Managing Unintended Consequences

We all know about Unintended Consequences (UC). Say it out loud – UC.  For those of you whose native language is not English you should pronounce UC a little like the word duck or muck, but without the d or the m. It is not a pretty sound and UC is not a pretty topic. But if you ask me UC is the place that liberals, conservatives, and other people might find some common ground.

Liberals often categorize conservatives as selfish people who represent the interests of wealthy individuals and businesses. Conservatives view liberals as people who like to stand for worthy causes especially when it involves using other people’s money. These descriptions probably fit some liberals and conservatives but most of the ones I know cannot be so easily stereotyped.

Most US liberals and conservatives grew up in similar schools and churches and pretty much buy into mainstream culture and philosophy. It would be hard to find many who disagree with the so-called golden rule – do unto others as you would have others do unto you. I don’t know how many stories and movies revolve around a character being aided unexpectedly and then sometime in the future repaying the kindness.

Liberals and conservatives share many such cultural values. But clearly it is not hard to find times when they disagree and often passionately. In recent days some liberals have championed policies which would increase taxes paid by rich people. Some conservatives responded by saying that we wouldn’t need to tax rich people so much if some people asked for less in the way of unearned entitlements. Liberals ask for gun control laws to protect our children and conservatives retort that such laws are ineffective and take away fundamental rights. The disagreements go on and on.

These disagreements exist despite a lot of share values. We often debate for good reasons. For example, liberals and conservatives disagree about the fundamental nature of man. A conservative sees people as fundamentally fixed while liberals believe society can change people. Conservatives are wont to engage in change while liberals persist in a belief that changing external circumstances can lead to better social outcomes.

So there is plenty of reason for liberals and conservatives to disagree even though they might seek the same outcome. Part of this can be explained by UC.  We are all familiar with UC. I was trying to mix a Manhattan and by accident I poured gin instead of bourbon. Yuk. You and your girlfriend wanted to end the evening in an enjoyable way and nine months later there were three of you. You get the picture, UC.

Professor Philip Adler at Georgia Tech introduced a lot of us to UC in the 1960s under the banner of bubble management. He told us that management is like a big balloon. He likened the solution to a management problem to pushing your finger into a bubble that formed on the surface of the balloon.. Adler warned that EVERY TIME you push your finger into the bubble on a fully inflated balloon it creates another bubble somewhere else on the surface of the balloon. It is a little like Newton’s Law of Motion III – to every action there is always an equal and opposite reaction. Good management means making the resulting bubble in the balloon smaller than the initial one.

So UC is always with us. You have to manage those bubbles. The main reason we have such big issues in Washington these days is that many of those people there have Law Degrees and never studied with Dr. Adler.  Managing UC means you always worry that your policy becomes counterproductive. Companies say they manage risk. What does that mean? It means UC. It means that in the course of deciding to build a new plant in Budapest they begin with a clear statement of all the good reasons why one would like to build a plant in that location. 

But you don’t stop there. Someone then says – what could go wrong? Is it possible that there are negatives that we have not fully accounted for? Even after you build the plant you keep asking this question. If the government changes and it imposes harsh penalties on foreign firms then maybe it is time to close that factory or move it to Bloomington.  Parents do the same thing all the time with their kids. Jimmy wants a BB gun. Mom says, you will shoot your eye out. But mom I am 45 years old now. Nevermind.

Liberalism or Progressivism or whatever you want to call it has promoted and continues to advance and expand the application of government solutions. Many of their goals are honorable. But the problem is that UC has been put on the back burner. If Samsung is willing to incorporate contingency planning then why is government so reluctant to admit UC?  There are many reasons but clearly the providers of government services often become the promoters of it. They become the cheerleaders. A harsh program evaluation could mean loss of a job for the government worker. Or the government worker might simply believe that more is always better. That worker might not zealously look for UC. Governments don’t measure profits to indicate the success or failure of a new program so it is harder to quantitatively evaluate UC. Often the simple metric that shows that more people are being served suffices to "prove" the validity of the program. Of course there is also the simple fact that it is much easier to give new benefits than it is to take them away in a democracy.

No matter what the reason we leave the measurement, analysis, and discussion of UC to the other guys or we kick them down the road for another time. The more the conservatives complain about UC the more the liberals dig in their heels. Thus the issue of good government management becomes a fight instead of a collaborative effort to improve the lives of citizens. Some people laughingly would say that good government management is a non sequitur. Good government is impossible.

Imagine if someone had the nerve to say any of these things in public…

·        More lenient abortion laws cause more unwanted pregnancies
·        Increasing the minimum wage helps very few poor people and increases unemployment of teens
·        Poverty programs reduce the desire to be independent and self-supporting
·        Alternative energy is bad for the economy because it is too costly
·        Illegal aliens create social burdens
·        Tax loopholes make the rich richer

Anyone who ventured such statements at a cocktail party might get slugged by an otherwise sweet and caring grandmother. Our liberals and conservatives have turned discussion into fights. Hot words set off other hotter words and possibly a few punches.  But everyone knows that all those statements have some truth to them. 

Everyone knows that every policy has an UC. The real question is not whether or not they exist – the question is how large and how important they are.

We have had plenty of experience with government programs. We have seen both the benefits and the UC of programs to reduce unwanted pregnancies, reduce poverty, promote alternative energy, improve healthcare, make Americans more secure at home and abroad, and so on. Today we are faced with large national debts and no one wants to spend or tax needlessly. Gutting good programs makes no sense. Taxing people more for programs that do not succeed only hurt the country.

I am not so naïve as to think that comparing prospective benefits with the UC of a government program is easy or definitive. But I do know that what we have been doing lately can only lead to worse outcomes for all of us. Most people agree that the current sequester was never meant to happen because it is so onerous and wrong. The fact that the House has been passing legislation that has no chance of passing in the Senate and the Senate passes nothing means that we make our mistakes permanent. Surely we can make all of our government programs more effective. Surely we can cut waste. 

Companies do this all the time. They hire and fire; they restructure; they hire new marketing consultants; they cut costs to meet new competition. Yet our government will not even discuss the effectiveness of trillions of dollars of programs. Voters and their representatives need to think like Professor Phil Adler – push in that balloon and expect something negative to happen. But make that UC as small as possible so that you get the very most bang from the tax buck.