Freeman

BOOK REVIEW

That's Not What We Meant to Do: Reform and Its Unintended Consequences in Twentieth-Century America by Steven M. Gillon

Gillon Should Learn Some Economics

JULY 01, 2001 by PHILIP MURRAY

W.W. Norton • 2000 • 288 pages • $25.95

The art of economics, as Henry Hazlitt might put it, is to uncover the unanticipated effects of an act. In “That’s Not What We Meant to Do,” historian Steven M. Gillon details the history of five federal acts. He states, “My goal is fairly modest: to tell a few stories of how unintended consequences occur, to speculate about their significance, and to inspire more research and discussion about this often mentioned but infrequently explored theme.” The legislation Gillon examines deals with welfare, mental illness, civil rights, immigration, and campaign finance.

Federal welfare policy begins with the Social Security Act, which included the pension for retirees and Aid to Dependent Children (ADC). Legislators did not foresee that the aging population and Congress’s habit of spending surpluses in the “trust fund” would threaten old-age pensions. As for ADC, later changed to Aid to Families with Dependent Children, Gillon explains: “A program designed with destitute widows in mind was evolving into a system in which the majority of beneficiaries were mothers who had never married or had been divorced.” An unintended consequence with very serious results.

The purpose of the Civil Rights Act of 1964 was to eliminate segregation. Gillon quotes Hubert Humphrey on quotas: “In effect, [Title VII] says that race, religion and national origin are not to be used as the basis for hiring and firing.” Then Humphrey made his famous challenge: if his colleague could show him where Title VII forced employers to adopt quotas, he would consume the paper. In 1971, however, the Supreme Court decided that employment statistics were adequate proof of discrimination. “The Court insisted that the ruling did not require strict quotas,” Gillon writes, “but by declaring suspect any employment standard that resulted in racial imbalance, the justices gave a powerful incentive to employers to use a proportional quota system.” Unintended consequence: employers adopted quotas to protect themselves from lawsuits over statistical disparities.

The Federal Election Campaign Finance Reform Act Amendments of 1974 were expected to destroy the influence of large contributors. The lofty-sounding goal was to “clean up politics and reinvigorate public faith in government.” Neither objective was accomplished, but there have been plenty of unintended consequences. One was the rise of the political action committee (PAC). Office seekers could gather only limited donations from individuals; thus they used PACs to raise funds. Restrictions on campaign finance also caused candidates to spend more time seeking contributions. Thus incumbents spend less time serving their constituents and challengers spend less time differentiating themselves on the campaign trail. As for restoring “public faith” in democracy, the percentage of citizens who vote has continued to fall.

The author draws this lesson: “At the heart of the problem of unanticipated consequences in the United States is a paradox: Americans look to Washington for solutions to complex problems, but they are reluctant to give government the power it needs to address most issues.” Sorry, Professor Gillon, but the problem of unintended consequences does not arise from an insufficiency of government power. Coercive interference in human action invariably leads to unintended—and undesirable—consequences. More government power to interfere will just lead to more unintended consequences (and demands for more power).

So a book that appears to make a decisive argument against social engineering ends with interventionist blather: “I would not want readers to conclude from these examples that we must abandon our efforts to identify social problems or suspend efforts to use government as a positive force for social change.” I suggest that Gillon learn some economics, then revisit the subject of unintended consequences.

Philip Murray is a professor of economics at Webber College in Babson Park, Florida.

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July 2001

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