Unintended consequences

Economics is about systems, and it’s not uncommon to see well-intentioned interventions in economic systems produce unintended consequences.  I ran across a good example a few weeks ago.  A well-meaning high school decided to increase the nutritional content of its lunches.  Good idea, right?  The students, though, had a different idea.  They walked down the street and bought as much unhealthy food as they wanted.

FAA and financial regulation revisited

A post by Larry White

Paul Romer’s post about the differences between the FAA and financial regulators got me thinking.  Are the latter so bogged down in detail that they miss the point?  Do they lack bottom-line responsibility?

Romer on rules

I ran across a link on Marginal Revolution to a cool piece by my colleague Paul Romer.  He ends with this:

“If we persist with a legalistic rule setting process, the opportunists will thrive. We will settle into a fatalistic acceptance of systemic financial crises, flash crashes, and ever more exotic forms of opportunism.”