The Cobra Effect. The phenomenon where an attempted solution to a problem actually makes it worse. The classic, namesake case is when British authorities in New Delhi offered a bounty on cobra skins in order to rid the city of the snakes. The locals, instead of killing the existing snakes, simply started breeding more of them. When the British finally caught on to the ruse and cancelled the payments, the snakes were released which increased the population to levels higher than pre-bounty.
Examples of the Cobra Effect are plentiful. However, I’m particularly interested in a slight variation; government actions that have the joys of not only making a situation worse, or creating an entirely new problem, but which also wastes money. And for this I have coined the term, and present to you, The Hepatitis Effect.
1 – San Diego Cause Hepatitis A Outbreak The city of San Diego implemented a ban on plastic shopping bags. However, San Diego forgot that it is in California, the state with the nation’s highest poverty rate, highest homeless rate and largest homeless population.
Why does this matter? Because homeless people poop in plastic bags. Without access to these bags their excrement ends up, well, everywhere. Sidewalks. Restaurants. Water fountains. In San Diego this abundance of feces resulted in a Hepatitis A outbreak, a deadly virus that has spread across California and to date has killed 21 people.
In response, San Diego has spent $6.5 million to erect temporary, large-scale tents (made of plastic) and has earmarked another $80 million to address the issue. It has also begun passing out taxpayer funded hygiene kits. What are in these kits? You guessed it – plastic bags.
2 – Seattle Increases Rent I like Seattle. Great town. Also has its share of homeless; I once drank some beers with a homeless man named Eddie Shoeshine who I paid $20 to shine my buddy’s flip flops. However, this housing snafu is not focused on the homeless, but rather those with the means to obtain housing but who struggle in Seattle’s tight housing market.
It is well worth the time to read How Seattle Killed Micro-Housing. Long story short, Seattle housing regulations are controlled by unwieldy entities such as City Council, The Construction Code Advisory Board, The Department of Construction and Inspection, and The Housing Affordability and Livability Agenda. These myriad of organizations ignored Economics 101 and insisted on feel good regulations focused on increasing the sizes of proposed micro-housing units.
The impact: less units available to rent, and higher costs for the ones that are. Micro apartments that were slated for $900 per month were instead rented for $1,400 per month. As an added bonus, these higher housing costs allow some to qualify for taxpayer funded rent subsidies, an expense that was not needed at the $900 price.
And if you think maybe Seattle wisened up, read this: How Seattle Killed Micro-Housing, Again.
3 – Flood Insurance Increases Flooding There is the misconception that private companies will not do flood insurance. Not true – either I’m crazy or private companies just like to avoid bankruptcy and do not insure “severe repetitive loss properties.” Properties like the Louisiana home that has flooded 40 times and has been rebuilt each time. Properties like the home in Alabama that is worth $115,000 and has flooded 16 times in the last 18 years and has cost $800,000 to be rebuilt. Who is financially incompetent enough to insure and rebuild these homes in the exact same locations? That’s right, Uncle Sam.
Providing flood insurance sounds great. However, the problems with the federal National Flood Insurance Program are numerous. Overall, it is too incompetent to accurately charge rates based upon flooding threat and therefore encourages building, and rebuilding, in flood prone zones. Read this: How Washington Made Harvey Worse. Who is more likely to build along bodies of water? Read this: The Government’s Hidden Subsidy for the Rich.
The current status of the National Flood Insurance Program? Underwater with $25 billion in debt.
I hope you enjoyed your introduction to the Hepatitis Effect; well-intentioned government laws that ultimately cause problems and waste your money. If you’re interested in this topic, I refer you to this NYTimes piece: The Most Expensive Mile of Subway Track on Earth. It is just further proof that government will, undoubtedly, waste your money even when it means well.
Thank you for reading. Click here for my homepage and feel free to tell me I’m crazy. – Nick