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Vail Valley Voices: Rabbits, gin, mosquitoes and yachts

In the mid-1800s thousands of European rabbits were introduced into Australia for sport hunting.

But rabbit populations expand exponentially, and soon the botanical composition of the areas where the rabbits were introduced was altered. Because those rabbits grazed more closely than sheep and cows, their grazing resulted in weakened native perennial grasses.

This in turn caused significant soil erosion, which radically affected agricultural yields, making the impact of introducing those “innocuous” rabbits disastrous to the Australian economy.

A few years after the 18th Amendment was instituted (Prohibition), more people died of alcohol-related deaths than had died when alcohol was legal. There were several reasons for this: illegal alcohol provided an incentive to those who sold bootlegged liquor to make strong alcohol such as gin instead of beer or wine because strong alcohol is more profitable as well as being easier to distribute and conceal than beer or wine.

Ironically, many people were actually introduced to hard liquor because of Prohibition. At the same time, because bootlegged liquor was often made in bathtubs and other less-than-sanitary vats, it was often dangerous to drink. Thousands of Americans died as a result of consuming contaminated alcohol.

In 1953 the World Health Organization (WHO) thought it had the perfect solution to the outbreak of malaria that was ravaging Borneo. The WHO sprayed large amounts of DDT to kill the mosquitoes that carried the malaria.

As anticipated, the mosquitoes died and malaria declined. But soon the roofs of people’s houses began crashing down on their heads. It seemed the DDT was also killing parasitic wasps that had previously controlled thatch-eating caterpillars. Worse, the DDT-poisoned insects were eaten by geckos, which were eaten by cats. When the cats began dying in great numbers the rat population burgeoned, and instead of malaria, people were threatened by epidemics of typhus and plague.

In the early 1990s Congress pushed through a luxury tax clearly focused on “the rich” who were buying expensive and lavish commodities such as yachts.

But a funny thing happened on the way to the harbor. The rich stopped buying American-made boats (the tax didn’t apply to foreign-made boats purchased outside the U.S.), and 10,000 middle-class American boat builders lost their jobs as the America boat industry cratered.

So what do these four stories have in common? Each is an example of the law of unintended consequences. Unintended consequences result when an action creates an outcome that was not planned or was completely unforeseen.

This immutable law dictates that every undertaking, however well-intentioned, is more often than not accompanied by unforeseen repercussions that frequently overshadows the reason for the undertaking in the first place.

From New York to San Francisco, the unintended consequences of rent control have been to reduce the number of available housing units in any given market place and to actually drive up prices in non-rent controlled properties.

When government dictates how much rent a landlord can collect (thereby limiting income while the landlord’s expenses rise unabated), the result is that landlords invest less in the upkeep of their properties, which is why rent-controlled properties deteriorate three times faster than non-rent controlled properties.

It’s been estimated that there are four times more housing units available in New York City than there are homeless people. But because it’s cheaper for landlords to abandon their run-down, rent-controlled properties rather than paying taxes and maintaining these buildings, thousands of vacant apartment units remain boarded-up while the homeless sleep in the streets.

Economist Stephan Levitt relates how many governmental entities have begun basing their garbage pickup fees on volume. The political wisdom was that if people have to pay for each extra bag of garbage, they’ll have a strong incentive to produce less of it.

But in Seattle, the incentive actually created was for people to stuff their garbage bags even fuller, thus creating problems for trash collectors. In Germany, trash-tax avoiders flushed so much uneaten food down their toilets that the sewers became infested with rats.

In Ireland, a new garbage tax resulted in increased backyard trash burning, and St. James Hospital in Dublin reported that the number of burn patients admitted to the hospital for setting themselves on fire while burning trash tripled.

What politicians never seem to grasp is that all governmental policies must be evaluated in terms of the incentives they create rather than the goals they proclaim. Economists and other social scientists understand this dynamic. Unfortunately for us, politicians and their special interests simply ignore it.

With Congress about to pass a pork-filled health-care bill that few people understand (including the politicians who will vote for it), you can rest assured there will be hundreds and perhaps even thousands of unintended consequences.

The Mayo Clinic in Glendale, Ariz., has already stopped taking Medicare patients due to meager government reimbursement. the pace of doctors opting out of the system will only pick up when $500 billion is slashed from Medicare funding as is planned by Congress. The roughly 3,000 Medicare patients served by the clinic will now either have to pay cash for medical services or find other doctors who still accept Medicare patients. So get ready, folks. This is only the beginning.

Quote of the Day: “If you think health care is expensive now, just wait until you see what it costs when it’s free.” P.J. O’Rourke

Butch Mazzuca is an Edwards resident.


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