Saturday, April 26, 2008

Annals of Unintended Consequences

"Booms and bubbles may be economically dangerous; they end up with many people losing money and a lot of companies going bankrupt. But they also often do drive innovation faster and faster, and the sheer overcapacity that they spur...can create its own unitended positive consequences."
Thomas Friedman, The World is Flat

"Taking these together -- environmental damage, the human pain of food price inflation, the failure to reduce our dependence on oil -- its is impossible to avoid the conclusion that food-to-fuel mandates have failed."
Lester Brown and Jonathan Lewis, "Ethanol's Failed Promise," Washington Post, April 28, A19

The positive of the dot.com bust was excess capacity of fiber optic cable. A major negative of Ethanol is food crisis. We are schooled in public policy and life to be mindful of the ripple effects, or unintended consequences, of our actions and proposals. But we take action in a complex world in which things change and in which we don't control all levers of change, much less understand all the interconnections.

The lessons are to be modest while bold; conduct simulations and premortems about our great ideas; avoid bad policies that seem to do not harm; be mindful of implementation complexities; take advantage of silver linings; and be ready to admit mistakes, adapt, and change course when the unintended consequences or collateral damage become evident. Above all, remember that unintended consequences have impact on real people in real places.

What unintended consequences in the arena of community economic development should we learn from or be mindful about for the future?

2 comments:

Josh said...

Robert Reich has argued that making welfare dependent upon seeking employment can force some individuals into dead-end jobs. I'm not sure that I agree with his assessment of this but it is definitely one potential unintended consequence.

Bob Giloth said...

A good example of that is in Jason Deparle's book, American Family, about Milwaukee welfare moms. In the end, it's not clear they or their kids are better off. It all seemed to work, to some degree, in the hot economy of the 1990s