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Definitely Not Funny – The Iron Law Of Unintended Consequences

Definitely Not Funny – The Iron Law Of Unintended Consequences

| On 08, May 2019

Darrell Mann

Not so long ago I proposed a new rule: No-one should be allowed to run for public office or work in a management position unless they’ve successfully passed a Complex Adaptive Systems 101 course.

If we don’t understand complexity we don’t understand that the relationships between the actions we take and the reactions they trigger can often be highly tenuous. Worse still, the more well intentioned an action is, the greater the likelihood that the reaction will be 180 degrees opposite to what was intended.

Take this water-saving idea from Colorado Springs:

The basic unintended consequence model looks something like this:

If it wasn’t so tragic it would be funny. Especially in light of the fact that it is often those acting as a proxy to the problem victims who trigger what can very easily turn into a horrible vicious cycle.

Here’s a recent Bloomberg article relating to one of the unintended consequences of the highly admirable #MeToo campaign. Sexual harassment is a bad thing, but trying to solve the problem by calling it out is already doing nothing but exacerbating the problem. The vicious cycle hasn’t been completed yet, but its easy to see how the first of the unintended consequences will quickly devolve into the second…

No more dinners with female colleagues. Don’t sit next to them on flights. Book hotel rooms on different floors. Avoid one-on-one meetings.

In fact, as a wealth adviser put it, just hiring a woman these days is “an unknown risk.” What if she took something he said the wrong way?

Across Wall Street, men are adopting controversial strategies for the #MeToo era and, in the process, making life even harder for women.

Call it the Pence Effect, after U.S. Vice President Mike Pence, who has said he avoids dining alone with any woman other than his wife. In finance, the overarching impact can be, in essence, gender segregation.

Interviews with more than 30 senior executives suggest many are spooked by #MeToo and struggling to cope. “It’s creating a sense of walking on eggshells,” said David Bahnsen, a former managing director at Morgan Stanley who’s now an independent adviser overseeing more than $1.5 billion.

This is hardly a single-industry phenomenon, as men across the country check their behavior at work, to protect themselves in the face of what they consider unreasonable political correctness — or to simply do the right thing. The upshot is forceful on Wall Street, where women are scarce in the upper ranks. The industry has also long nurtured a culture that keeps harassment complaints out of the courts and public eye, and has so far avoided a mega-scandal like the one that has engulfed Harvey Weinstein.

Now, more than a year into the #MeToo movement — with its devastating revelations of harassment and abuse in Hollywood, Silicon Valley and beyond — Wall Street risks becoming more of a boy’s club, rather than less of one.

“Women are grasping for ideas on how to deal with it, because it is affecting our careers,” said Karen Elinski, president of the Financial Women’s Association and a senior vice president at Wells Fargo & Co. “It’s a real loss.”

There’s a danger, too, for companies that fail to squash the isolating backlash and don’t take steps to have top managers be open about the issue and make it safe for everyone to discuss it, said Stephen Zweig, an employment attorney with FordHarrison.

“If men avoid working or traveling with women alone, or stop mentoring women for fear of being accused of sexual harassment,” he said, “those men are going to back out of a sexual harassment complaint and right into a sex discrimination complaint.”

Other well-intentioned initiatives have already matured into societal problems that are now almost completely unsolvable. Think Sarah’s Law. Prohibition Laws. Tightened bankruptcy laws. Gun buy-back laws. Incentives to kill snakes. Anti-pollution laws… I like the 1989 Mexico City one involving a policy called Hoy No Circula (“You Don’t Drive Today”), which simply banned a certain percentage of the city’s cars from driving each day. The way they did it was by license plate number – if yours ended in a 5 or a 6, then you weren’t allowed to drive your car on a Monday, so you would have to carpool, take a cab, or bike your ass to work. The next day, you could drive, but somebody else would have to walk, etc. Sounds great, except, apparently underestimating the lengths people will go to in order to not do as they’re told, Hoy No Circula only restricted car use between 5 a.m. and 10 p.m., leaving drivers with a cool seven hours with which to make up for the day’s lost pollution. Air pollution levels increased during the off hours, showing that people would rather work a 17-hour day than take the bus.

But those who wanted a more convenient way to get around the law simply bought a second car. The policy applied to cars, not people, and thus didn’t restrict anyone from driving a different car with different plates on those “off” days. Not only did this increase the number of cars in Mexico City, but people usually opted to buy really cheap, shitty, hyper-polluting used cars as their backup, so they were polluting more on their off days than when they were allowed to drive their regular car.

I also quite like the Smokey The Bear forest fire prevention story from the US

The Forest Service’s Smokey campaign was very successful, but environmentally speaking, we know now it wasn’t such a good idea. Beginning in the early 20th century, the federal government – principally the Forest Service, but also other agencies like eventually the BLM and the Bureau of Indian Affairs – committed themselves to an operational model that mandated full suppression of fires in national forestlands, wherever they occurred. Sounds like a good idea, right? Well, ecologically, it’s not that simple. Many forest fires are started by humans, whether negligently, carelessly or deliberately, but some are also natural, such as from lightning strikes, and they are part of the ecological process of clearing out small brush and downed branches from the forest floor. Not all forest fires are bad. The government’s tendency to treat them that way, however, especially in the 1940s when Smokey debuted, meant that this brush built up in many forests.

When they burned, the intensity of the fires was often much greater than it would have been under natural conditions. This paradigm did not really begin to change until the 1970s, when the relatively new science of ecology began to take hold at policy levels, recognizing that the balances of forest ecosystems are more complex than they seemed. Unfortunately, we are still living with the results of the “pure suppression” model. In the past few decades, wildfires have grown progressively more catastrophic, in large part due to drought and climate change, but also because too few forests have been “managed” to reduce the underbrush fuels that can make fires much worse than they should be. Furthermore, as more people move to fire-prone areas, especially in the West, they bring with them an assumption that it is the federal government’s responsibility–not theirs and not their local communities’–to protect them from wildfires.

Ironically the “Only You” and Smokey campaigns obliquely reinforced this assumption. It’s your job, said Smokey, to prevent fires, but suppressing them once they start is someone else’s. The federal government can’t shoulder the financial burden alone, especially in the era of climate change.

Sometimes the string of unintended consequences can, like this forest-fire story be quite a long one. Here’s another multi-step, multi-year consequence chain:

Other times, the vicious loop cycle happens quite quickly. Like this one:

This one is also likely to be fairly direct too. Albeit for different reasons:

Finally, in a bid to avoid thinking about the impending relationship between Brexit and unintended consequences, here’s a different example of the need for the Complex Adaptive Systems 101 rule:

in order to replace the use of coal in the UK, power stations are being refitted to burn wood chips.  But the UK doesn’t have enough forests to supply the wood chips, (biofuel) so…

…power companies in the UK are planning on purchasing timber in the United States to be converted to wood chips to be shipped across the Atlantic to burn in the previously coal-fired power plants.

Next stop, Electric Vehicle legislation, social media curbing legislation and cyber-security surveillance laws. If they don’t knock all the dominoes over, nothing will. Happy New Year.