There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.
One of the great risks of human endeavors is that all actions, however well intended, have unintended consequences. This is especially true when governments are involved.
History shows that government actions—as well as inaction—have repercussions that are rarely anticipated. This is the case of legislation, tax policy, and most especially of bailouts. Legislative policy pursued at the request of a given company or industry often ends up harming that industry immeasurably. That it was pursued by friend rather than foe makes it only ironic, not untrue.
For the Bailout Nation, this critical issue is well worth pondering, especially now that we have written some rather enormous checks. Our collective actions and omissions will leave an onerous legacy to future generations, often manifesting themselves in unanticipated ways.
As examples of how unintended consequences can be felt far in the future, consider two legislative acts wholly unrelated to the current financial crisis.
The 1996 Telecommunications Reform Act amended the Communications Act of 1934 and eliminated media ownership regulations. This led to an enormous degree of media consolidation, especially in radio. Prior ...