Any system that serves the interests of the few by choking off adaptability and the dynamisms of a free-for-all churn lacks the tools needed to avoid systemic collapse. By enabling elites to organize the nation to serve their personal interests, America has been stripped of the dynamics needed to adapt. Without these dynamics, collapse is the only possible outcome.
Decades of central bank distortions and regulatory / market-share capture by cartels and monopolies have completely gutted “markets,” destroying their self-correcting dynamics.
Unintended consequences introduce unexpected problems that may not have easy solutions. An entirely different set of problems are unleashed as unintended consequences have their own unintended consequences. This is the problem with complex emergent systems such as economies, societies and global supply chains: the system’s feedback, leverage points and phase-change thresholds are not necessarily visible or predictable, yet these dynamics have the potential to cascade small failures into systemic collapse.
The unintended consequences of unintended consequences are called second-order effects: consequences have their own consequences.
So for example, you juice your economy with massive stimulus after a lockdown that upended consumers and global supply chains, crushing both demand and supply, and suddenly you have rip-roaring inflation as demand comes back while supply chains remain tangled.
Shifting critical industrial production to frenemies so corporations could maximize profits while reducing the quality of goods and services seemed like a good idea until the potential costs of that dependence on frenemies become apparent.
Assuming oil and natural gas would always be in abundance made sense when they were abundant, but geopolitical forces kicked that assumption into the gutter. All the reassuring economic stories we told ourselves–energy is only 3.5% of the economy and the household spending budget, so cost really doesn’t matter–fall off the cliff when availability and supply become the paramount issues setting price.
That 3.5% loses meaning when there’s not enough to supply demand and somebody loses the game of musical chairs.
Then there’s the fantasy that monetary policy imposed by central banks control inflation. The inconvenient reality is central bank monetary policy is akin to building sand castles on the beach: when the tide is ebbing, the castles look magnificent. When the tide is rising, the sand castles are quickly washed away.
Inflation is actually a consequence of much larger forces that central banks don’t control: demographics (labor supply), social changes (quiet quitting, laying flat, let it rot), supply of essential minerals/materials, flows of private-sector capital, and most profoundly, the real-world productivity of capital, labor and state policies.
The tide of inflation has reversed and is now rising. This tide is gradual and will temporarily be reversed by the gluts of supply that inevitably follow artificial scarcities and the deflationary impact of credit-asset bubbles popping. But these reversals will be temporary and misleading: inflation has reversed for structural reasons unrelated to credit-asset bubbles and temporary gluts.
Perhaps more importantly, he argues that extreme caution can backfire and produce outcomes that have the opposite of their desired effect. He uses the AIDS crisis as an example, pointing out that demonizing sexual intercourse and trying to frighten people away from it had the unintended consequence of increasing unsafe sex.
A similar phenomenon appears to be at work today.
“Telling Americans to wear masks when they’re unnecessary undermines efforts to persuade more people to wear masks where they are vital,” Leonhardt writes.
The New York Times published an article on Friday under a simple headline: “Covid Absolutism.”
The article opens by noting that during public health emergencies, absolutism—the idea that people should cease any and all behavior that creates additional risk—is a tempting response. Times writer David Leonhardt gives various examples of this “absolutism” on display in America today.
“People continue to scream at joggers, walkers and cyclists who are not wearing masks. The University of California, Berkeley, this week banned outdoor exercise, masked or not, saying, ‘The risk is real,’” he writes. “The University of Massachusetts Amherst has banned outdoor walks. It encouraged students to get exercise by ‘accessing food and participating in twice-weekly Covid testing.'”
Examples like these are virtually endless. They invite two key questions, Leonhardt notes: How effective are these behaviors in reducing the spread of the virus? And is there a downside?
The Rise of ‘Hygiene Theater’
As Leonhardt notes, many of these actions are essentially a kind of “hygiene theater,” the subject of a recent article in the Atlantic written by Derek Thompson.
The phrase basically speaks for itself. According to Leonhardt, these actions are not rooted in science, and are primarily a form of theatrical presentation that will have little or no actual impact.
Taking every possible precaution is unrealistic. Human beings are social creatures who crave connection and pleasure and who cannot minimize danger at all times.
“Prohibiting outdoor activity is unlikely to reduce the spread of the virus, nor is urging people always to wear a mask outdoors,” he writes. “Worldwide, scientists have not documented any instances of outdoor transmission unless people were in close conversation, Dr. Muge Cevik, an infectious-disease specialist at the University of St. Andrews in Scotland, told me.”
Have there been any documented instances of transmission among unmasked people who are outdoors and *not* in close conversation with each other?
So the answer to Leonhardt’s first question—How effective are they at reducing the spread of the virus?— is not difficult to answer: they’re not effective.
The second question, and its answer, is more interesting.
Unintended Consequences of ‘Hygiene Theater’
One might be tempted to argue that these theatrics still produce positive outcomes, since they are likely to make people more conscious of the pandemic and slow the spread of the virus.
Taking extreme precautions is simply “playing it safe.” What’s the harm in that?
The answer is, “plenty.” First, Leonhardt argues it’s not part of human nature to live in a perpetual state of extreme caution.
“Taking every possible precaution is unrealistic,” he writes. “Human beings are social creatures who crave connection and pleasure and who cannot minimize danger at all times.”
Perhaps more importantly, he argues that extreme caution can backfire and produce outcomes that have the opposite of their desired effect. He uses the AIDS crisis as an example, pointing out that demonizing sexual intercourse and trying to frighten people away from it had the unintended consequence of increasing unsafe sex.
A similar phenomenon appears to be at work today.
“Telling Americans to wear masks when they’re unnecessary undermines efforts to persuade more people to wear masks where they are vital,” Leonhardt writes.
For many, this statement probably doesn’t sound particularly noteworthy. It basically has the ring of common sense, a variation of The Boy Who Cried Wolf, one of Aesop’s famous parables, which taught that false alarms can harm humans by inhibiting their ability to detect actual danger.
The Timeless Lesson of Unintended Consequences
The COVID-19 pandemic has been a case study in “unintended consequences,” a term popularized by American sociologist Robert K. Merton in the twentieth century. Basically, it’s the idea that virtually every action comes with outcomes that are not foreseen or intended.
“In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects,” Bastiat wrote.
The problem, he noted, is that humans rarely pay attention to the unseen or unintended effects of a given action or policy. Ignoring these outcomes is one of the great mistakes in public policy, the Nobel Laureate Milton Friedman once observed.
Unfortunately, ignoring unintended consequences and focusing on intentions is precisely what we saw in 2020, and nobody has been more guilty of this than the Times.
No one is served by ignoring unintended consequences. And the adverse unintended consequences of lockdowns are legion.
If you search for articles discussing the unintended consequences of COVID-19 policies, which are boundless, you’ll find virtually nothing on their site. I was able to find two articles using the phrase “unintended consequences” of COVID lockdowns.
One article, published in September, is a profile of Dr. Bonnie Henry, a Canadian physician and British Columbia’s top doctor who spoke of minimizing the unintended consequences of government interventions. The other is an article in May that discussed how lockdowns could result in a surge of mental illness.
This dearth of coverage is unfortunate. The Times is one of the most influential papers in the world. It has immense reach and a news staff of 1,300 people. And yet—our tiny writing team at FEE has produced more articles on the unintended consequences of lockdowns than the Grey Lady.
No one is served by ignoring unintended consequences. (Well, maybe politicians.) If we’re to understand the damage wrought in 2020 and prevent it in the future, lockdowns must be judged by their actual consequences, not what they were designed to achieve.
And the adverse unintended consequences of lockdowns are legion.
The fact that even the New York Times is finally beginning to discuss the unintended consequences of COVID-19-inspired actions is a sign that we may be, however belatedly, moving in the right direction.
Sometimes, important and interesting things come out of Washington, and small things can have major impacts. One of these is President Trump’s proposal to decriminalize homosexuality around the world.
What is fascinating about this proposal – and what is fascinating about government in general – are the unintended consequences of policies and actions. In this case, we can hope there are many.
The neoconservative busybodies in the White House and in Congress wish to make war on Iran (we won’t), and this is especially urgent as they feel they have Venezuela in the bag (they don’t).
The administration’s proposal to decriminalize homosexuality and eliminate the state-directed mistreatment of homosexuals is designed to help demonize Iran and to a lesser extent Russia. This fits in the neoconservative foreign policy agenda well, and also adds to a large body of evidence that the Russian government (which worked well with the Clintons, in terms of relations and uranium sales) has no serious investment in Donald Trump as president… Read the rest of this entry »
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