Intervention > Unintended consequences > Intervention…

Yesterday, I wrote about how the actual outcomes of particular policies can be very different from those intended, giving the example of minimum wage and ‘Ban the box’ laws.

So, given the actual outcomes of ‘ban the box’ laws, shouldn’t we ditch them?

The Urban Institute argues not. It says that

These results do not necessarily mean that ban the box should be eliminated. Additional policies, regulations, and alterations can ensure that ban the box improves employment outcomes for people with criminal histories without causing negative effects on people of color

Minnesota gives some indication of what form these “Additional policies, regulations, and alterations” might take.

“We’d like to prevent discrimination before it starts,” Commissioner Rebecca Lucero told the [Duluth] News Tribune last month. “We’re putting together a rebranding right now — the equity and inclusion team.”

Instead of focusing on punishing employers for asking about criminal records — which is still allowed in interviews — the department wants to work more on educating hiring managers about why they should more carefully consider convictions and arrest records.

“The question is overall, how are we creating a strong workforce in Minnesota and making sure we’re creating a culture where everyone feels welcome?” Lucero said. “That’s built into compliance and outreach.”

So, one policy intervention – ‘ban the box laws’ – has had the unintended consequence of reducing “the likelihood that employers call back or hire young black and Latino men”. Rather than repeal this intervention, a fresh intervention is proposed to ameliorate the consequences of the previous one. In this case, that seems to require an “equity and inclusion team” to lecture Minnesota’s employers on “why they should more carefully consider convictions and arrest records”.

To suppose that new intervention will cure the effects of previous intervention would seem to be the triumph of hope over experience. At the very least, the new intervention will have unintended consequences of its own and to soothe these will require further interventions in turn.

This dynamic was outlined as long ago as 1949 by the economist Ludwig von Mises. In his book Human Action, he writes that

All varieties of [government] interference with the market phenomena not only fail to achieve the ends aimed at by their authors and supporters, but bring about a state of affairs which — from the point of view of the authors’ and advocates’ valuations — is less desirable than the previous state of affairs which they were designed to alter. If one wants to correct their manifest unsuitableness and preposterousness by supplementing the first acts of intervention with more and more of such acts, one must go farther and farther until the market economy has been entirely destroyed and socialism has been substituted for it. 

You don’t have to sign up to socialism as the ultimate destination of this dynamic to see that piling intervention upon intervention isn’t a good idea. Federal regulation were estimated to cost the United States’ economy $1.9 trillion in 2017 alone, which is bad enough.

John Phelan is an economist at the Center of the American Experiment.