Friday, July 8, 2011

Law of unintended consequences

The Law of Unintended Consequences is a well known political concept.   It is why the GOP thinks raising taxes will not increase revenue.

Basically it says that the world is a dynamic place and reacts to changes you make.  So when you raise taxes, people take steps to pay less taxes, even going so far as to work less.

The concept is pretty well established - and works with lots of things besides taxes.  If you aid a revolutionary, it can win, take over it's country, and end up as your enemy.  When we kill terrorists, we anger others.  When you cut tarrifs, you can hurt your own business interests.

In the business world, pollution is practically the definition of unintended consequence.  No one wants it and we don't really know how bad it will be.  Hate crimes against Hispanics is another unintended consequence of border control.

But one issue that the GOP tends to forget is the unpredictability.   That does not just mean that we don't want it, it also means that the consequences are unpredictable.  If they were rock solid certanity, then they would be obvious and everyone would take it into account. 

Honestly, we don't really know if killing Bin Ladin will cause other, worse terrorists to rise up.  Maybe they will, maybe they won't.

Similarly, we don't really know what tax increases will do to federal revenue.  It could be that taxes are too low (GW Bush cut them significantly), and we can easily raise taxes without hurting the economy one iota.

Another unintended consequence occurs when people feel they are getting ripped off.  They don't just avoid the business, they look for ways to get even.

When employers cut overtime, employees steal office supplies. When a government agency starts treating people poorly, employees start to lie to the employers.  At the very least it angers people, which means they yell and make trouble.  Productivity drops, which often exasperates the problem.  The Department of Motor Vehicles is a prime example of this.

Often "monopoly" corporations (light rail, internet, etc.) have similar problems.  For example, the Long Island Rail Road recently introduced a bunch of obnoxious rules.  For a very long time they have had a ridiculously high service charge (~$6) to buy a ticket on the train.  Fine, they don't want people doing that.  The solution for some of us was to buy extra tickets in advance.

But now they are having budget problems, and cutting back on conductors.  This means that sometimes conductors don't get through the train and take your ticket.  Instead of doing what a reasonable business would do (fixing their ticket taking procedure), they simply charged a $10 refund price and made the tickets only last 2 weeks.

Their idea sounds reasonable, except for the ridiculously high charges.   Honestly, a $2, or even $3 service charge would be just as effective in preventing people from buying on the train, and there is zero reason for $10 refund charge for all tickets.  Why not set it at 50%?

Why do they get away with this crap?  They have a monopoly and they frankly have zero desire to be fair or reasonable.

But there are ways for people to get back at the LIRR, besides simply avoiding using it.   Graffiti, property destruction, etc. may go up, because criminals get angry at the LIRR for ripping them off.   But us law abiding citizens should not have to become a criminal.  I don't advocate taking revenge, instead the public-private corporations should avoid angering people in the first place. 

P.S.  Here are 4 good reasons why someone might want a refund, besides the conductor failing to do their job: 1) They bought a two-way, went to a party and got lucky.  2) Bought a two-way and they got sick/ in an accident.    3) They bought a ticket for a friend running late - who did not make the train. 4) They simply bought a ticket to the wrong destination.

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