Unintended Consequences

economics

A baby on an airplane would be safer in a car seat than in his mother’s arms.  Recognizing this, government mandates that infants must fly in a car seat. This makes babies on airplanes safer.  However, many mothers will not be able to afford an extra plane ticket for their infant.  Instead, they will choose to drive to their destination rather than fly.  Since driving is far more dangerous than flying, many infants end up injured or killed as a result of this law.

A person would be better off with a higher wage rather than lower wage.  Recognizing this, government mandates that wages must be above a certain minimum level.  However, employers who could afford to hire someone for less than the minimum wage, will not always be able to do so at or above the minimum wage.  While some people who were being paid less than the minimum wage might now be paid the minimum wage, many people will be either fired or unable to find a job.  Instead of increasing the wages for the poor, the main effect of this law is to put the poor out of work.

People are better off with low gasoline prices than with high gasoline prices. Recognizing this, government mandates that gasoline must be below a certain price.  This makes gasoline cheaper for those who buy it. However, at artificially low prices, gasoline providers will not be able to provide all of the gasoline that people need.  While some will be able to buy cheap gasoline, others will not be able to buy gasoline at all.  This law leads to shortages.

As Henry Hazlitt said in Economics in One Lesson, “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

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