Just Add Diesel: How Unintended Consequences Rob Taxpayers Blind
4th April 2009
One of the reasons we’re often skeptical of legislative/regulatory solutions to things is that they almost always have unintended consequences that do a lot more harm than good — and quite often those unintended consequences are the exact opposite of what the regulation was supposed to do.
Every legislator ought to have that tattooed on his (or her) forehead.
A few years back, the government passed a bill to encourage “greener” transportation by providing tax credits for the use of alternative fuels — including for the use of fuel mixtures that combined alternative fuels with gasoline or diesel. As Chris Hayes explains, this resulted in America’s paper companies suddenly dumping diesel into their production process solely to qualify for the tax credit.
Free markets work, even when you don’t want them to.