Nothing is more dangerous than good intentions

The title might sound odd considering there is nothing that people like more than someone who has a good heart and intends to do good for others and society as a whole. The dangerous part is that good intentions and a good heart are hard to argue with and thus can be dangerous when the heart is WRONG! Think with your head not your heart Washington D.C.! See that sounds bad because we always love the heart but when it comes to government, use your head! Parents... use your heart!

My students are learning about Price Control laws in school right now. One of my favorite subjects to talk about is when good intentions have bad consequences. No doubt everyone out there knows the most basic principal in economics: We buy more at lower prices and buy less at higher prices. The other half of that principal is not common sense but obvious too: Producers produce more when they can get a higher price and produce less when their goods sell for lower prices. Pretty simply huh?

San Francisco and NYC are known for their gracious Rent Control laws. They love to help out the poor people by not allowing those nasty landlords keep raising their rent! Only problem is that homelessness is a huge problem in NYC and was in San Francisco until most poor people left that city making it now one of the most wealthy cities in America. Why did this happen? Government wanted to help people my not allowing rent prices to rise so high. So prices were kept low! Now people who had the money began renting bigger apartments than they needed, and the landlords stopped building or taking care of existing apartments because they as the basic principal says: produce less at lower prices. Now the poor people have a hard time finding a place to rent and they end up homeless! Such a great law huh? Its true recently a study showed that about 175,000 single adults in NYC rent apartments... that have 4 bedrooms!! Why? because their located in rent controlled areas and are cheaper. This takes up all the room for larger families that need housing!

Now, guess what Minimum Wage laws do: Well they keep the price for workers high (currently $7.25/hr) Well remember what the most basic principal of economics is: People buy less at higher prices. And producers become consumers when it comes to hiring workers. So they hire fewer workers at the higher price and thus what is created? If you said a higher UNEMPLOYMENT RATE go to the front of the class your right! Thus in countries with high worker protection laws and high minimum wage laws, there are also lots of jobless benefits programs to help them when they lose their jobs because its common to have lots of unemployed workers where these laws exist. This hurts teenagers more than anyone. Who often in Germany (where they have more of these laws than nearly any other place) have a normal unemployment rate of around 25%! Terrible! Yet those government officials were well intended! So I sound like a monster arguing against Tenure laws, benefit programs, minimum wages for hard workers, and rent control to help poor people. But in reality I'm just choosing to think with my head not my heart... and in the end that is actually more compassionate whether it sounds like it or not!