One of the tasks of anyone involved in the economics profession is constantly pointing out the hidden costs and unintended consequences of various policies. The bag tax is no exception and provides a good example. In my column, I suggested we look at the general level of pollution versus the specific pollution caused by plastic grocery bags to evaluate whether pollution would be reduced by placing a 20-cent tax on plastic grocery bags. I suspect there wouldn’t be any effect, but I really cannot know for sure without extensive research. Regardless, we should look at the general pollution level.

It is hard to keep the general pollution level in mind. Plastic bags are something that we can readily see and touch. They are both specific and visible, which makes their reduction via taxation so easy to quantify. The general pollution level is far more difficult. The 20-cent bag tax may end up causing more pollution across the board by forcing more resources or different resources to be used. Sure, a few more fish and birds could be saved from death by plastic grocery bags, but that does not mean less will die overall.

Another example are price supports. A tariff on foreign steel would help prop up the U.S. steel industry, but it would immediately take away jobs from every industry that uses steel and prevents every other industry from expanding by raising the cost of resources. The problem is that there is no economy-wide organization fighting against the tariff, while there are plenty of steel firms and steel-workers unions visibly coming together in support of it.

This is not a new observation. Hordes of economists repeat it, again and again, and anyone who takes a basic microeconomics class will hear it as well. But sadly, such a small percentage of the general public understands it because our natural tendency is to look for what is visible. It takes discipline to always try to see beyond what is immediately in front of us.

We’re not all economists, but almost all of us have had some training in first aid right? When paramedics respond to car accidents, are they more concerned with the person loudly screaming inside the wrecked car or the person who is silent? Sure, it is easier to see that the screaming person is in danger, but the silent person is the one we should be much more concerned about.

Or take dating, for example. If I’m not interested in any of the girls I know at the moment: I would be doing multiple people a disservice by asking one of them out; I would be doing myself a disservice by not looking for a girl I am actually interested in; I would be doing the girl I know a disservice by wasting her time with someone who is not actually interested in her; I would be doing a guy a disservice by taking away a date he might otherwise have had with the girl I know; and — without trying to sound prideful — I would be doing a disservice to the girl I don’t know but would be interested in if I had met her, assuming she also would be interested in me.

It’s easier for us to think “beyond stage one,” a phrase commonly used by Thomas Sowell, in dating and car accidents because they are both very visible and specific, which is not something that can be said for the general economy. Please try to apply some of the same logic used in first aid and dating to tax initiatives. Just as you would look for the car accident victim who is silent and unseen first or the person you might be interested in dating but do not know, look for costs you cannot immediately see with every government policy and program — bag tax most certainly included.

Links:

http://www.seattlebagtax.org

In their “About Us” section, they state: “We are a group of economists who make up the Northwest Economic Policy Seminar. We have no connections with the plastic bag industry and have received no remuneration in any form for looking and commenting on this issue. Our mission at the Seminar is to use our skills and training to help inform the public and develop and comment on public policy issues.”

http://bastiat.org/en/twisatwins.html

This is a classic essay by one of the great economists, Frédéric Bastiat, titled “That Which is Seen, and That Which is Not Seen.”

http://www.eharmony.com

This is a joke really, but it will help you find someone you’re interested in if you’re single. Although, I can’t say I’ve ever used it.

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