Good Intentions Don’t Make Things Happen

People want to help

Most people are kind and gentle and want things to work out perfectly for everyone. These people have ideas about how that could come to pass. Sometimes they get into a position that allows them to influence how things work out.

How does that turn out?

Usually not well. The reasons are many:

  1. The problem they are addressing is not objectively defined. A common example is, “People are poor because someone else is exploiting them.”
  2. The problem is not as simple as they wish. Rents are high because there are disincentives to building more units.
  3. There is a time delay in implementing the solution. It takes a long time to build an apartment building even if you start today. In the current world it could take years to get approval to build.
  4. Some people being helped are in their condition by their own actions. They won’t do what they should do to improve that.

No one carefully measures the results of their action.

If an intelligent life from another planet came and studied some of the things we do, that being would wonder how we got to the top of the food chain. The first observation would be that we seem not to have any real idea how to relate outcomes to their causes.

Take socialism. Of the hundreds of examples of it attempted, has even one shown a glimmer of hope of success? No. Why would anyone continue to believe it is possible? Because they are kind and gentle and want to help their fellow humans. Intentions do not automatically translate to results.

Does anyone check to see if the program worked?

Objectively!?

Having the people who benefit from the program’s operation are not good assessors. Objective measurement of results, against the purpose and the resources consumed, should guide future decisions. Milton Friedman once commented that measuring a program by its intentions rather than outcomes was a huge error.

Intentions are only a beginning

I think we could all agree we would prefer people to be able to afford housing, to have enough income and to have good healthcare. I think we cannot agree on how to achieve that.

It should be about incentivizing behaviours.

Housing is easy. But it won’t happen quickly. Perhaps a decade is needed to overcome the bureaucratic morass.

If you want more housing and thus more affordable housing, how does it make sense for governments to impose conditions that delay the start of construction? How does it make sense to cap rents and thus limit profits and the time to recover the capital invested? How does a biased tribunal system to arbitrate landlord tenant disputes make sense?

If you want more housing, notice that you cannot get it by chasing the landlords out of your jurisdiction. Some are trapped by old investments, but there will be no new ones. Public housing has generally been a disgrace. Intentions are not enough to operate a complex, capital intensive, business.

Same ideas apply to medicare. If you try to limit the price of delivery by limiting what doctors receive, you should expect fewer doctors in your jurisdiction.

Same again for jobs affected by minimum wage. If governments command the price to be higher, they should expect fewer jobs to be provided. Good intentions don’t make it happen

It is pretty simple

Understand disincentives. Overpriced items like low wage job openings, will reduce the number made available. Shortages of goods will increase price, like rents. The most effective incentive to action, is the removal of disincentives to that action.

If voters, assuming they have any influence at all, looked at bureaucratic rules and controls as proof of the failure of other policies, we would have fewer rules and controls. Sadly, no one connects the dots. They continue to look at intentions and ignore results. As intentions dominate there is a tendency for bigger and more powerful bureaucracies to appear. The oblivion spiral.

Good intentions are not a sufficient basis for policy

Be sure your personal good intentions and plans are supported by carefully monitored action.


I help business owners and others use tax efficiencies and design advantages to achieve more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

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