Unintended Consequences

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

- Frédéric Bastiat

The same could be said about any rule maker, legislator or governor.

An example of a government not thinking things through is the 1990 “Fair Share” 30% luxury tax on airplanes, cars and yachts.  The idea was that the people buying those goods could afford to pay the tax.  What actually happened was that wealthy people stopped buying these products. It was estimated that 25,000 workers in the yacht industry lost their jobs, in addition to 75,000 workers in companies that supplied the yacht builders.  Those who did buy yachts often purchased them from foreign countries and registered them in the Bahamas.  And the tax man got nothing.

Get the point?

Almost everything we do has unintended consequences.  Many of these are bad, and occasionally there’s a good one like the invention of the drink Tang which resulted from a NASA astronaut nutritional program.

Here are a few examples of some not so good consequences.

Plastic Bag Bans

Disposable bag regulations were first introduced in the United States only a little more than a decade ago but have experienced rapid growth in this short period: as of 2017, one out of six people lived in a jurisdiction covered by a state or local government ordinance regulating plastic bags.

Since then, what have we learned what have some of the effects been?

• Since a state-wide ban on plastic bags, in NJ people are stealing grocery store shopping baskets.

• According to a new study, when communities ban plastic grocery bags or charge fees for their use, local stores sell more plastic garbage bags.  It found that bans led to a 55-101% increase in sales of 4-gallon garbage bags and a 54-129% increase in sales of 8-gallon garbage bags.

• About 30% of the plastic that was eliminated by the ban came back in the form of thicker garbage bags.  Additionally, cities that banned plastic bags saw a surge in the use of paper bags which, it’s estimated, resulted in about 80 million pounds of extra paper trash per year.

Governments found that plastic bags were not always the evil that they’ve been made to be.

• The Danish government estimates that the heavy equipment used to plant and harvest cotton, along with weed killers and other chemicals required make cloth bags even worse than plastic.  Their study estimated that you would have to use an organic cotton bag 20,000 times more than a plastic grocery bag to make using it better for the environment.

• A research study conducted on behalf of the Northern Ireland Assembly found:

  • Paper bags in a landfill do not degrade or breakdown at a substantially faster rate than plastic does.  And, it can take 400-1,000 years for a plastic bag to decompose.

  • It takes more than four times as much energy to manufacture a paper bag as it does to make a plastic bag, and in the manufacturing process, paper bags generate 70% more air and 50 times more water pollutants than plastic bags.

  • Cloth bags which would be used to replace plastic bags are 80 times bulkier.  So, those bags incur 80 times the cost to transport while generating 80 times the CO2.

  • It takes 81% less energy to recycle a pound of plastic vs. paper.

So, was the plastic bag ban worth it? How bad is the bag versus all the plastic jars and bottles we put in them? What do you think?

Plastic Straw Bans

The war against plastic drinking straws was launched in August 2015 when the world saw video of marine biologist Christine Figgener removing a plastic straw stuck in a sea turtle’s nose. 

Three years later companies like Starbucks and American Airlines were eliminating plastic straws from the beverages they serve.

This was also helped along by a nine-year-old kid who determined that we were using 500 million plastic straws per day.  While that number has been disputed, it was sensationalized and entered our social conscience.

So, what were some effects of the straw ban?

• Starbucks banned the distribution of plastic straws at its stores to reduce environmental waste.

• To replace the banned straws Starbucks introduced a new strawless cold‐cup lid, which actually required more plastic than the original lid and straw combined.

• After straws were banned disabled people who relied on straws to drink and eat were impacted.

Philadelphia Soda Tax

In 2016 the city of Philadelphia passed a law that levied a 1.5 cent per ounce tax on sweetened drinks.  The city wanted to raise additional money to fund a universal pre-K program and reduce obesity.  What they got was entirely predictable to anyone with a basic understanding of economics.

• Poor Philadelphians with limited access to transportation were forced to pay the tax.  Wealthier citizens could drive a couple of miles to stores outside the city and pay the lower cost.

• Beverage sales in Phila declined 42% while soda sales outside the city rose.

• A study that reviewed point of sale data from Nielsen Retail Scanner Data analyzed the sugar content of each food item purchased based upon the item’s online nutrition facts.  The study found that while sugar intake from sugary beverages decreased, that decrease was offset by an increase of 21.8% and 39.9% in non-liquid sugary purchases.

• According to TV station WHYY, one supermarket in West Philadelphia closed in 2019 after losing approximately one quarter of its business after the 2017 tax went into effect.  The owner blamed shoppers taking their business to other stores across the city’s border.  Additionally he said decreasing sales in other stores forced him to reduce the total employees at all stores by approximately 300.

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These three examples show how politicians who just “try to do something” can enact rules that don’t always work out as expected. This isn’t a sin, but ignoring results without taking corrective action is.

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“Virtue Is More to Be Feared Than Vice.”

-          Adam Smith

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Are Small Versions of Large Things Cute?  100%!  (Hat tip to Tracie.)

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