Thursday, February 25, 2010

Of Rats and Mongoose

Late in the  19th century, the sugarcane farmers of Maui, Hawaii had a rat problem.  Their solution to this problem was to introduce the Indian Mongoose, a small, weasel-like little critter renowned for its rodent-killing prowess.
The mongoose took to the climate of Hawaii and spread like wildfire around six of the eight Hawaiian islands.  There were several unforeseen problems with this plan: the nocturnal rat conducts most of its business at night, while the mongoose is a diurnal hunter, feeding almost exclusively during the day.  The mongoose therefore did not have the desired effect on the rat population.  It did, however, do a number on the native bird and insect species.  This is an example of the phenomenon of unintended consequences.

Government intervention in both markets and foreign affairs nearly always result in unintended consequences.

Think of the 9/11 terror attacks.  The United States' perpetual military involvement in the Middle East for the last half-century resulted in the murder of 3,000 innocent American civilians.

Though the intention of minimum wage laws was a benevolent one, countless domestic jobs have been lost to cheap labor overseas.  Minimum wage laws have also prevented the employment of workers on the margins by making it much harder to pay market wages to disabled or young, under-experienced workers.

In this essay commemorating Ludwig Von Mises's 90th birthday, my personal favorite Austrian Economist, Murray N. Rothbard, draws a nice parallel between the invasive spread of species and government:
A notable feature of Mises's analysis of "interventionism" — of government intervention in the economy — is that it is fundamentally what could now be called "ecological"; for it shows that an act of intervention generates unintended consequences and difficulties, which then present the government with an alternative: either more intervention to "solve" these problems, or repeal of the whole interventionist structure.
In short, Mises shows that the market economy is a finely constructed, interrelated web; and coercive intervention at various points of the structure will create unforeseen troubles elsewhere. The logic of intervention, then, is cumulative; and so a mixed economy is unstable — always tending either toward full-scale socialism or back to a free-market economy. The American farm-price support program, as well as the New York City rent-control program, are almost textbook cases of the consequences and pitfalls of intervention.
The cane toad epidemic in Australia is still another example of counter-productive tinkering. Here is a great (and kind of comical) article that chronicles the battle against this invasive species.   

 Biological, military, and economic intervention inevitably results in unforeseen and unintended consequences.  The intricacies of our world make predicting outcomes based on our actions all but impossible. This leads to and ever-expanding paradox in which "solutions" invariably need more "solutions" and ultimately bleed out a natural system or interventionist government.


  1. Seriously, enough with the nature metaphors already! It's such a discursive cop out. "Oh hey, I totally agree with Gardner that human intervention into natural ecosystems can have terrible unintended consequences, therefore I must also agree that human intervention into the economy is also always a big mistake." It just doesn't make sense as anything other than a rhetorical device. It obscures the real questions that we should be asking about the economy.

    And it's not like I entirely disagree with you! I totally agree that poorly thought out government intervention into the economy can have terrible unintended consequences - agricultural subsidies being one of the best examples.

    The problem is that you take your argument much too far. Why does it have to be all black and white? The total lack of government involvement in the economy is only a possibility in theory. It could never be in practice. It is exactly like pure socialism in this regard. Pure socialism looks pretty good on paper too, but in reality attempts at socialism have been a massive cluster fuck. It is exactly the same with your pure libertarianism (or whatever you call it). Because it can never really be, in arguing for it you are really just lending all of your excellent brainpower in support of the misguided attempts at "free markets" we see being put into place by the WTO, IMF etc.

    Perhaps it is because your principles would be impossible to actually implement that you keep coming back to these vague nature metaphors?

  2. Gardner, are you saying that free markets do not create unintended consequences? Surely you will agree that they do--I would be surprised if there was any human venture that did not do this. If you do agree, how do you determine if a government's intervention or the intervention of free markets (because those markets surely impact people, places, etc. that don't necessarily want to participate in them) are any better or worse than the other?

    This is an interesting example that you bring up. As far as I know, the mongoose was first introduced to control rat populations that were destroying sugar cane in Jamaica. They were successful, someone wrote an article about it, and farmers in Hawaii who read about this decided to try out the mongoose despite some opposition. There was likely no regulation placed on these farmers dictating what species they could introduce. Could not the case be made that free markets and the lack of oversight and regulation resulted in these unintended consequences?

    Thank you for getting me to think about things a bit more and ask some questions. Keep up the posts.

  3. Tim,
    I, too, know that there are unintended consequences associated with free markets. As you say, there are no human ventures that do not have some undesired effects.

    The differences, however, between the interventions of governments and the interventions of truly free markets are the self-correcting mechanisms associated with markets. Shy of some omnipotent geek, perched on a mountain top who can point out all the possible outcomes of human actions, it is simply impossible to predict the countless variables associated with both policy decisions and those within the market. Markets function as a result of built in corrective profits and losses, where governments function on their power of coercive force. A stupid decision made in the free market will inevitably lead to failure - take Beta max video recorders, the AMC Gremlin, and Aloha Air, for example. A stupid decision made by a government inevitably leads to a redoubling of the effort - see the Vietnam War, the War on Drugs, and Amtrak, to name just a few.

    As far as the example that I used, I was aware that that was a decision made within the framework that I would describe mostly as the free market(the land was taken over violently and stolen from its native people for its lush soil a strategic location militarily, so that detracts from the freedom a bit). Nonetheless, I realize my wording on the original post was a little misleading. I was not trying to infer that the mongoose problem was the result of government action. My goal was to draw the parallel between the unintended consequences of human actions in both nature and governments.

    All the most invasive government oversight and regulation in the world was unable to prevent a guy with a bomb in his boxers from boarding an airplane a couple months ago. Why could this same mechanism effectively stop a big weasel from being smuggled into a state, especially with the perceived financial incentives the action was supposed to result in?

    Thanks for the well thought out response. Keep them coming.

  4. The problem (well, one of them anyway) from my perspective is that "truly free markets" are no more possible than that omnipotent geek perched on a mountain top.