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.