Atanu Dey On India's Development

The Road to Hell

Some time ago in a piece titled Dutch Disease Disturbing the Universe I had written:

The Law of Unintended Consequences is pretty well known, I suppose. It is part of a more general law which I call the Zeroth Law of Ecology which says that you can never really do only one thing. That is, you want to do only A but you find that you have also done B and C, both of which you had not intended doing. This is because the universe is complex and all its parts are interlinked and so when you do something to one bit of the universe, you end up disturbing the whole universe.

There must be many reasons why we cannot see all the connections. There may be ignorance, willful or otherwise, for instance. Or it could be that we are not omniscient. But, I believe, it is mostly due to what is called our bounded rationality, which means we are not clever enough to think through all the complexities of the universe.

I find paradoxical stuff fascinating. A paradox is puzzling only as long as you have not figured out the full story. Counter-intuitive stuff also give me thrills. Take, for instance, the observation that many people who win lotteries end up being not lucky after all: a good many of these lucky winners end up broke and sometimes worse off than they were before they got the windfall. It is like a winner’s curse with vengeance.

Thus have I heard that the Tathagata said: First do no harm; then try to do good. (For more of what the Buddha said, see “It’s the small stuff, stupid!”). Very sane advice, if you ask me.

Very few people are fundamentally evil, very few wake up and say gleefully with an evil glint in their eyes, “What can I do to screw up the happiness of my fellow humans?” Most say, “Let me help fix this, that or the other.” And since most people are ignorant about most things**, they end up monkeying around and muck up the whole works. Let me save you from drowning, said the monkey to the fish as he put it up on a tree. The road to hell is often paved with good intentions.

[**: Actually, everybody is ignorant about most things. Very few people know a lot about a few things, most people know a little about a few things, and an astonishingly large number of people in positions of power know f*all about anything.]

I guess by now you are wondering where all this is leading to, eh? Where is all this talk about good intentions and screw-ups taking us, you ask. Here. I want to first bring out a few examples of good intentions gone bad. Then ask what went wrong and then draw a general lesson. That general lesson will become a tool, a mental model, with which one can shape an argument, solve an apparent paradox. Then go on to add more tools till we have a somewhat complete set of tools which are extremely general purpose. Just thinking about these things is a delightful exercise. That in the end of all this, I would have changed a few minds about the nature of the population problem and my proposed solution, is an added incentive for me, to say nothing of the free dinners that I hope to collect from a bunch who have already taken up my challenge.

He that will not apply new remedies must expect new evils for time is the greatest innovator.

Sir Francis Bacon (1561-1626)

One of the more familiar of self-inflicted economic wounds is what goes under the name of rent control. The intent is to prevent greedy landlords from charging ungodly rents and exploiting poor people who cannot afford high rents. Who would be so mean-minded as to oppose rent control, one would incredulously ask. Isn’t it great that because of rent control the poor have a shot at finding housing? The truth is precisely the opposite: rent control hurts the poor the most by reducing the supply of rental housing.

I did a google on rent control perverse and got over 24,000 hits. Good reading if you have the time. Rent control has the perverse effect of reducing supply of affordable housing, creates disincentives for new developments, leads to deterioration of the existing stock of housing, and many other ill-effects that are certainly not intended. (Until about 6 years ago, Berkeley California which was home for me, used to have rent control laws. Housing was expensive and shoddy. After the removal of those laws, prices have started coming down because the supply of housing has gone up.)

I have been in Mumbai for about eight months. I can tell from a glance which buildings in any fancy neighborhood are under rent control: those that appear shabby and about to fall down. I visited an apartment in one such building. The inside of the apartment was lavish to the hilt; the outside was crumbling. The rent being paid: about $20 a month. Market rate: $2000 a month. Who lived in there? Someone who could afford $4000 a month in rent. How long were they living there? A short 30 years. Does the owner want the renter out? By god, yes. Can he get them out? No way in hell.

Why doesn’t the landlord fix the building? Answer: Are you crazy? How the heck can he afford to fix the building when he gets about one percent of the market rent for the building and from that income he cannot even hope to paint the entrance way of the building?

Laws are on the books ostensibly to protect tenants from evil landlords but they end up victimizing the tenants and penalizing the landlords. Because it is next to impossible to evict tenants in most parts of India legally, people prefer to lock up an unused apartment rather than put it on the rental market. I moved into an apartment in Mumbai which was two years old but was never lived in because the absentee owner dared not rent it out to anyone. Only through family connections and assurances of never ever wanting to settle down in Mumbai was I able to use the apartment. Anecdotal evidence indicates that a significant percentage of vacant Mumbai property is not available for rental because the laws make it impossible for legitimately terminating a rental agreement.

Bottom line for now: it is possible to be well-meaning and yet come out with astonishingly asinine policy out of ignorance and not having thought through the consequences. If one wants, one can spend the whole day just to list out idiotic ideas that harm the people they are intended to protect. I will discuss one more next time: the labor laws, specifically those that are supposed to protect the worker from being fired without reason but which results in fewer jobs for workers.

Connection with the topic of population control: many believe that it is inhumane to restrict reproductive rights of people. I intend to show that it is precisely the opposite: it is inhumane to not restrict it under the circumstances that we find ourselves in. I will show that those who argue that the poor will be hurt by a uniform policy of restricted reproductive rights are exactly wrong and that it is the poor who would benefit more than the rich.

There is more to come. Details at 11.

  • Prashant Mullick

    >This is because the universe is complex and all its parts are interlinked and so when you do something to one bit of the universe, you end up disturbing the whole universe.
    There must be many reasons why we cannot see all the connections.

    For some reason this reminds me of Janna Levin’s book, How the Universe got its Spots.

    She talks about how we cannot see the actual shape of the Universe due to our limited abilities. Even if the Universe was bananashaped and finite in size, we would not know it so if we might be sitting on the surface that seems to be infinite.

    Something similar to the effect of the surface of the earth seeming to be flat rather than spherical.

    Sorry for the unrelated comment since this has nothing to do with Ecology/Economics but just a tangential thought that came up on reading that zeroth law of ecology you mentioned… :-)

  • Niket

    One of the side-effects of the population control regime is likely to be a further skewing of sex ratios (# females per 1000 males), which are already reaching an alarmingly low numbers.

    I am all ears for your extrapolation of how a population control regime will be beneficial, using examples of externally imposed controls being counterproductive in the long run.

  • Atanu Dey

    Niket, for my views on the matter, do a search on this blog for “sex ratio”.