FOUNDATION FOR ECONOMIC EDUCATION – Never underestimate the ability of politicians to try to micromanage our lives and make everything worse in the process. The latest example of big government’s inherent incompetence comes courtesy of the city of Seattle.
In 2018, the city established a tax on soda and other sugary drinks “designed to result in the improved health of Seattle residents.” Yet a new peer-reviewed study shows that the tax has backfired in a spectacular (and hilarious) manner.
How Seattle’s Nanny State Efforts Backfired
Published in PLoS, the study found that consumers responded to the tax by purchasing less soda—and purchasing more beer, instead.
It reports that two years after the implementation of the soda tax, beer sales increased in Seattle 7 percent relative to nearby Portland, which did not have the tax.
“There was evidence of substitution to beer following the implementation of the Seattle [sweetened beverage] tax,” researchers Lisa M. Powell and Julien Lader concluded.
So, yes, Seattle’s policy may have successfully burdened its residents with a regressive tax and pushed them away from their first choice drinks. But it’s not at all apparent that it actually “improved the health of Seattle residents.”
Indeed, alcohol consumption carries a wide range of negative health consequences. And calorie-rich beer can actually contribute to obesity, the very problem this tax was supposed to address.
Why Unintended Consequences Constantly Plague Big Government Schemes
Big government schemes are constantly plagued by unintended consequences. Why?
“Every human action has both intended and unintended consequences,” economist Antony Davies and political scientist James Harrigan explain. “Human beings react to every rule, regulation, and order governments impose, and their reactions result in outcomes that can be quite different than the outcomes lawmakers intended.”
It’s actually par for the course to see invasive regulations and taxes backfire and have unintended consequences that achieve the exact opposite of their original goals. This is what Harrigan and Davies dubbed the “Cobra Effect.”
They told the comical yet revealing tale of how an Indian city placed a bounty on cobras to try and solve their infestation problem, yet achieved the opposite result. How come?
At first, more people hunted cobras to get the bounty, and the cobra population decreased. Yet then individuals started breeding and raising cobras at home in order to get the bounty again. When the government canceled the bounty because the population had seemingly declined, citizens released all the cobras they had been raising in their homes into the wild.
The end result was a worse infestation of cobras than the city had to begin with.
Whether it’s cobras or the consumption of healthy drinks, big government schemes to micromanage our lives reliably fail spectacularly. How many times does this have to happen before elected officials realize this reality?