I Knew That!

The law of unintended consequences is that actions of people and particularly of government—always have effects that are unanticipated or "unintended." Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it.

American sociologist Robert K. Merton identified five sources of unanticipated consequences. The first two sources are ignorance and error. The third source is the "imperious immediacy of interest." By that he was referring to instances in which an individual wants the intended consequence of an action so much that he purposefully chooses to ignore any unintended effects. "Basic values" was Merton's fourth example. The Protestant ethic of hard work and asceticism, he wrote, "paradoxically leads to its own decline through the accumulation of wealth and possessions." His final case was the "self-defeating prediction." Here he was referring to the instances when the public prediction of a social development proves false precisely because the prediction changes the course of history.

The law of unintended consequences is at work always and everywhere. The law of unintended consequences is what happens when a simple system tries to influence a complex system. The political system is simple; it operates with limited information (rational ignorance), short time horizons, limited feedback, and poor and misaligned incentives. Society in contrast is a complex, evolving, high but imperfect-feedback, self interested system. When a simple system tries to influence a complex system you often get unintended consequences.

An example is in the 1970s - Iran was an ally of the United States. Although the Shah was a brutal ditator, he was anti-communist and many of the nations to the north of Iran were becoming Soviet satelites. To maintain positive relations with Iran, the United States government agreed to sell Iran the very same intaglio presses used to print American currency for printing their currency. The Shah was deposed and a new government hostile to the United States took over. Soon counterfeit $100 bills began spreading around the world. Known as "superbills" by the US Treasury due to the quality of the forgeries, these $100 bills became a problem not only for the US and its economy, but also for people all over the world that depend on the surety of American money. Although never proven, most suspect the culprit to be the Iranian government who is deeply hostile to the United States... and even worse, an Iranian government that possesses the very same printing presses used to create American money. This required the redesign of American money in the 1990s. The desire to eliminate communism almost led to the destablization of the American economy.

The internet developers never thought of spam or spyware. An interstate highway system designed to evacuate urban masses in the event of nuclear attack begets unsightly urban sprawl and every-greater traffic congestion. Technological innovations intended to save labor and deliver us from stress and drudgery lead to information overload and unrelenting workplace stress. Televised court proceedings meant to reinforce democracy and freedom of information in an open society creates celebrity jurists and undermine public trust.” - Fredrikson & Byron P.A.

Does the law of unintended consequences mean that the government should never try to influence complex systems? No, of course not, but it does mean that policy makers should be careful and not rush to make changes until they are well debated and critically thought out.