Economics 101: Newton's Law of Unintended Consequences for Beginners

Economics 101: Newton's Law of Unintended Consequences for Beginners

You go to your mailbox. You pull out a big bill for life insurance. It's way too much to pay for something you only benefit from after you die.

So you and your favorite congressman decide that the premiums should be lower and the payouts should be higher. You get a bill through Congress that mandates that all life insurance should cost next to nothing, and pay out everything. Cool for you! You really stuck it to those nasty insurance bastages!

What will happen next?

• Everyone will enjoy great life insurance at a cheap price
• The insurance companies will stop issuing life insurance policies because they will always lose money. Then, every time anyone's payment is 1 hour late, their existing policy will be cancelled.

It's quite simple. No business is going to stick around when you legislate that they lose money on every transaction. Would you stay at a job that pays $10 a day and it costs $15 in expenses to work there?

This is what happened to the flu vaccine industry. American regulation, legislation, and lawsuits (greedy lawyers like John Edwards) have all but closed down the flu vaccine business in this country. Notice how the President said we had problems in the UK - but don't worry, we'll try Canada. Where are the "giant pharmaceuticals" in the U.S.? They won't touch the stuff because 1/100th of 1% of the population will get sick and sue them for $900,000,000,000 each plus legal costs.

Well, that's what we want here in America - a country where we live our lives waiting for something bad to happen, and then we get a lawyer and pounce on the guy with the deepest pockets so we can make our attorney rich. So we all just coast along hoping for the day when we trip on a lawn sprinkler or step on a rusty nail, or until we get bit by a bichon frise (purse dog). Then we've hit the big time!

The truth is that everyone who wins one of those ruins the lives of countless others who work with and for the victim company. To get his 10 million, he has to pay his lawyer $20 million. That takes $30 million out of the company or city or county that he sued. The result? Layoffs and lost business and postponing of raises and hiring freezes.

According to Ayn Rand, there are 2 kinds of people: producers and looters. Which are you?