The Law of Unintended Consequences

Back in the 2008 election, many Americans became convinced that our economy had become a victim of extreme greed and selfish motives.  Going back a decade and pointing to the excesses of a few companies such as Enron, Worldcom and then leading up to Lehman Brothers and AIG, we were told that these debacles could be "tamed" simply by introducing regulation and oversight.

There is an old saying, "be careful what you wish for, you just might get it".  And get it we are!

Regulation is running rampant in our government these days.  In many circumstances we are beginning to see that even regulation begun in earnest by honorable people can have unintended consequences.

Genies often fulfill wishes in unexpected ways and while the person is granted their wish, they often come to regret it.

Consider Airline Regulations

According to a story in USAToday; "For travel consumers, the government's increased regulatory focus on the airline business can cut two ways. New regulations or laws often effectively address specific complaints but can have unintended consequences, too.


The tarmac delay rule is an example.

Since it was implemented, the chances that anyone will be kept onboard a plane for more than three hours during a ground delay — always statistically extremely low — is now almost nil. The threat of a $27,500-per-passenger fine against any airline that allows it to happen all but ensures that it won't happen.

In July, there were just three instances of domestic flights stuck on the ground for more than three hours with passengers aboard, according to airline data reported to the DOT. But there was a 20% increase in the flight cancellation rate as airlines chose to abort flights rather than risk big fines for excessive ground delays. (The actual number of flight cancellations in July was smaller than in July 2009. But there was unusually good flying weather this July in New York, the biggest source of delays in the nation.)

So the question is, which is better for most travelers: being delayed, uncomfortably so, for more than three hours but eventually reaching the destination, or having the flight canceled and scrambling to find an available seat on another flight at a time when planes are 80% full on average?"

Meanwhile, opponents still warn that the three-hour tarmac rule will lead to a lot more travelers having their flights canceled than ever were inconvenienced by lengthy ground delays.

Whether the rule change actually leads to that probably won't be known until next winter or spring, when bad weather could play havoc with airline schedules

Time to put the Genie back in the bottle?

For many, the message of the tea-party is simply one about cutting spending and taxes.  What I read and hear from those who are passionate proponents of this philosophy is more robust than simply about cutting taxes.  It is about Freedom and a faith that the fewer decisions are made by government appointed bureaucrats and the more individuals are empowered to make choices, better solutions ultimately reveal themselves.

This airline tarmac rule is but one example of what happens when we turn to big government to address issues.  It is time to put this drive to regulate everything on-hold and re-consider the bureaucratic mess we have already put in place.

Let Freedom Ring!

Raising Taxes in a Fragile Economy

In today's WSJ and other publications it was reported that our economy slowed in the 2nd Quarter of this year.  According to the WSJ "The Commerce Department Friday said U.S. gross domestic product, or the value of all goods and services produced, rose at an annualized seasonally adjusted rate of 2.4% in April to June. In its first estimate of the economy's benchmark indicator, the government report showed growth was lifted by business investments and exports. Consumer spending, a key growth engine for the U.S. economy, made a smaller contribution to growth."

Reading some of the comments associated with this are fascinating....

Peter Klientje wrote: "I don't understand.... Where did it go wrong?


We all know that Socialism works. It works in Cuba, it works in North Korea and it did wonders for the people in the former Soviet Union. Socialism works every single time it is tried.

Why then is Socialism not working in the USA? We have the perfect shepherd for us, the sheeple; obama. We have the smartest, the most inspirational leaders in the House and Senate, pelosi and reid....

We have honesty and integrity in our government; rangel, geithner, sebelius, kerry...

And yet, despite all these blessings, there is no spark, no jobs, no economic growth. How can this be? July is practically over, when will the Summer of Recovery start?"
 
Jim Altfeld wrote:  "The administration can say and do anything it wants, but when it comes right down to it, nothing they are doing is working. It's a lot like building a bridge. It's hard to hide your mistakes when it's out there for everyone to see. More taxes can only lead to more government spending. Less taxes takes money out of government's pockets and puts it back into the pockets of corporations and We The People!! If turning this economy around will be done on the backs of the people, then let the people determine when and where they want to spend their money. Hey Government: Stop spending and stop taxing. You cannot and were never meant to cure all the ills that go on in our country."
 
Attorney General Ken Cuccinelli pointed this out recently at a fund raiser for Patrick Murray.  This is backled up by a recent remarks by Ken Walker, CFE, chairman of the International Franchise Association and chairman and CEO of Driven Brands. 
 
His remarks included the following:  "Uncertainty is the theme for franchise businesses this summer. Uncertainty about new government regulations, uncertainty about availability of capital, and uncertainty about how quickly the economy will truly recover is stifling job and business growth.


Of course, there are many reasons for the current wave of uncertainly, but as Dallas Fed President Richard Fisher recently said, “Congress and the government have inhibited growth by creating uncertainty about business costs. We need clarity. You can’t eliminate uncertainty, but you have to reduce it as much as possible.”

As job creators, franchise business owners remain in the crossfire of a political agenda that increasingly threatens to stifle economic growth even further. Potential new taxes on both personal and business incomes, a continuing array of new regulatory burdens from health and energy reforms, and the failure to invest in common-sense solutions to help small businesses grow will certainly hamper job creation.

For example, we know that tax paperwork and compliance are already major expenses for small businesses, but buried in the new health-care law is a requirement for small businesses to report every business-to-business transaction that involve property and services in excess of $600 annually.

This would trigger the requirement to file a Form 1099 with the IRS and furnish taxpayer identification numbers (TINs) for all businesses and persons involved." (more)

The point is the that this uncertainty and additional burdens being placed on small businesses may be contributing to the drag in the economy.  That drag and the policies of the current administration and congress are making it increasingly difficult for businesses to create jobs and hire people.  It points them in the direction of seeking labor saving solutions overseas and in technology rather than hire people here.

What is needed is stability and policies that do not discourage businesses to invest and hire domestically.

My Thoughts, What are Yours?

Let Freedom Ring