Let’s say, just for the sake of argument, that you decided to buy an old house in a small town. We’ll call the town Lincolnville and put it in Monkeybelch County, Texas. So this house isn’t really much, really just a squat and blocky brownstone on the less attractive side of town, but it was cheap, and you can work on it weekends until you retire or flip it.
While rummaging through the junk-filled attic, you discover a portrait of a man standing beside an open coffin with another man’s corpse in it–weird, but not really unlikely in an old west town. This piques your interest, however, and you look into the history of your ugly little house. With the help of a city clerk and a librarian, you discover that the house was where Ron “Pornstache” Lipschulz shot Hezekiah “Hezekiah” Barbar, ending the Monkeybelch Range War and determining the course of the entire Monkeybelch Draw Valley’s history. Your house is historic!
So the city clerk convinces you to register your squat toad of a house with the National Historic Registry, which causes you to jump through a few hoops to prove provenance and to prove that the end of the Monkeybelch Range War was in some way significant to national history (Monkeybelch county is the nation’s number 7 producer of scorpions embedded in yellow-tinted Lucite that looks kind of like amber).
Only now your weekend project got complicated. Now that your home is historic, you have to maintain its architectural integrity. Instead of just repairing the walls, cleaning up the yard and figuring out some way to make the front less glaringly unattractive, you now have to follow specific rules, laws, and guidelines guiding you in every step of repair and upgrades. Simply bringing the building up to the point where Registry officials won’t fine you for mistreating a National Treasure will cost you twice as much as the building purchase ran in the first place. You’d have been better off ignoring the place’s historic significance and just bulldozing it to make room for a three-bedroom clapboard ranch.
Or, let’s say you have a pine tree in your yard. This thing is seventy-five feet tall and weighs upwards of five tons. And it’s dead. Between pine beetles and the recent droughts, it just gave up, and now you cringe every time a stiff breeze blows through your neighborhood. So you call a reputable tree service to take care of it without destroying your house.
The only problem is, while inspecting the tree, they discovered a bird’s nest. Not just a bird’s nest, but a nest of Shrill Tiny Mud-Colored Annoying Birds. They’re on the Endangered Species list. They were put on the list in 1978, when it was discovered that there were only 300 of them in the entire country. Now, of course, you have to elbow them out of the way just to get down the street, but they remain on the list because development threatens their natural woodland habitat (the six thousand birds that seem happy to live in your neighborhood and crap on your car are considered “aberrations”). That tree has to stay up, because birds.
Unfortunately for you, when the next big thunderstorm comes through and your dead tree crashes into your house, you’re screwed. Your insurance company considers your failure to remove a clearly dead tree to be negligence, and they won’t pay out if you act like a dumbass.
These are perverse incentives: times when the effect of government regulations is the opposite of their intent. The US Code is rife with laws and regulations that punish people for doing the right thing. My last example probably sounds familiar because it is a popular plot for sitcoms. Unfortunately, it is also a reality for many people whose lives have been disrupted by the Endangered Species Act.
Believe it or not, encouraging common citizens to ignore or violate the law is not the most common result of perverse incentives. The most common result, and, in my view, the most harmful, is the manufacturing of narratives. Last January, I started hearing about the huge drought that Houston was entering this year, which was surprising, because Houston didn’t start lagging behind on rainfall until the middle of February, when the jet stream that gives us dry Decembers reappeared. As it stands, we’ are about three inches behind average for the first quarter, most of it in February and March. Of course, we’ve already gotten half our April average in the first week, with more expected. But the narrative remains that we’re heading for a drought that will be worse than 2011.
It’s hard to see, when you look at a year that may be a little light on rain how these dire predictions of drought are born. Hard to see until you look up the source of these prediction. The National Integrated Drought Information System is a division of the National Oceanographic Advisory Administration (NOAA–in turn, an administration of the US Department of Commerce), established to provide information and recommendations regarding drought relief and mediation all over the country. That seems reasonable, these guys study drought and drought conditions all the time, so they should be trusted to let us know when drought is imminent, so we can be proactive in mediating drought effects instead of just cutting giant crop insurance checks in August.
Except these guys see drought everywhere they go. If it is not currently raining (and sometimes, even if it is) they shout drought and tell you to stop washing your car and to drink only Red Bull. They are like your crazy aunt who spends too much time on WebMD and is convinced she has every possible disease including rickets. Because the climate is so huge and unpredictable, they can’t possibly know how it works or how it’s going to work, so they look at one or two things that maybe were in effect when past droughts happened and shout DROUGHT!
Of course, there’s also the fact that they have jobs because they can show drought as being a credible threat. Let me put that another way: Their jobs depend on their ability to present ongoing widespread drought as an imminent danger to American well-being. It is literally in their best interest to declare Houston to be under “severe” drought conditions, despite the fact that NOAA’s rainfall maps show us not to be in any serious rain debt.
It’s a perverse incentive. Since their jobs depend on their ability to show that the country has a need for their services, they are always going to find something that supports the narrative. Any time you hear a dire prediction, whether it’s impending drought, the threat of terrorism, or the dangers of apple fritters, you should be sure to follow the Benjamins. And do it both ways, because it’s not always Big Business offering scads of bucks to people willing to prove that sucking hot smoke directly into your lungs isn’t harmful, sometimes, it’s someone whose job depends on convincing you that being in the same state as a lit cigarette will give you every disease (including rickets). It’s not just the people cutting the checks that are culpable for misleading the public, it’s just as often the ones cashing them.