The Impact of Unintended Consequences

In 2001 I was fortunate to be nominated as an attendee to the South Carolina Executive Institute.  This program was for up and coming leaders in state government.  It was sponsored and administered by the South Carolina Budget and Control Board (BCB). BCB is responsible for developing a budget and selected administrative jobs for state government.  The primary teaching vehicle was case studies. It required a lot of reading and analysis, but it was well worth it. 

BCB recruited faculty from all over the U.S..  Faculty came from the University of Washington; University of Tennessee; Baruch College; and the John F. Kennedy School of Government, Harvard University.  Each class had approximately 50 students and the eight sessions were held across the state. 

Facilitated by an outstanding faculty, discussions were lively and educational.  Each member brought his/her own experience and knowledge. You always left a class smarter than when you went in.

Of all the issues I recall and of all the discussions, I most remember the phrase and concept of “unintended consequences”.  It basically means an action may result in outcomes not foreseen or anticipated. 

The example I recall from class was the deregulation of the airline industry in 1978. The US government through the Civil Aeronautics Board (CAB) determined fares, routes, and market entry of new airlines.  President Carter appointed Alfred Kahn chairman of the CAB. Dr. Kahn was asked what will be the impact of deregulation.  (I am paraphrasing).  He responded lower fares and an increase in productivity.  He also noted a few unintended consequences.  The number of airlines will decrease to 4-5 majors.  A raft of mergers will take place.  Some airlines will fail.  Service to rural areas will decrease. 

I remember all of this.  My reason for posting this is an intro to the following article.  New York City raised its minimum wage to $15 per hour.  It promised several benefits like reducing income inequality. However, other impacts also appeared and were mostly negative in its impact.  This excellent article in the Wall Street Journal highlights a few of the unintended consequences. 

https://www.wsj.com/articles/new-york-city-businesses-struggle-to-keep-up-after-minimum-wage-increase-11565035475?shareToken=st4aa1c2aac454439a9f849c413391a190

I post this because any new legislation should be examined and analyzed to include unintended consequences.  As we know from a history of government programs and laws, once a bell is rung, it is almost impossible to unring it.