Unintended Consequences is a phrase that is being heard more and more often.
The law of unintended consequences, often cited but rarely defined, is that actions of people—and especially of government—always have effects that are unanticipated or unintended. Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it.
The real danger of unintended consequences is that the affects of an action cannot be foretold with any degree of accuracy. The opinion of most is that unintended consequences are the result of carelessness, inattention and ignorance. The definition of unintended consequences can be either positive or negative. The negative occurrences are more visible because they often affect many beyond the original scope of the act.
Let’s take a look at such an occurrence that is now being splashed across the internet—a last minute amendment added by Senator Dick Durbin (D-IL) to the Dodd-Frank Banking bill.
By: | 10/01/11 8:05 PMIf we had a “Dim Bulb of the Year” award, we would give it to Sen. Dick Durbin, D-Ill. How better to honor someone who so ostentatiously proposes a policy with obvious unintended consequences, then gets angry when they predictably come to pass?During the debate over the Dodd-Frank financial reform bill, when Democrats controlled Congress, Durbin insisted on including an amendment that had nothing to do with Dodd-Frank’s stated aims of stable banks and consumer protections. The Durbin amendment granted regulators the authority to establish price controls on what banks could charge merchants that accepted their customers’ debit cards as payment. The resulting regulations, which took effect Oct. 1, limit what banks can charge merchants to no more than 24 cents per debit card transaction.Critics pointed out that banks, facing $6 billion annual losses from this change, would shift the costs of debit cards from merchants to bank customers. Sure enough, Bank of America and several of its largest competitors — including Wells Fargo, PNC, HSBC, SunTrust, TDBank, and Chase — will be imposing various new fees on their customers to make up for Durbin’s folly.