I tried to think of a factor that could, as Henry described it, “spawn new economic fallacies every day.” I drew a blank. “Okay, Henry, let’s have it,” I said.
He did, “This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.”
“The Fallacy of Overlooking Secondary Consequences,” I parroted. Then, thinking to myself, “That sounds like the title of a book,” I said, aloud, “Yes, Henry. I see. I didn’t express myself well before. In the realm of business, though, we would simply call ‘overlooking secondary consequences’ ‘Failing to Plan,’ also known as ‘Planning to Fail.’ With either title, it’s bad.”
I looked intently at Henry to see how he was handling my last statement. He seemed okay, so I resumed, “And, such bad planning leads to suboptimization.”
Again, I looked at Henry, who remained silent, but still attentive.
Continuing, I added, “Paradoxically, suboptimization is a result of optimizing a subsystem independently of other subsystems. Almost always, this independent subsystem optimization causes big problems. What I mean is: making an improvement of one particular subsystem without regard to secondary consequences will actually worsen the performance of the overall system.”
Henry’s face had begun to take on a glow.
Observing that, and pressing on, I said, “For example, one element in a system, in acting to achieve its own goals, may operate to constrain or seriously hamper the actions of other elements of the same system. The result is that its success in achieving its own particular goals causes serious injury to the other elements.”
I paused to see if Henry was still with me. He was now glowing brightly.
With Henry seeming to be hanging on my words, I continued, “The irony here, Henry, is that the well-being of every element in a system is dependent upon the well-being of the whole system of which it’s a part. That’s why, if it’s to preserve the well-being of the whole system, sometimes it’s necessary for one element to limit its goals and actions.” I saw Henry’s face break into a broad grin.
Finally enjoying myself, I continued, saying, “I can see where, in the distinctly different areas of politics and economics, suboptimization can have serious and widespread negative repercussions. I see this, especially, where the special interests trying to do the suboptimization gain sufficient political power to accomplish the dirty deed. This is a situation where, in spite of the doer’s intention to ‘do good’, the doer ends up ‘doing bad.’ It proves that there’s a big difference between intentions and consequences.” I paused, feeling pretty good about what I had said.
He did, “This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.”
“The Fallacy of Overlooking Secondary Consequences,” I parroted. Then, thinking to myself, “That sounds like the title of a book,” I said, aloud, “Yes, Henry. I see. I didn’t express myself well before. In the realm of business, though, we would simply call ‘overlooking secondary consequences’ ‘Failing to Plan,’ also known as ‘Planning to Fail.’ With either title, it’s bad.”
I looked intently at Henry to see how he was handling my last statement. He seemed okay, so I resumed, “And, such bad planning leads to suboptimization.”
Again, I looked at Henry, who remained silent, but still attentive.
Continuing, I added, “Paradoxically, suboptimization is a result of optimizing a subsystem independently of other subsystems. Almost always, this independent subsystem optimization causes big problems. What I mean is: making an improvement of one particular subsystem without regard to secondary consequences will actually worsen the performance of the overall system.”
Henry’s face had begun to take on a glow.
Observing that, and pressing on, I said, “For example, one element in a system, in acting to achieve its own goals, may operate to constrain or seriously hamper the actions of other elements of the same system. The result is that its success in achieving its own particular goals causes serious injury to the other elements.”
I paused to see if Henry was still with me. He was now glowing brightly.
With Henry seeming to be hanging on my words, I continued, “The irony here, Henry, is that the well-being of every element in a system is dependent upon the well-being of the whole system of which it’s a part. That’s why, if it’s to preserve the well-being of the whole system, sometimes it’s necessary for one element to limit its goals and actions.” I saw Henry’s face break into a broad grin.
Finally enjoying myself, I continued, saying, “I can see where, in the distinctly different areas of politics and economics, suboptimization can have serious and widespread negative repercussions. I see this, especially, where the special interests trying to do the suboptimization gain sufficient political power to accomplish the dirty deed. This is a situation where, in spite of the doer’s intention to ‘do good’, the doer ends up ‘doing bad.’ It proves that there’s a big difference between intentions and consequences.” I paused, feeling pretty good about what I had said.
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