Example:
The British navy was placed off the coast of Africa to halt all slave trading. This had the unintended consequence of making conditions even worse for slaves as slaves traders cramped them into even smaller cargo holds that were disguised so the navy could not see them
When simple rules have the objective to regulate or control complex systems, you will obtain unintended consequences; any group of people making decisions are going to have a problem when they have limited information, short time horizons, little feedback and misleading incentives.
Another scenario is when regulations push against incentives, incentives tend to push back.
Example: Disability Act - Employment of disable people drastically decreased because the cost of hiring someone disable was higher than before.
Other Key points:
- Trade between individuals and countries is not zero sum
- Pie Fallacy: Thinking there is a fixed amount of wealth in the world.
-Rizzo
Daniel Gaona
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