Law of Unintended Consequences Economics Theory
The unintended consequences of these initiatives will prove catastrophic in the long run. The root cause of this unexpected consequence is what Merton called the “relevance paradox,” where policymakers believe they know their areas of ignorance on one topic, get the information needed to fill that ignorance gap, but deliberately neglect other areas because their relevance is not obvious to them. This is precisely the case with our central bank. In the United States, the Patriot Act expanded the power of law enforcement and government agencies to monitor and intercept individuals` data. An unintended consequence has been the reluctance of companies and individuals to allow their data to be stored in the United States. The unintended consequence of these Fed actions will result in the only economic situation worse than inflation, namely “stagflation,” where inflation is high and economic growth is low. What will make this very damaging is the inverse relationship between the U.S. dollar and oil prices. Oil prices have risen in the past as the value of the dollar has fallen.
Oil prices could surpass their peak of $148.00 per barrel in 2008, especially considering that the value of the U.S. dollar was much higher with an all-time high in 2008. The unintended consequence of a “weak dollar” designed to boost exports and stimulate our economy is higher inflation and more upward pressure on commodities and oil than in 2008. Due to the complexity of ecosystems, deliberate ecosystem changes or other environmental interventions often have unintended (usually negative) consequences. Sometimes these effects cause permanent irreversible changes. In addition to Merton`s causes, psychologist Stuart Vyse found that the groupthink described by Irving Janis was blamed for certain decisions that lead to unintended consequences.  The law on unintended consequences, often cited but rarely defined, states that the actions of people – and especially the government – always have unintended or unintended effects. Economists and other social scientists have considered its power for centuries; For just as long, politics and public opinion largely ignored them. The law of unintended consequences has been around for a long time, dating back at least to Adam Smith, but was popularized in the twentieth century by sociologist Robert K. Merton.
In his theory, Merton noted that often unintended or unintended consequences are outcomes that are not the intended outcomes of intentional action. In some cases, the law of unintended consequences could create a perverse effect that contradicts what was originally intended and ultimately exacerbates the problem. In “The Unexpecteds Consequences of Purposive Social Action” (1936), Merton attempted to apply a systematic analysis to the problem of the unintended consequences of deliberate actions intended to bring about social change. He pointed out that his term deliberate action “dealt exclusively with `conduct` as opposed to `conduct`. That is, with actions that involve motives and therefore a choice between different alternatives.”  Merton`s use contained deviations from what Max Weber defined as rational social action: instrumentally rational and rational of value.  Merton also stated that “no general statement that categorically confirms or denies the practical feasibility of any social planning is justified.”  The concept of unintended consequences is one of the building blocks of the economy. Adam Smith`s “invisible hand,” the social sciences` most famous metaphor, is an example of an unintended positive consequence. Smith asserted that any individual seeking only his own gain is “guided by an invisible hand to achieve a goal that was not part of his intention,” that goal being the public interest. “It is not out of benevolence of the butcher or baker that we await our dinner,” Smith writes, “but out of consideration for their own interests. MP: The Econoclass site also offers good resources for teaching economics (high school or college), including discussion topics, classroom activities, puzzles, games and simulations, etc. More recently, the law of unintended consequences has been used as a proverb or idiomatic warning that interfering with a complex system tends to produce unexpected and often undesirable results.     With the development of machine-to-machine (M2M) communication and the Internet of Things (IoT), more and more devices are able to transmit data over a network.
However, these devices are often things that traditionally have no communication capability and, as such, do not have security mechanisms to protect them. One unintended consequence is security attacks on IoT devices, which include a light bulb hack. AOL`s implementation of an obscenity filter in 1996 had the unintended consequence that residents of Scunthorpe, North Lincolnshire, England, were prevented from creating accounts due to a false positive.  The accidental censorship of innocent language, known as the Scunthorpe problem, has been repeated and widely documented.    Rob Norton is a writer and consultant and was previously business editor of Fortune magazine. The law of unintended consequences is the basis of many criticisms of government programs. According to critics, unintended consequences can increase the cost of some programs to such an extent that they make programs unwise, even if they achieve their stated objectives. For example, the U.S. government introduced quotas for steel imports to protect steel companies and metalworkers from cheaper competition.
Quotas help steel companies. But they also make less cheap steel available to U.S. automakers. As a result, automakers have to pay more for steel than their foreign competitors. A policy that protects one industry from foreign competition makes it more difficult for another industry to compete with imports. Friedrich Engels addressed the idea of unintended consequences in his discussion of Ludwig Feuerbach: “The objectives of actions are intentional, but the results that actually result from these actions are not intentional; Or if they seem to fit the intended purpose, they ultimately have very different consequences than intended. Factors that reduce the likelihood of unintended consequences include understanding the systems involved, careful planning, and attention to detail during execution. In recent years, the law of unintended consequences has often been invoked in relation to complex systems that, by definition, cannot be fully understood.