The Road to Hell is Paved with Unintended Consequences

Even with the best of intentions, there are always unintended consequences.

After the Jan. 12 quake, which killed as many as 300,000 people, the world launched a massive relief effort to bring food, water, medicine and other supplies to needy Haitians. The U.S. alone has spent more than $665 million, official figures show.

But only a tiny fraction of that money is being spent in Haiti, buying goods from local businesses. Worse, the aid is having the unintended consequence of making life harder for many businesses here, because of competition from free goods brought in by relief agencies. The damage to Haitian companies is making it harder for them to get back on their feet and create the jobs the country needs for a lasting recovery. …

“I have fewer customers now because they are handing out free food down the street,” says the 52-year-old [food vendor], pointing to the nearby Champs de Mars plaza where aid organizations regularly hand out food to tens of thousands of people camped there in tents.

Obviously the people of Haiti need help after the devastation of a natural disaster of this scale, and the hundreds of millions of dollars coming into the country are a positive, but how might the lessons learned there apply here in America?

[WSJ via Freakonomics]

Energy-efficient Traffic Lights Can't Melt Snow

The Law of Unintended Consequences strikes again!

MILWAUKEE – Cities around the country that have installed energy-efficient traffic lights are discovering a hazardous downside: The bulbs don't burn hot enough to melt snow and can become crusted over in a storm — a problem blamed for dozens of accidents and at least one death.

"I've never had to put up with this in the past," said Duane Kassens, a driver from West Bend who got into a fender-bender recently because he couldn't see the lights. "The police officer told me the new lights weren't melting the snow. How is that safe?"

Many communities have switched to LED bulbs in their traffic lights because they use 90 percent less energy than the old incandescent variety, last far longer and save money. Their great advantage is also their drawback: They do not waste energy by producing heat.

Authorities in several states are testing possible solutions, including installing weather shields, adding heating elements like those used in airport runway lights, or coating the lights with water-repellent substances.

Short of some kind of technological fix, "as far as I'm aware, all that can be done is to have crews clean off the snow by hand," said Green Bay, Wis., police Lt. Jim Runge. "It's a bit labor-intensive."

This is mainly for the Global Warming folks who want to reform our vast energy economy using the power of the government. In this example, changing something as small as the type of light bulb in our traffic lights can cause headaches and, in limited cases, injury and death. All from our choice in lightbulbs.

[via Instapundit]

The Best Laid Plans

The Law of Unintended Consequences strikes even in a tropical paradise:

The island of Kiribati began to subsidize coconut harvesting in the hopes of encouraging fishermen to switch to the coconut trade and thereby help preserve Kiribati’s reefs from the ravages of overfishing. But as NPR reports, the plan backfired: with more money coming in, coconut harvesters worked fewer hours, which left more time for their favorite leisure activities — including fishing, which increased 33 percent since the start of the program. Says one researcher who studied the unintended consequences of the subsidies: “It hit us like a bumper sticker saying — a bad day fishing is better than a good day working.”

Fishermen 1, Government 0, Tax Payers lose

The Self Correcting Market

When college students need a mental boost to study for exams, they often turn to Adderall. These pills, which generally sell for $3 a piece, tend to increase in price to $5 around exam time.

One student reports that in his suburban Dallas hometown, drug dealers, realizing this price variation, speculated by buying up large supplies of the drug at $3 and dumping them on the market during exam time, hoping to sell at $5.

They didn’t realize that this large increase in supply would cause the price to drop below $5. Indeed, so many dealers engaged in speculation that there was a surplus at the usual equilibrium price of $3. Students were able to buy the drug for only $2 as dealers sold off their excess supply. One imagines that the dealers were less enthusiastic about speculation the next year and that the exam-week price stayed above $3.

I wonder where the bailout is for the Adderall dealers who speculated and lost. Apparently they just weren't "too big to fail."

This adds further evidence to my point, that though speculation happens, if you allow it to run its course and speculators face the consequences of their bad decision, they will not make the same mistake again.

Banks to Charge Fees for Paying Off Credit Card Every Month

Avoid doing business with these companies:

Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.

Citigroup, meanwhile, has started charging annual fees to card holders who don't put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don't use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.

These fees are the credit card industry's response to credit card legislation that will, among other things, restrict credit card issuers' ability to raise interest rates on existing balances. Credit card issuers are looking for ways to raise income before the new rules take effect in February. During the first quarter, 27% of credit card offers included annual fees, up from 18% a year earlier, according to Synovate Mail Monitor, a credit card direct-mail tracking service.

I have a Citi card that I rarely use, and now I could be charged a fee for not using it. However, if I close my account it could hurt my credit score.

In an effort to soften the blow to deadbeats, new regulation is shifting the costs to responsible borrowers. That's in addition, of course, to the many billions of dollars we've given to these banks to save them from their own mistakes.

Only the Federal government could take a system that is totally broken and make it worse.

The Unintended Consequences

Renewable energy is often touted as our savior from environmental collapse, but many renewable sources come with their own downsides.

Here is an inconvenient truth about renewable energy: It can sometimes demand a huge amount of water. Many of the proposed solutions to the nation’s energy problems, from certain types of solar farms to biofuel refineries to cleaner coal plants, could consume billions of gallons of water every year.

“When push comes to shove, water could become the real throttle on renewable energy,” said Michael E. Webber, an assistant professor at the University of Texas in Austin who studies the relationship between energy and water.

Conflicts over water could shape the future of many energy technologies. The most water-efficient renewable technologies are not necessarily the most economical, but water shortages could give them a competitive edge.

There are always unintended consequences, ignore them at your peril.