The Law of Unintended Consequences

The biggest argument against increasing government involvement is the Law of Unintended Consequences. Basically, it states that changes to a complex system may result in different results than originally desired. Sometimes the changes make things worse than they were in the beginning. This tends to happen more often with government for several reasons. One is that Congress likes to be seen responding to problems. Election cycles being what they are, it doesn't matter if the problem is actually solved or not. The important thing it to be seen doing something. Problems big enough to warrant Congressional scrutiny are seldom easy to understand so Congress allows their staff to write the actual bill. The people voting on the bill seldom bother to read them and probably could not understand them anyway (I'm getting this part straight from a recent quote from a committee chair). Finally, bills are seldom pure. Lobbyists exist to make legislation more favorable to their clients and Congress is happy to oblige. The result is that legislation to solve a problem often makes things worse.

A few examples:

Credit reform caused most people's interest rate to rise. That's because banks offered low rates but would raise them in case of late payments or other infractions. Unable to raise rates on offenders, they raised everyone's rate instead.

Last year's popular Cash for Clunkers program raised the cost of used cars. Hundreds of thousands of low-end cars in drivable condition were destroyed. Just try to find one now. The environmental gains are also debatable since it takes a lot more energy to make a new car than will be saved by trashing existing low-mileage cars.

The most recent addition to this list - the three hour rule for airlines. This said that airlines could not keep people in planes sitting on the tarmac for more than three hours. While this sounds reasonable, a new report says that, in order to spare 110,000 passengers an average 3.26 hour wait, 400,000 people will have their flights canceled. This will cause more disruption.

The increase wasn't due to bad weather or air traffic control issues, says Marks, but the new rule and the airlines' reaction to it. "Hundreds of flights were canceled directly because of the rule and indirectly as airlines pulled back flights after as little as 60 minutes on the tarmac out of fear of the fines."