Unintended consequences is the idea that actions can sometimes have outcomes that you didn’t plan on, and that affect you or even the world around you negatively. Today Emma and Brittany discuss how unintended consequences can impact all of us.

Here’s a transcript of our conversation:

Emma: Hi, Brittany.

Brittany: Hi, Emma.

Emma: Today wanna talk about this concept of unintended consequences. And this is basically the idea that actions can sometimes have outcomes that you might not have planned on, and that can affect you or even the world around you negatively. And this is something that’s taught in all different disciplines. It’s taught in psychology, it’s taught in business school, and it has a lot of relevance also in politics and economics, but also even in our personal lives. Brittany, can you read us the definition of an unintended consequence?

Brittany: Yes. An unintended consequence is the idea that actions of people and especially of the government, always have effects that are unanticipated or unintended. Unanticipated means like you didn’t expect, and unintended would mean, you know, not what you intended, not it’s purpose.

Emma: Yes, thank you. So that definition is a little wonky. So I wanna tell a quick story that is often used to illustrate this idea. And I’m gonna give a disclaimer right now. There is a dispute out there on whether or not this story is real because it’s not super well documented. But regardless, I think it is a super interesting way to look at this problem. So maybe think about this as like the comic book illustration in your guidebooks that we have. If you’ve ever read one of those, this is like an illustration that’s gonna help you understand the idea. It may or may not have happened. If you wanna do a research project and write in and tell us if it’s real or not, maybe you can.

Brittany: That’s a good little quiz for our listeners. Yeah, we’ll find out if what we’re saying is true.

Emma: Yes. Go, fact-check our podcast, and you can, you can tell Spotify and tell Apple if we’re wrong on here. But basically, the Cobra effect is this idea that in India, so India used to be actually occupied by the British Empire. And when India was occupied, you know, these cities started filling up with a lot more people. Trade was increasing. There was a huge spice trade and all sorts of goods that the British were taking out of India. So these cities started to grow very, very quickly. And one of the ones that started to grow the fastest was Deli. And this is still one of the largest cities in India. but as this city continued to grow and sort of expand out into the jungle area that was surrounding it, people started to have problems with snakes and specifically cobras. I don’t know if you’ve ever seen a cobra, hopefully not in real life, but, they are super scary. I am very scared of snakes, so I’m always gonna be scared of a cobra. They stand up, like sort of like stand up straight, and they have this big head that like expands outward. They’re very scary and they’re very poisonous. And when the British Empire started to have people have problems with the cobras, they said, well, let’s come up with a government program to fix this. And we always know how that turns out. But they made this program where people who brought in dead cobras would get paid a fee for each one that they brought in. So basically they got paid to go out and hunt down these animals. And the Indians that were living there, they basically said, well, all right, let’s go out and let’s hunt these cobras. It’s a good way to make a buck or whatever the currency would be at the time, probably a pound. So there, out and they’re hunting these cobras, they’re bringing them into the authorities, but then they start running out of cobras because they’re hunting them all. And it’s kind of starting to look like, oh, the program is gonna work. But because that bounty was still in place and these people were being basically ruled by the British, they said, well, why don’t we just start breeding our own cobras so we can keep getting this bounty? So people started actually breeding the cobras and it became its own little business. And then they would kill them and bring them in and still get the bounty. So then a lot more cobras start, you know, being born in this area and are hatching, I guess they’re not born, they hatch out of eggs. So the British ends the bounty for them, and the British say, we’re not gonna pay this anymore. And then what happens is, of course, all of these people have these deadly cobras, you know, being raised in cages and stuff, and they just decide to let them go. So that’s basically, what happened. And it made the infestation a lot worse than it was even to, begin with. So again, I will say a lot of this, you can go look it up online, there are a few articles on either side saying, well, this probably is true. Like, there are some eyewitness accounts. And some of them are saying, well, I don’t know about that. History is, history is like that. The more you look into it, the more you find like, that. But this is a really good example of how government programs can actually cause problems, even when they’re trying to fix a really simple-seeming problem.

Brittany: I think they always do that. Like, I can hardly think of a government, you know, program or anything the government does that doesn’t have an unintended consequence. Right. I mean, before I get to the most recent ones, war has unintended consequences. Absolutely. We bomb countries, then they bomb us, then we get mad at them for bombing us. So we bomb them. And it’s just like this perpetual cycle. But even more recently, we’ve seen that the government has created programs to incentivize people not to work. You know, during covid Yeah. A lot of restaurants shut down. A lot of just businesses shut down and people couldn’t go to work. So then they upped the unemployment. People were getting like 600 extra dollars a week than they would’ve been normally getting with unemployment. And now people don’t wanna work. And it sounds silly, but this is completely true. Why would you go back to a job if you don’t have to? You know, this is the whole argument against, the universal basic income, which we just did an episode on. So like, nobody’s going to want to be or incentivized to work. If they don’t have to make a living. So a lot of businesses and restaurants are actually shutting down cuz they’re understaffed, they don’t have the people to work them. So in many states right now, it’s paying more. You pay, get paid more to collect unemployment than you do to work an entry-level job.

Emma: Totally. That’s a really good example of a negative unintended consequence. But I also, I wanna make sure that we also talk about positive unintended consequences, because that’s actually one of the most basic building blocks of economics. Adam Smith, who basically, he wrote The Wealth of Nations and he talked about the invisible hand of the free market. And he basically created the study of the free market and economics in general. He didn’t create economics, but he is a guy who we have to thank for a lot of really important writing on these ideas and on how money works and how markets work. So, he talked about the invisible hand and how when people tried to serve their own, so they’re trying to feed themselves, feed their families, meet their own needs, they’re led by an invisible hand to actually promote, things that are good for other people. So it’s not just it, he has this famous quote where he says, it’s not the benevolence of the butcher or the baker that we expect our dinner, but from regard to their own self-interest. So the butcher is cutting up meat because they know that people wanna buy meat and it’s a good way to make a living. And the baker bakes bread because they know that people need to eat bread. So, you know, they’re gonna make the product and try to make money off of that, but they actually also help people who don’t have those skills but have money to trade for it. So, the unintended consequences can also be a good thing. But the difference is when the government comes in and uses force to try to make something work, a lot of times that’s when you see the negative consequences. Whereas when there’s freedom, those unintended consequences can actually be pretty awesome. Like people who, you know, end up driving for DoorDash and come up with these really creative ideas just because someone invented an iPhone and they invented a wireless network for us to use, there are all sorts of like new things and amazing technologies and solutions to our problems that can come almost on accident. And we’ve talked about stuff like that a lot when we talk about businesses and entrepreneurs who come up with these ideas in crazy ways. Not even because they were trying to, but just because they were trying to work on something else or get something else done. But the difference that really seems to separate the positive and the negative sort of ways that these consequences can play out is just whether it came through force or through free will.

Brittany: No, I think you’re absolutely right. And I love that you brought up, you said Bastiat, right? I’m like zoning out now.

Emma: Yeah. I didn’t mention him, but he also talked about this so good bit.

Brittany: Okay. That’s what I thought. Okay, good. Good, good, good. That I was on the right track. Bastiat talked about this a lot with, what is seen and what is unseen, right? and that’s exactly what this is. That there are unintended consequences or there are unseen consequences of every single action. So I love, you know, the whole broken window fallacy, which we’ve talked about a bunch of times. Yeah. Where if somebody says like, oh, let’s break this window, we’re gonna stimulate the economy. That sounds great, right? but what are the unintended consequences of that? Another bill or another, company shuts down cuz they’re not getting paid or the company with the broken window count operate for a little bit cause they can’t do their job. So I think this is a really, really important thing because again, we talk about critical thinking a lot, and a lot of times people don’t think about the unintended consequences. They only think about what the plan is. And I would say that this is not only important with policies and with government, I think it’s important in our own lives, right? Totally. We make decisions. You have to think, okay, what is my intended goal here? And what could be the possible, you know, what is unseen, what are the unintended consequences that might happen? Totally if I don’t think this all the way through. So that’s why I love topics like this because again, we can learn a lot about how our government operates, how our you know, the political system operates. But there’s a lesson for our personal lives too because I think every single one of us has made a decision where it was like, I made a mistake. Like I did not think about what this would mean for me.

Emma: Totally.

Brittany: So, yeah, I think that’s a really important thing to keep in mind.

Emma: I completely agree with you. I think it’s a good example that there is natural law in the world and there’s sort of these rules that exist in not only on the political level, not only on, you know, government level or our economy, but also in our personal lives where, you know, we may do things but not necessarily understand what the outcome is gonna be. And you wanna make sure that you’re thinking through those things and it can’t always be easy to figure those things out. But it can be also a really good way of thinking about morality and thinking about ethics. Like if you, you know, maybe you’re really craving a Snickers bar. We always talk about Snickers bars as our like Snickers bars inflation marker. But yeah. another example, we’re gonna use Snickers bars. Imagine you’re really craving one and you know, you’re thinking, well there’s one sitting on this store shelf right in front of me. If I just picked it up and walked away with it, you know what’s gonna happen. It’s this store owner will never notice it missing. But say someone else sees you do that and they decide to take one and someone else decides to take one and then someone else just decides to steal something bigger from the store, you could actually end up causing a chain of events that could put that store out of business. And the store owner who, you know, relies on that income to feed their family and put their kids through school and the people that they employ, like not to get all crazy dramatic about one Snickers bar, but every action has consequences. And, you wanna make sure that when you’re making decisions throughout your life and the things that you do have control over, that you are going to make actions and, do things that have good consequences and that open up good possibilities. Not where, you know, say you do set off a chain reaction or something like that to where, it’s gonna harm people. And that’s why we talk about like the golden rule. We have a book about the golden rule. Treat other people the way you want to be treated or sort of the phrase don’t hurt people and don’t take their stuff like respecting other people is super important. And I think a big part of that comes from sort of this rule of unintended consequences and not wanting things to happen that maybe you didn’t anticipate or maybe you didn’t think about. So I would encourage you guys to look at the world around you. Maybe take today or take the week or something and try to identify some unintended consequences may be of, you know, things that you do throughout the day that maybe you hadn’t thought of before or even on a political level. Maybe there’s a law in your community thinking about sort of the consequences of the law and talk about it with your family and try to get a conversation going because there are so many of these things that happen around us constantly in our daily life that maybe you wouldn’t have thought of. And once you could start thinking that way, it gives you a real advantage in life. I’m also going to link to our article, we sent out a newsletter a while ago, Connor did about the Cobra effect. So I’ll be sure to link that in the show notes. You can read sort of a more detailed version than my little rundown here. But we are so glad you guys joined us to listen. Thank you so much and we will talk to you later.

Brittany: Talk to you later.