Unintended consequences of control – booze
The connections between Prohibition in the 20s with the proliferation of speakeasys, bootleggers (and hence the establishment of the Mafia as a major force in the US) is well established in popular psyche. The blanket ban of booze failed miserably. But what happens with more elegant and refined approaches?
Epic fail. From the Freakonomics blog:
To eliminate drinking on Sundays, New York City restricted it to hotels. In response, bars created makeshift hotel rooms, separated by dividers, which in turn created a burgeoning prostitution business.
To avoid having men buy a drink in a bar in order to use the only publicly available restroom, the city opened public restrooms. But this created places where gay sex could proliferate.
Metabolic control analysis – MCA – is a discipline drilled into me at Oxford as part of my MBiochem. It is a framework for understanding the complex pathways and networks of cell metabolism (which can get a little bit complex) – and as a commentator to this story on the freakonomics blog points out:
My background is in theoretical chemistry. When you put a restriction on one thing (say the size of one molecule), all the other degrees of freedom (size, shape, location of the other molecules) stretch to make up for that restriction.
The same thing happens with markets. You try to regulate one thing, the market will work around that regulation. There’s a natural equilibrium that everything wants to be at. Restrictions/regulations try to displace that equilibrium, but since the market is _always_ smarter than the regulators, (simply because there are more brains in the market than in the regulators) so the market will evolve around that regulation – and not always in a good way, as this article trys to say.
Your cells are similar. I’ll return to the subject with more detailed discussion next time.
What’s really fascinating, however, is how ingenious the market can be at circumventing artificial restrictions when genuine demand exists – and how far fetched the unintended consequences can be. It out to terrify any regulator, and yet it seems that this is rarely the case. Perhaps something for Dan Ariely to investigate (his fascinating behavioural science/economics blog can be found here).
Related:
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