Friday, April 03, 2009

Unintended Consequences

The Nation tags it as a story about white collar crime, but this piece by Christopher Hayes is really about the unintended consequences of regulation.

Thanks to an obscure tax provision, the United States government stands to pay out as much as $8 billion this year to the ten largest paper companies. And get this: even though the money comes from a transportation bill whose manifest intent was to reduce dependence on fossil fuel, paper mills are adding diesel fuel to a process that requires none in order to qualify for the tax credit. In other words, we are paying the industry--handsomely--to use more fossil fuel. "Which is," as a Goldman Sachs report archly noted, the "opposite of what lawmakers likely had in mind when the tax credit was established."

Hayes ends by noting what libertarians have known all along:

Whether or not Congress gets around to turning off the spigot, the episode is a useful reminder of the persistently ingenious ways the private sector can exploit even well-intentioned legislation.

And perhaps this is the best way of putting it so the left really gets it. The best and brightest rule makers in Washington are no match for the ingenuity of the millions and millions of Americans out there looking to make money. The more complex our laws and regulations become, the more loopholes there are for people to exploit. What's important isn't the intention of legislation, but the real world results.


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