Right Thinking From The Left Coast
We didn't lose the game; we just ran out of time. - Vince Lombardi

Wednesday, March 16, 2011

The Law of Unintended Consequences Strikes Again

I’m sure that, intellectually, the Democrats are familiar with the Law of Unintended Consequences. As a practical matter, however, they are completely clueless.  Otherwise, why would they pass laws assuming that nothing will change in response?

Two examples this week.

First, debit cards:

JPMorgan Chase, one of the nation’s largest banks, is considering capping debit card transactions at either $50 or $100, according to a source with knowledge of the proposal. And the cap would apply even if you run your debit card as credit.

Why? Because of a tricky thing called interchange fees.

Right now, every time you swipe your debit card your bank charges the retailer an average fee of 44 cents, which it shares with its partners. Those little fees, however, add up to about $16 billion per year, according to 2009 data from the Federal Reserve.

But as part of the Wall Street reform legislation that was passed last year, these fees are being slashed. The Fed is currently proposing rules that would go into effect in July and would cap interchange fees at 12 cents.

They’re also considering raising fees and rates on debit cards users.  The man behind this mess is Dick Durbin, who decided that interchange fees were unfair ... to the big box retailers who supported his campaign.  So the big box guys will rake in tens of millions in profits at the expense of the consumer, who will face larger card fees or massive inconvenience in using them.

Well, not to worry.  I’m sure Dick will come up with a new law to fix this.  Which will, of course, create unintended consequences that will requre eve more laws.  People like this will not be satisfied until our entire existence is slathered in rules and regulations to make life “fair”.

Now for the second one:

Last Thursday, Illinois Governor Pat Quinn signed into law the “Mainstreet Fairness Bill” and immediately imposed new taxes on all online retailers with business partners in the state. For the Democrats in charge, passing the largest tax hike in the Prairie State’s history this past January, adding the equivalent of $1,600 per year to the average personal income tax bill, was apparently not enough of an assault on those of us who still - albeit foolishly - live in financially and politically bankrupt Illinois.

Rather than place the burden for cleaning up the state’s budgetary mess only on physical residents of Illinois, Governor Quinn and a totally complicit legislature (Republicans included) have now forcefully enlisted the help of innocent outsiders. The new legislation requires internet stores, even those without a single outlet in the state, collect and remit taxes for all sales made through their Illinois-based affiliates. Doing so purportedly levels the playing field between brick-and-mortar businesses who must tax purchases and their untaxed online competitors.

You, being a thinking person, can probably guess what happened next.  Amazon immediately notified its Illinois affiliates that it was terminating business with them.  This includes non-profits and charities that get tiny amount of money when people buy stuff through links on their web pages.

In the rush to placate and prop-up those who cannot compete with the online marketplace, Springfield has now dealt a serious blow to the 9,000 affiliates in Illinois who are estimated to lose at least 25% of their income when online outlets end their contracts in the state. Holding residents captive to a high sales tax is one thing; declaring outsiders pay up as well at the expense of local business is another. But then again, perhaps this equitable distribution of fiscal misery is the real “fairness” referenced in the law’s title.

Politics operates on something akin to the Heisenberg Uncertainty Principle: acting upon a system changes it.  When you pass laws that affect people’s lives, that changes the way people live their lives.  People not afflicted with pathological hubris understand this.  Politicians, who see themselves as little tin gods who can move the world with a wave of their hand, do not.

The only way to stop this is to take power away from them.

Posted by Hal_10000 on 03/16/11 at 10:42 PM in Left Wing Idiocy  • (0) TrackbacksPermalink
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