

Unintended consequences: What do a deaf woman and an endangered woodpecker have in common? - mhb
http://www.nytimes.com/2008/01/20/magazine/20wwln-freak-t.html?ex=1358485200&en=0d05099c03c97375&ei=5090&partner=rssuserland&emc=rss&pagewanted=all

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mhartl
I wish more people understood the ideas in this article. Opposing the minimum
wage doesn't mean you hate the poor; opposing anti-discrimination laws doesn't
mean you're racist; opposing generous maternity leave doesn't mean you're
sexist. Incentives matter, and often---probably much more often than not---the
most straightforward and intuitively appealing solutions introduce incentives
pointing in exactly the opposite direction.

Economic law is almost as immutable as physical law: trying to fix poverty
using a minimum wage is like building a bridge using the wrong tensile
strength for steel. Intent is irrelevant, because you can't fool nature.

~~~
halo
I agree that setting up straw men and other fallacies is a bad thing. There's
two sides to every argument and they should be heard without reducing the
argument down to insults or misrepresenting the other side's point of view.

On the other hand, I think you're yourself abusing the association fallacy by
making a bold assumption that because the article points towards examples of
laws with unintended consequences that they also automatically applies to the
specific examples you've given. (i.e. opposing the minimum wage doesn't mean
you hate the poor, but it equally doesn't necessarily mean that it's going to
cause negative unintended consequences as implied)

~~~
noonespecial
In the case of minimum wage, it does. I thought it was a good example.

<http://blog.russnelson.com/economics/minimum-wage.html>

~~~
halo
I disagree that it is that clear cut.

As a recent counter-example to the blog, view the UK's introduction of a
relatively high minimum wage in 1998 which, despite above-inflation increases
over several years, have caused little-to-no problems. Incidentally, the UK
had it's highest employment rate in 2007 according to National Statistics
Online (<http://www.statistics.gov.uk/cci/nugget.asp?id=12>). By the blog's
reasoning, the exact opposite should have happened. For the record, I was
fairly indifferent when it was introduced, but now I see it as a positive
thing.

The blog makes the rather bold statement that "anybody whose labor is not
worth the minimum shall not be employed" based around the assumption that
anyone who earns less than the minimum wage's job is redundant and can be
replaced. This simply isn't true, thinking about the large amount of service
industry workers (e.g. waiters, supermarket-workers, fast-food workers) who
are typically paid a low wage but are unlikely to lose their jobs. It doesn't
mention that many companies can afford to pay more for unskilled workers but
choose not to in order to create bigger profits in the knowledge that the
employees don't have the choice of getting a better paying job. It avoids
mention of the effect of increased consumption in the local economy, or the
likelihood that price increases which require more manual labour will effect
premium goods and services the most. There's plenty more additional variables
too - it's simply not a case of the situation being summarised as "Higher
wages = less jobs".

~~~
angryprofessor
It's not clear cut, mainly due to a lack of useful data. I don't know much
about the labor market in the UK (your link only discusses
employment/unemployment in 2007, not the effects of minimum wage in 1998), but
I'll discuss the US.

In the US, only 1-2% of workers make minimum wage. If a minimum wage law drove
50% of them out of work over 2 years, it would increase unemployment by only
0.25-0.5%/year. And 50% is a huge; in reality, far fewer than 50% of minimum
wage workers will be driven out of the market.

The effects on minimum wage also don't last much beyond a few years, since the
minimum wage is not indexed to market wage for low skill jobs (or even to
inflation, which is not the same thing). So in a few years, the minimum wage
drops below market wage and becomes irrelevant.

This effect is sped up by companies raising prices (since costs rise across
the industry, this doesn't cause a loss of market share). This drives up
prices, causing inflation, which again reduces the effect of minimum wage.

Minimum wage is mainly just a a propaganda tool for politicians. That's why
it's not indexed to inflation: if it were, they couldn't get on TV and say "I
care about America's poorest workers" every few years. That's also why minimum
wage is kept low; if they pushed it above market wage for the bottom 1-2%, the
harmful effects might be large enough to be visible (even if they are
questionable, this is not a risk a politician wants to take).

~~~
noonespecial
Well said. +1. I think Russ's point was that if minimum wage actually was
raised high enough by the well-meaners that they thought it would institute
social change, it would backfire in a most comical and epic way. Imagine if
the minimum wage were set to 100/hour tomorrow...

Instead, politicians just wait till election season then realign the letter of
the law to more or less match the current market value and then proclaim what
a friend to the poor they've been from the doorway of their gulfstream.

------
Prrometheus
We often take into account the most direct effects of a law without taking
into account the indirect effects. Or, as Bastiat would put it, we look at the
things seen but ignore the things not seen:

<http://bastiat.org/en/twisatwins.html>

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scw
A minor meta comment; Good titles really do matter:
<http://news.ycombinator.com/item?id=103834>

~~~
Tichy
Ah, and now I understand why there even can be multiple submissions: I guess
because of the various random parameters some websites attach (session ids or
whatever), the duplicate detection mechanism of news.yc doesn't work.

Makes me wonder if there could be a way to assign a unique id to every
website. I guess at least for news feeds it already exists, but not every
submission has a news feed.

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oPerrin
I enjoyed this piece, now whenever I find a loophole in a law that I can
exploit for my own benefit I can blame the law! I'm not a bad person, it's a
bad law! Along with the invisible hand of Adam Smith, I was basically
bitchslapped into maximizing my profit at the cost of the needy, the disabled,
and those damn woodpeckers. Won't someone feel bad for poor (rich) little
(rotund) old me?

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trevelyan
This is a puff piece ("things have unintended consequences" is as pablum as it
gets).

The anti-environmental slant implicit in the piece is intellectually
offensive. If land is in the hands of developers with plans for real estate
development, the wildlife is already screwed. That doesn't mean tanking
environmental regulations is somehow "better" for wildlife.

Ceteris paribus, this article sucks.

~~~
mhb
I don't think the article is any more anti-environmental than it is anti-deaf
people. Isn't it a benefit to the environment to point out policies which
damage it when intended to help it so that they can be replaced with policies
which help it?

