Introduction to Connor Boyack and His Relevance
Connor Boyack, the founder of the Libertas Institute and an author known for his insightful books on liberty, shares a compelling reflection on the unintended consequences of government policies. This story serves as an excellent example to understand how well-meaning policies can lead to unexpected outcomes.
The Tale of the Cobra Infestation: A Government-Induced Problem
Have you ever heard about a government that caused a snake plague in the black market? (Here’s your chance to learn about free-market economics!)
The story begins during British rule in India, a land mostly covered by untamed jungles and teeming with cobras.
If you’ve never encountered one, let me tell you – cobras are intimidating. They’re large, with striking black heads that hoist up when threatened, and their venom is deadly. Out in the open, they weren’t much of a problem as long as people kept their distance.
However, as trade and opportunities grew, Indian cities expanded into previously wild areas – like Delhi – making cobras a growing concern in residents’ daily lives.
So, the British decided to declare war on the snakes: they offered locals a reward for every cobra skin handed over to authorities.
Initially, large quantities of dead cobras were submitted. The plan seemed to be working – more dead snakes meant fewer living ones threatening the public!
But when government intentions met market consequences, things took a turn.
Unintended Consequences: The Rise of the Cobra-Breeding Business
Once locals realized they could make good money hunting cobras for their skins, everyone wanted a piece of the reward. Eventually, the number of cobras started to dwindle.
It didn’t take long for people to figure out they could keep making money from their rulers if only they could find a way to acquire more skins. Thus, the cobra-breeding business was born.
When the British suspected something was amiss due to the growing number of people asking for rewards, they eliminated the compensation.
But by then, the cobra market had already taken off. The incentive offered by the government fueled the demand, and when this false demand was abruptly cut off overnight, farmers – facing worthless venomous snakes – released them.
This, of course, led to an even larger cobra population than before the government intervention. Delhi was terrorized by snakes in even greater numbers than before the government got involved.
The Cobra Effect: A Metaphor for Unintended Policy Consequences
Today, this story is known as the “cobra effect,” used across various fields – from business to psychology conferences – to illustrate unintended consequences and perverse outcomes.
One would think that modern governments would pay heed to past examples of unintended consequences when discussing today’s “cobras” – such as pandemics, privacy, and money printing.
Instead, politicians often treat citizens as guinea pigs for their recurring experiments, disregarding what previous attempts have shown.
The Physics of Government Policies: Action and Reaction
Just as physics teaches us that every action has an equal and opposite reaction, the same principle applies to public policies. For every government measure, regardless of its good intentions or appeal, there’s a consequence.
For instance, when “frightening” things (like snakes or guns) are restricted by government policies, they become attractive to the market and gain even more value due to artificial scarcity created by prohibition.
Governments can try to enforce their will over natural laws – including free-market laws – but there will always be consequences.
Key Questions and Answers
- What is the Cobra Effect? The Cobra Effect is a metaphor describing unintended consequences of government policies. It originated from a British initiative in India that backfired, leading to an increase in the cobra population instead of a decrease.
- Why is understanding the Cobra Effect important? Recognizing the Cobra Effect helps us understand how well-intentioned government policies can lead to unforeseen negative outcomes. It encourages policymakers to consider potential consequences before implementing new regulations.
- How does the Cobra Effect relate to modern issues? The Cobra Effect serves as a reminder of the potential pitfalls when governments intervene in free markets or restrict individual liberties, such as in cases of pandemic response, privacy concerns, and monetary policies.
Connor Boyack
*The author is the president and founder of Grupo Salinas
