigate a reform, such as Civil Rights, it incentivizes them to more reforms, often without a firm understanding of the unintended consequences.
juandos: Because of the Civil Rights act of '64 we have the following: Social engineering like affirmative action, hate crimes, school busing and housing projects have been a impotent replacement for the moral order...
Hmm. You didn't use quotes, but the rest of comment includes a racist and homophobic rant. Odd that.
samyn on the green: "The primary thing that the civil rights movement was concerned about was co-opting the loose sexual morals of the most unbridled elements of the black community and transposing them on the mainstream."
In any case, you seem to be supporting our original statement concerning the unintended consequence of success breeding possible overreach.
Sure. In those days, parties were more coalitions rather than ideologically based. The Democrats united the South, workers, and progressives. The Republican party represented business interests, and actually included many liberals, including a large number of Southern blacks.
Absolutely correct. Politics of that era were quite fascinating, weren't they?
"If you consider federally enforced end of segregation to be at the expense of liberty." -- Zach
Sorry, but segregation was imposed by progressives/liberals. The federal workforce, for instance, was integrated until Woodrow Wilson became president. It was the Republican Party led by Eisenhower and Nixon that challenged, defeated and then enforced desegregation.
What's more, an examination of the voting records of those Republicans who were supporters of civil rights legislation showed many of them to be staunch conservatives. The idea that the Civil Rights movement was championed solely by liberals in opposition to conservatives is simply horseshit. Certainly, there were many liberal Democrats who broke with the majority of their party and fought for civil rights, but the Civil Rights Acts of 1957, 1960 and 1964 would not have passed without the overwhelming support of Republicans in Congress. Democrats, and their sycophants in the media and academe, have since rewritten the history of this period shamefully casting Republicans and conservatives in opposition to black equality.
"... Westminster College historian David W. Southern notes in his recent book, The Progressive Era and Race: Reform and Reaction, 1900–1917, the very worst of it—disfranchisement, segregation, race baiting, lynching—“went hand-in-hand with the most advanced forms of southern progressivism.” Racism was the norm, not the exception, among the very crusaders romanticized by today’s activist left." -- When Bigots Become Reformers, Reason
"Since 1933, Republicans had a more positive record on civil rights in Congress than the Democrats. In the twenty-six major civil rights votes since 1933, a majority of Democrats opposed civil rights legislation in over 80 percent of the votes. By contrast, the Republican majority favored civil rights in over 96 percent of the votes." -- Congresslink
"King, the most important leader of the movement, was considered a liberal at the time ..." -- Zach
"These Negroes, they're getting pretty uppity these days and that's a problem for us since they've got something now they never had before, the political pull to back up their uppityness. Now we've got to do something about this, we've got to give them a little something, just enough to quiet them down, not enough to make a difference. For if we don't move at all, then their allies will line up against us and there'll be no way of stopping them, we'll lose the filibuster and there'll be no way of putting a brake on all sorts of wild legislation. It'll be Reconstruction all over again." -- Sen. Lyndon B. Johnson (D., Texas), 1957
"I did not lie awake at night worrying about the problems of Negroes." -- Attorney General Robert F. Kennedy, 1961, Kennedy later authorized wiretapping the phones and bugging the hotel rooms of Dr. Martin Luther King Jr.
Like Bobby Kennedy and Lyndon Johnson, King's views on a whole host of issues changed over time. But the fact remains that the system that he was challenging was created and maintained by progressives and "New Dealers" - not conservatives.
"Sure. In those days, parties were more coalitions rather than ideologically based. The Democrats united the South, workers, and progressives. The Republican party represented business interests, and actually included many liberals, including a large number of Southern blacks." -- Zach
The Republican Party at the time may have had some liberals - they've certainly got them today - but these men, unlike the unionized workers and the majority of progressives in the Democrat Party at the time, were not anti-civil rights. I am not arguing that ALL Republicans were in favor of civil rights legislation and that ALL Democrats were opposed. Nor, am I saying that the parties were ideologically pure in terms of being comprised of only conservatives or only liberals. What I am saying is that the Civil Rights movement was an effort to end a system imposed, maintained and enforced by liberals/progressives. So, to celebrate the role that liberals played in the Civil Rights movement of the 60's without acknowledging their role in creating the very problems that they were rightfully confronting is simply rediculous. And to insinuate - as the left does at every instance - that Republicans in general, and conservative in particular, were against black equality is just evil, ahistorical gibberish.
Che is dead: Sorry, but segregation was imposed by progressives/liberals.
And yet everybody considered Southern segregationists to be conservative, and Civil Rights marchers to be liberals.
Che is dead: It was the Republican Party led by Eisenhower and Nixon that challenged, defeated and then enforced desegregation.
You seem to be conflating political party with left and right. While today, the parties are somewhat ideologically divided, in previous times, they were coalitions of disparate groups.
"And yet everybody considered Southern segregationists to be conservative, and Civil Rights marchers to be liberals." -- Zach
Only those with no real understanding of the actual history, or subjected to the indoctrination of a leftist media and academy, anxious to divert blame away from their "progressive" heroes. The Civil Rights movement was a struggle within the Democrat Party. Many northern "progressives" could see, after the efforts of the Eisenhower administration, that the tide of history was moving against them and chose to confront their fellow "progressives" in the south. "Bull" Conner was a "New Dealer" and a member of the DNC, the governing board of the national Democratic Party. You simply give them credit for challenging a system that they had created.
"You seem to be conflating political party with left and right. While today, the parties are somewhat ideologically divided, in previous times, they were coalitions of disparate groups." -- Zach
Where's the evidence for this claim? While there maybe individuals within a given party who do not subscribe to all of the tenets of that party, stark ideological divides rarely exist. What both southern and northern Democrats shared was that they were "progressives". And commitment to that shared "progressive" world view trumped any uneasiness that more tolerant Democrats may have had with regard to race. Here's an example of the southern "progressive":
"South Carolina's Benjamin "Pitchfork" Tillman (1847-1914), a leading progressive who railed against the sins of "unregulated capitalism" while preaching the salvation of white supremacy. An ally of the agrarian populist William Jennings Bryan, Tillman supported antitrust laws, railroad regulations, the free coinage of silver, and a host of other progressive panaceas. He first entered politics as a member of the Red Shirts, a Klan-like terror group that "came out of the Civil War" to menace African Americans during the early years of Reconstruction. When President Theodore Roosevelt entertained the black leader Booker T. Washington at the White House in 1901, Tillman served as a de facto spokesman for the Southern opposition, declaring: "The action of President Roosevelt in entertaining that n***er will necessitate our killing a thousand n***ers in the South before they will learn their place again." -- Reason
Lyndon Johnson would echo that sentiment in the quote I provided above.
At the onset of the Civil Rights movement southern "New Dealers" like Sam Ervin, Claude Pepper and Robert Byrd still sat in the congress along side their northern counterparts.
Northern "progressives" were not much better, embracing the eugenics movement wholeheartedly and working to undermine black equality in the workplace. The labor movement, which "progressives" relied on heavily for support, was racist to its core. That included outfits like the American Railway Union which was whites-only and was led by Eugene V. Debs, later to become the Socialist Party candidate for President. The AFL, led by Samuel Gompers, was whites-only as was every other major labor union at the time.
John Kennedy deliberately chose Lyndon Johnson as his running mate in order to reinforce a shared commitment to the "progressive" coalition. King marched on Washington in 1963 to protest the fact that Kennedy, in an effort to maintain this "progressive coalition, had let the Civil Right movement languish. He never marched on Eisenhower, in fact, he voted for both Eisenhower and Nixon.
Liberals love to point out that in 1968, following their support for and passage of the 1964 Civil Rights Act, Democrats won only one southern state - Texas. What they do not mention is that they lost the remaining southern states to another Democrat. Nixon came in third in many southern states. Wallace, the other Democrat candidate, actually won the south by carrying the states of Arkansas, Louisiana, Mississippi, Alabama, and Georgia. There was no mass exodus to the Republican Party, it would be more than a generation before southerners switched their allegiances.
Che is dead: The Civil Rights movement was a struggle within the Democrat Party.
That is largely correct.
in terms of "conservative" and "liberal", who considered civil rights to be a states rights issue?
Here's some names
Dixiecrats
Harry F Byrd
Orval Faubus
George Wallace
Jesse Helms
"Hmm. You didn't use quotes, but the rest of comment includes a racist and homophobic rant. Odd that"...
Well zach thanks for filling out that part since I got what I orignally in my comment I got in an e-mail reply from someone I mailed your comment to and it had no attributions...
'racist and homophobic', eh?
Well it looks like samyn on the green is right and the only thing that is 'racist and homophobic' is what your mind has somehow conjured up...
Affirmative action and quota hiring has proven to be an epic fail in the real world zach and not just merely institutionalized racism imposed by a collection of bureaucratic parasites and failed ambulance chasers...
The biggest one of all:
U.S. governments at various levels decided to support the children of single parents.
The result?
Fathers left the families to maximize income.
Things are now so bad in the black community that 70% of black children live in single-parent households.
So in other words sethstorm unless the government is proping you up with some inane and expensive legislation you can't make your own way in the world, right?
No, I'm just asking businesses to be consistent by treating their versions of the labor union as labor unions for the purposes of RTW.
Or would you rather wish to have a federal nullification of RTW?
samyn on the green: "The primary thing that the civil rights movement was concerned about was co-opting the loose sexual morals of the most unbridled elements of the black community and transposing them on the mainstream."
juandos: Well it looks like samyn on the green is right and the only thing that is 'racist and homophobic' is what your mind has somehow conjured up...
given that "background", a cursory look at the comprehensive width and breath of the Civil Rights Act itself is nothing short of astounding!
Somebody sure had a LOT to say beyond the original premise!
http://www.ourdocuments.gov/doc.php?flash=true&doc=97&page=transcript
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