03-17-2001
POLITICS: Oops!
Would this damn airplane ever get off the ground? On a recent drizzly
Friday afternoon, Delta Air Lines overloaded the plane with cargo (to make
a few extra bucks) and a full complement of passengers and fuel. The
additional weight, coupled with the (predicted) rain, made the plane too
heavy to fly. More than an hour later, the standby passengers were ushered
off, and the plane finally left the runway at National Airport. This meant
that your travel-weary correspondent and his family missed their
connection to Tampa, spent the night at an airport hotel in Atlanta, and
arrived a day late-shorn of good spirits and several dollars-to celebrate
his sainted mother's 80th birthday.
So, is this how airline deregulation was supposed to work?
Well, yeah.
Ask the architect of the 1978 removal of federal controls over the
airlines. Alfred E. Kahn was the chairman of the Civil Aeronautics Board
and later an economic adviser to President Carter, and is now a professor
emeritus of economics at Cornell University. The point of letting airlines
decide on their own operations and fares, he explained in an interview,
was to put air travel within everyone's reach-to provide "low-fare
travel that would be uncomfortable. And boy, did we succeed." The
endemic congestion at airports and the coach seating designed for dwarfs
are "signs of success," said the wry Kahn, "not
failure."
But something else has happened, he went on, that the deregulators never
intended: The airline industry is consolidating into a few giants.
"The present mergers are very frightening," he said, referring
to the proposed amalgamations of American Airlines with TWA, and United
Airlines with US Airways. After a multitude of mergers, and the
disappearance of some of the industry's proudest names, these proposed
consolidations would leave two U.S. airlines with half of the domestic
business. And they would create the prospect of four or five airlines
claiming more than 85 percent of the business, leaving the balance to a
bunch of pip-squeaks with market shares that-as Kahn put it-"add up
to peanuts." It is easy to start an airline, and many people have.
But because of the industry's economies of scale and the restrictions on
landing rights at popular airports, most of the born-yesterday airlines
have collapsed or been taken over by larger competitors.
That airline deregulation would lead to fewer-not more-competitors, was
"the furthest thing from [anyone's] mind," said Gene Kimmelman,
the co-director of the Washington office of Consumers Union.
But this sort of thing happens all the time: Policy-makers set out to do
something in particular, and they wind up doing something else entirely.
Or, they accomplish the goal they intended and do something else they
never imagined-whether they are happy about it or (more likely) aren't.
Cocky policy wonks like to call this the "Law of Unintended
Consequences," but it actually is nothing so predictable or certain.
That our complicated world changes in wondrously unknowable ways is less
like a law and more like a confluence of probabilities. So, the
politicians and bureaucrats who try to predict-and alter-the course of
events are bound to screw up.
When policy-makers try to deal with complex problems, unintended
consequences are "absolutely inevitable," said Daniel Kahneman,
a professor of psychology at Princeton University. He is considered the
father of heuristics, the study of the art of mental shortcuts, which is
grounded on the premise that the world is so complicated that no one can
figure it out completely. Things change quickly, after all, and available
facts are limited. "In addition," Kahneman appended, "we're
not so smart."
Consider how policy typically gets made. Experts squabble, interest groups
lobby, and staff members horse-trade. Then politicians, who may or may not
know all of the ins and outs of what they're doing, work out an awkward
compromise that keeps a majority of their constituencies barely
content.
In 1996, not a single California lawmaker dissented when-intending to
bring electricity prices down-the Legislature voted to end the state's
regulation of electric power production. Only-they severely underestimated
future demand; assumed, wrongly, that new competitors would enter the
market; didn't bother to insist that electricity producers sell at
agreed-upon prices for a number of years; failed to foresee that nearby
states would compete for power; and didn't anticipate that out-of-state
suppliers could withhold electricity from the market and thereby drive
prices higher. As a result, average electricity prices in California more
than tripled in a year, and a once-reliable power supply now relies on
rolling blackouts to make ends meet. California's painful experience, in
turn, has produced yet another unintended consequence: Municipalities
around the state (and elsewhere) may shun deregulation and instead start
their own, government-run power companies.
The grander the ambition, it seems, the greater the risk of something
going awry. "When the government is doing something big, it is very
often something difficult," said Charles L. Schultze, a former White
House budget director and Council of Economic Advisers chairman. "You
just can't figure out what the consequences are going to be."
Even actions that look routine at the time can wreak havoc. When President
Clinton signed the Violence Against Women Act in 1994, he couldn't have
imagined that four years later it would lead to his impeachment because it
gave Paula Jones, who accused him of sexual harassment, the right to delve
into his sex life. An election official in Palm Beach County, Fla.,
designed a "butterfly ballot" with larger type that was meant to
make it easier for elderly voters to choose their preferred presidential
candidate; it had the opposite effect, and might well have reversed the
outcome of the 2000 election.
And now the victor's Administration is plotting out its own intended
policy changes. If President George W. Bush succeeds in persuading
Congress to cut income tax rates across the board, economist Henry Aaron
at the Brookings Institution pointed out, it's possible-though not
necessarily probable-that this will cause the budget surplus to vanish,
interest rates to spike, and capital investment to contract, so that
"productivity growth goes to hell." Which isn't at all what Bush
intends. And the President's desire to repeal the estate tax has prompted
some of the nation's richest folks (who stand to gain the most) to oppose
the idea, partly because of the damage they say it would do to the level
of charitable donations. As for privatizing part of Social Security,
"God knows what that could lead to," said Schultze.
It's no surprise that First Amendment purists object to Bush's proposal to
let religious institutions take federal money to run social-service
programs. More startling are the objections from religious conservatives
who are worried about the possible unintended consequences of bringing
houses of worship under the government's purview. Televangelist Pat
Robertson recently cautioned his viewers nationwide that the move could
open "a real Pandora's box," in providing the likes of Hare
Krishnas or the Church of Scientology with federal financial support.
Marvin H. Kosters, an economist at the American Enterprise Institute for
Public Policy Research, said he is in favor of Bush's faith-based
initiative, but he worries that the government's involvement in, say, a
church's drug rehabilitation program could undermine its explicitly
religious approach-the very element that may account for the program's
success.
The notion that whatever government does is pretty much a shot in the dark
need not lead to paralysis. It might argue, though, for caution and-as
Bush's father liked to say-prudence. Yes, and "a certain amount of
humility," added Steven M. Gillon, a historian at the University of
Oklahoma and the author of a book published last year on unintended
consequences of 20th-century American reforms. Humility is a quality the
new President talks about a lot, though how seriously he practices it in
his policy-making isn't obvious yet.
"You've got to be more careful," said Robert Pitofsky, the
chairman of the Federal Trade Commission, in an interview. "You need
to know things that engineers and biologists tend to know, but that
legislators and government officials don't."
There are many reasons why policy doesn't play out according to plan,
ranging from willful ignorance by policy-makers, to deviousness by the
people they govern, to the labyrinthine nature of a world far beyond the
understanding of mortals, even ones equipped with powerful computers.
Prudent policy-making entails seeing around corners. And time and again,
policy-makers can't-or won't. In the fashioning of laws, regulatory
policy, and bureaucratic practice, the examples are legion, and
maddeningly so. Here are just a few.
Creatures Sinful and Weak
Occasionally, a politician glimpses the hell that lies ahead. When
President Johnson signed the landmark civil rights law of 1964, he
famously-and accurately-predicted to an aide that, as a result, the
Democrats would lose the South for a generation. The consequence may have
been unintended, but it wasn't a surprise.
Sometimes, consequences do come as a surprise when, at least in
retrospect, they probably shouldn't have. The advocates of virtue who
brought us Prohibition in 1920 should not have been shocked that people
would nevertheless continue to consume liquor, and that criminals would
organize to supply it. Why didn't the authors of the 1982 law that
deregulated savings and loan associations foresee the possibility that
highfliers in the stodgy industry might invest flamboyantly in racehorses,
casinos, and fast-food joints, leaving a trail of bankruptcies and
bailouts? The Pentagon's attempt a couple of years ago to alleviate a
shortage of military pilots by offering them bonuses of more than $100,000
caused dissension in the cockpits, with navigators and other crew members
feeling shortchanged.
"The most important reason we have unintended consequences,"
Gillon pointed out, "is because we're human beings."
It seems to be a common mistake: to assume that human beings will behave
nobly in situations where, too often, they don't. At times, the prospect
that people can be weak, stupid, or selfish manifests itself guilelessly,
even unconsciously. The use of safety belts in automobiles, some scholars
say, prompts drivers to increase their speed, because the belts lower the
risk to an acceptable level. W. Kip Viscusi, a professor of law and
economics at Harvard Law School, has found that the use of
"child-proof" caps on medicine bottles hasn't reduced the number
of child poisonings. Parents "were lulled into a false sense of
security" by the caps, he reported, so that they became less careful
with medicines of all sorts. Poisonings from containers with safety caps
didn't go down, and poisonings from medicines without them went
up.
Looking for Loopholes
Sometimes, our failure to behave as the policy-makers expect us to isn't
inadvertent. The human brain is endlessly inventive, especially when money
is at stake. Last spring, legislators in Arizona had a nifty idea: Why not
reduce air pollution over Phoenix and wean consumers away from
gasoline-powered cars by offering a generous tax break for people who buy
vehicles that can run on something else? Without a lot of debate or
publicity, the state Legislature decreed that Arizonans who outfitted a
new or existing vehicle with a separate tank for, say, propane or
compressed natural gas could be reimbursed for the cost of the tank, plus
30 percent of the vehicle's overall worth. The resulting loophole was big
enough to drive an SUV through. People could buy a pricey, gas-guzzling
vehicle, put on a separate tank-but never use it-and get the state to pay
for as much as half of the vehicle's cost. A subsidy that was expected to
cost the state no more than $10 million a year soaked up at least a
half-billion dollars. "Welfare for the well-to-do," a
conservative editorialist grumbled. And the politicians who approved the
idea paid a price: The state speaker lost his legislative seat, and the
governor was widely criticized for her ham-handed reaction.
It isn't only ordinary citizens, of course, who are learned at finding
loopholes. FTC Chairman Pitofsky recalled, for instance, that the Supreme
Court's aggressiveness under Chief Justice Earl Warren in forbidding
horizontal mergers (that captured as little as 5 percent to 6 percent of
the market), prompted monopoly-minded companies to integrate vertically
instead. Legions of lawyers are well-paid to find ways around what
policy-makers intend. Indeed, Kahneman suggests that the government should
hire top-flight lawyers of its own to look for loopholes in proposed
legislation, before hired guns get their chance.
Because, if loopholes can be found, surely they will be, if the stakes are
high enough. Take the quarter-century, unsuccessful battle to clean up the
financing of political campaigns. The 1974 post-Watergate law that
established strict limits on fund raising was meant to limit the role of
money in politics and to accord challengers an equal chance against
incumbents. "Neither happened," said David Boaz, the executive
vice president of the libertarian Cato Institute. Instead, he recounted,
the landmark law "turned out to be an incumbency-protection act,
unintended or not."
Election cycle after election cycle, desperate candidates and
fund-raisers-and lawyers-have seized on the tiniest cracks in legislative
language, and the most generous interpretations of policy minutiae, to
find innovative ways to funnel more money into political campaigns.
Consider the saga of "soft money." Under the terms of the 1974
law, the sole means by which corporations or labor unions can make
political donations is by contributing to "party-building,"
though only in the most literal sense-in the "construction or
purchase" of a party headquarters. But that provision wasn't what
opened the floodgates to the unlimited funds that corporations and labor
unions have been giving in ever-increasing amounts to finance
party-building of a less tangible sort. It was, rather, a 4-2 ruling by
the Federal Election Commission in 1978 that permitted the Kansas
Republican Party to raise this unregulated money to register new voters
and get them to the polls, even if doing so affected a federal
election.
Was this little-noticed decision a reasonable one at the time? "Yes,
absolutely," according to Trevor Potter, a Republican lawyer who was
on the commission from 1991-95. Yet, at the time, a Democratic dissenter
warned that once the commission began letting politicians spend
unregulated money, there would be no place to stop. That fear proved to be
prescient. Soon, the FEC gave the same permission to national political
parties that wished to help out their state affiliates, and then Michael
S. Dukakis' Democratic presidential strategists in 1988 pioneered the use
of soft money in a federal campaign. Bill Clinton raised the ante by using
soft money to pay for televised issue ads in his 1996 re-election
campaign.
Never intended as a major shift in policy, the soft-money provision has
vitiated the nation's election laws. "People got cleverer and
greedier," Potter explained, "and the regulatory system didn't
respond."
But the prospect of legislation to outlaw soft money threatens some
unintended consequences of its own. Democratic lawmakers who have opposed
soft money-even as they've benefited from it-are now reportedly fearful
that actually abolishing it would leave Republicans with an intolerable
financial advantage.
Perverse Incentives
In 1956, the federal government began to offer sewer-and-water-pollution
grants to local governments, in the hope of encouraging them to build
water-treatment plants. But the program had the opposite effect. Year
after year, Congress appropriated less money than the grants required, yet
local officials remained ever-optimistic that more money would show up the
next year. So they kept waiting to reapply for the grants yet again,
rather than moving ahead on their own to build treatment plants, as they
would have if the federal government had never stepped in.
"Public policy sets up different sets of incentives," said
Michael W. Sherraden, a professor of social work at Washington University
in St. Louis. "A lot of times, they're not thought
through."
For many years, it was the practice of federal procurement officers not to
take into account the past performance of companies that had sold stuff to
the government before deciding whether to buy from them again. The
rationale behind this approach was to prevent bureaucrats from exercising
subjective judgment, and maybe showing favoritism-a suspicion that arose
out of the public's growing distrust of government. But the result
was-well, it isn't hard to guess. "It screwed up the
incentives," said Steven Kelman, who oversaw the government's
procurement system during Clinton's first term. Because there were no
penalties for contractors with a history of performing poorly, he
recalled, "there was no incentive" for them to try hard to do a
good job.
Think of the incentives-or disincentives-that bedeviled the nation's
welfare system for decades. Welfare helped millions of families get on
their feet, but it also fostered a hand-me-down dependence and-because it
was available for so many years only to single-parent families-made it
economically rational for fathers to skedaddle or hide. Scholars dispute
the importance of these disincentives, said AEI's Kosters, but "it is
not disputed that there is an effect.... It is the biggest and most
damaging unintended effect that I can think of."
Perverse incentives lurk everywhere. Why should anyone be surprised if the
rising importance of standardized tests in schools has prompted
administrators to cheat by, for example, categorizing slower kids as
special-education students so that their scores don't bring down their
school's total? Michael Maren, the author of The Road to Hell: The
Ravaging Effects of Foreign Aid and International Charity, has argued that
the humanitarian act of sending food to both sides in war-torn Sudan has
given the combatants an instrument for solidifying their positions in the
areas of the country they control, and has thus prolonged the
fighting.
The wrong incentives can also be found in the pine forests along the U.S.
coastline from East Texas to southern Virginia, the vanishing habitat of
an endangered bird. Red-cockaded woodpeckers, named for the red tufts on
the cheeks of the males, nest inside the trunks of longleaf pines-usually
in trees at least 60 years old, with squishy-enough centers that an
eight-inch bird can peck out a home. The pines don't reach their top price
for lumber until they are 80 years old, but forestry consultants have
advised landowners to cut down their trees decades earlier, before the
woodpeckers move in. Because once they do, the Endangered Species Act
decrees that the trees must be left standing for a half-mile around, and
without governmental compensation for the landowner.
"Small landowners get panicky," said R.J. Smith, an
environmental scholar at the Competitive Enterprise Institute, a
market-oriented think tank in Washington. "You'd have to be crazy to
bring woodpeckers onto your land."
"That was the problem with the Endangered Species Act-it promoted
fear," said Ralph Costa, the recovery coordinator for red-cockaded
woodpeckers at the U.S. Fish and Wildlife Service. At Environmental
Defense, an advocacy group, attorney Michael J. Bean acknowledged
"instances" in which the law has been a disincentive. It isn't
so much that landowners have destroyed the woodpeckers' habitat, he said,
as that they have refrained from taking steps to improve it. He also
pointed to another governmental attempt at environmental compassion that
has hurt the endangered birds: The longtime practice (since abandoned) of
suppressing forest fires on federal lands might have been a godsend for
Smokey the Bear, but the denser forests made it harder for red-cockaded
woodpeckers to thrive.
No Free Lunch
When Californians debated in 1978 whether to slash their property taxes by
passing Proposition 13, opponents warned that it would injure the state's
high-quality public schools. Either the voters didn't believe it or, given
their financial pressures, they didn't care. The ballot initiative was
approved, and the opponents turned out to be right.
Sometimes the public or the policy-makers want something so badly that
they willfully-or unthinkingly-ignore the likely downsides and the
necessary trade-offs. Examples abound. Out of concern for the privacy of
children so poor that they qualify for subsidized school lunches, the
authorities refrained from also offering them subsidized health insurance.
Economic sanctions imposed by Washington on Cuba and Iraq haven't toppled
any tyrants from power, but they have made life harder for the masses of
people that the sanctions are meant to help. Fuel-efficiency standards
intended to reduce U.S. reliance on foreign oil encouraged the popularity
of smaller cars, which are estimated to have caused an extra 2,000 traffic
fatalities each year. The fuel standards also sent jobs abroad by stoking
the rise of Japanese automakers who were turning out the small, efficient
cars at a time when Detroit was not. The potential difficulty in firing
disabled workers because of the protections in the Americans With
Disabilities Act may, in fact, discourage companies from hiring them in
the first place.
Even populist symbolism can come at a price. Remember who got hurt by the
luxury tax imposed on yachts and other play toys of the rich in 1990 to
make former President Bush's deficit-cutting deal politically more
palatable? The levy of 10 percent on the price of boats costing more than
$100,000 wound up devastating the sales of new yachts, putting 100,000
less-than-wealthy workers (a sixth of the industry's workforce) out of
jobs. "Chalk this up as a costly, painful example of the Law of
Unintended Consequences," the Fort Lauderdale, Fla., Sun-Sentinel
editorialized in 1993, once the tax was repealed, "and vow that it
will never happen again."
But it did. When the federal government began to insist on passive
restraints-in practice, air bags-in every new vehicle sold, the point was
to save lives, not to take them. Concerns were raised about the impact of
air bags on children seated "out of position," said Diane Steed,
who headed the National Highway Traffic Safety Administration from
1983-89, but "I don't think anybody had any idea" of the danger
posed to children and small women who sat in the right place. Air bags had
been subjected to "very little" on-road experience, said Steed.
As of last October, air bags had saved 6,138 lives-but killed 169 people,
including 100 children and 67 women.
As Time Goes By
Usually, if you wait long enough, things change. When the Founding Fathers
put the Second Amendment into the Bill of Rights to ensure "the right
of the people to keep and bear arms," and thus assure "the
security of a free State," could they have imagined the profusion of
firearms that would someday turn mean streets into free-fire
zones?
Or in more-upscale neighborhoods, the alternative minimum tax was
intended, when it was enacted in 1969, to target the very rich who pay
very little income tax because they shelter most of what they earn. But
the levy is starting to hit middle-income households. The 1 million
taxpayers now subject to the tax will expand to 17 million within a
decade, said Frank Sammartino, an expert on taxes at the Urban
Institute-and could go as high as 25 million, if Congress passes Bush's
proposed tax cut. Over time, said Sammartino, the alternative minimum tax
will fall on taxpayers who have lots of dependents, or who happen to
reside in high-tax states. (See NJ, 2/24/01,
p. 574.)
A more spectacular instance of public policy that was ruined by the
passage of time imploded in Baltimore last month, when the city razed its
last standing example of high-rise public housing. Back in the 1950s and
`60s, as slum housing gave way to urban renewal, apartment towers for the
poor became the rage. The French architect known as Le Corbusier, with his
predilection for boxy, industrial designs, was in vogue, and high-rises
allowed the same density of development as the slums, yet with more open
space.
But, even a Soviet architect who once toured high-rise housing in Chicago
said it was "terrible-he would never do this," recalled Wayne
Sherwood, a former public housing official who is a research consultant on
low-income housing in Takoma Park, Md. And sure enough, the high-rises
became places of rampant crime, dangerous drugs, and frightful anonymity.
But the decline wasn't necessarily the result of an inherently flawed
design, said Sherwood, so much as the reflection of a shift in the
tenants. Increasingly, "working people didn't need public housing
anymore," he explained, and the high-rises became home to
single-parent, disastrously poor families.
"Mostly," Sherwood concluded, "the world
changed."
An Intricate World
The world is so complicated that the most powerful computers can't
accurately predict whether tomorrow morning will bring a light sprinkling
of snow or the worst storm in a half-century. And the weather is the
product of a closed physical system. So, what are the odds of prophecy
when 6 billion people and at least as many interactions and imponderables
are thrown into the mix?
"Everything is connected to everything," said economist Aaron.
"There are always offshoot consequences."
Think of the vast consequences of policies that were begun for other
purposes. When the government's wage and price controls during World War
II left businesses scrounging for ways to attract workers, companies
started to offer health insurance as a permissible come-on; from this
recruitment tool evolved our national practice of relying on employers as
the main vehicle for health coverage, which has left so many Americans
uninsured and has discouraged self-employment. In the 1950s, the
construction of the interstate highways smoothed the movement of goods and
people, as its planners intended. But the planners never foresaw how this
would lead to the proliferation of suburbs, beltways, and shopping
malls-and transform the way most Americans live.
Details of policy that were barely noticed at the time have turned out to
matter a lot. When members of Congress debated a higher-education bill in
1972, not much attention was paid to the promise of gender equality in
Title IX, and even less to the impact it might make on college sports; and
it was never imagined that the law would lead to decisions on some
campuses to eliminate men's sports teams in order to make room for more
women's teams. When lawmakers argued about tax reform in 1986, the subject
of the horse-racing industry never came up, but the law wound up
devastating the supply of racehorses.
Legislators who are thinking about one set of circumstances may prescribe
rules that won't work in another situation. In 1980, when Congress passed
the Superfund law as a mechanism to finance the cleanup of toxic-waste
sites, it wrote liability rules specifying that any company that owned a
Superfund site would be subject to "joint and several"-that is,
possibly full-liability for any toxic wastes that might be found on it.
The point was to deter future polluters. But the law also scared away
companies that might want to purchase a site and clean it up enough to put
up a factory and provide some jobs. A former Environmental Protection
Agency official estimated that the liability provisions damaged the
prospects for cleanup at "hundreds" of the agency's 1,400 listed
Superfund sites.
But really, how could anyone have known? The crisis of the moment-the one
that prompted all the lawmaking-involved a housing development in Niagara
Falls, N.Y., called Love Canal. Its inhabitants had been forced to abandon
their homes, and it was unimaginable that anyone would ever want to buy
the place.
It's a wonder, in fact, that policy-makers ever get anything right.
"There are complex sequences of events that usually can't be deduced
from theory or intuition," said former Clinton domestic policy
adviser William A. Galston, who is a public policy professor at the
University of Maryland. "Knowing in advance that you can't know in
advance is the beginning of wisdom in social policy."
Serendipity
Even in this glass-half-empty universe of policy prognostication,
surprises needn't always be unhappy ones. Isabel V. Sawhill is a senior
fellow at Brookings who was a senior White House budget official early in
Clinton's tenure. She remembers how unshakable the inherited budget
deficit seemed to be, as she scrounged for possible cuts in federal
spending. "Never in our wildest dreams," she said, even amid the
drama of the Administration's triumph in battling the deficit in 1993, did
the policy-makers imagine the surpluses that have become a political fact
of life.
On occasion, a significant change at one place on the chain of supply can
bring magnified improvements at another. When the federal government
lifted controls from the trucking industry in 1980, economists figured
that market-driven efficiencies (such as truckers no longer having to
drive rigs home empty) would save consumers up to $8 billion a year. But a
1987 study by Cato found benefits 10 times as large. What happened? Boaz
said that "no one anticipated the huge reductions in
inventories" that were possible once manufacturers of all sorts
gained confidence that an available truck could always be found to bring
them new supplies. This encouraged the now-standard system of just-in-time
inventory.
Pleasant surprises range from the cosmic to the trivial. Back in the
1960s, the Pentagon's R&D agency set out to build a flexibly
configured communications network, with computer software that allowed
messages to reach their destination even if particular nodes had been
destroyed, say, in a nuclear attack. After university researchers adapted
the system, to keep in touch with one another, it quickly evolved into the
Internet.
And when the 1990 Americans With Disabilities Act required local
governments to put in curb cuts at street corners, to accommodate
wheelchairs, the ramps weren't regarded as a boon to skateboarders, or
bicyclists, or parents with strollers. But that's what they are.
Fixing Mistakes
Far-sighted, dispassionate people don't make laws. Politicians do. And
they don't do so in a far-sighted, dispassionate way. In legislatures, in
bureaucracies, and even in the judiciary, decision-makers spend most of
their professional hours between a rock and a hard place. Unwieldy
compromises and delicate balances count as successes.
Yet, the same haphazard political processes that can yield an irrational
outcome can also be used to fix mistakes. A 1994 law that overhauled
federal procurement practices included language that authorized the
government's buyers to take into account a bidder's previous performance
record. The policy "was easier to change than I thought it would
be," said former procurement chief Kelman, who is now a professor of
public management at Harvard University's John F. Kennedy School of
Government.
Last June, President Clinton signed a bill that lets local school
administrators tell federal health officials about poor children who
receive subsidized lunches and who might qualify for medical coverage. A
few years ago, the liability scheme at Superfund sites was made more
enticing, when the EPA began to offer potential purchasers contracts that
excuse them from liability for pollution that wasn't their doing; 125 have
been signed so far. The Fish and Wildlife Service has tried to encourage a
home for red-cockaded woodpeckers by promising not to impose restrictions
on landowners if they improve their pine forests and the woodpeckers
return. "It's just common sense-why should we punish landowners who
want to help?" said the agency's Costa. So far, more than 100 of the
private landowners have struck deals with the feds, covering nearly half
of the woodpeckers that live on privately held lands.
Sometimes, properly repairing an unintended consequence takes a couple of
whacks. The 1997 budget-balancing law, in trying to prune federal spending
on health care for the elderly, overdid it. Instead of cutting the
1998-2002 payments to hospitals and other medical facilities by $115
billion, as they intended, lawmakers wound up chopping Medicare
reimbursements by $227 billion, because of unforeseen trends in health
care and in the overall economy. So Congress then tried to fix the
resulting mess-twice. A reimbursement bill in 1999 proved to be too
modest, so another one was enacted in 2000.
So how can a policy-maker anticipate-and avoid-consequences that aren't
intended? "You can't," sighed Kahn, on the phone from Ithaca,
N.Y., where the airline service is far spottier than it was before
deregulation. "You do the best you can."
Burt Solomon
National Journal
