The vicious cycle of policy

I’ll start with an example:

Monetary policy leads to the devaluation of the currency -> as a result all nominal prices increase-> then government sees prices increasing as a problem that needs to be solved -> consequently government places price controls -> this then leads to scarcity and degradation -> this is when government decides to subsidize industries, provide incentives, or build in the case of housing, which it can’t efficiently do or re-zone areas which proves zoning was a problem in the first place…. -> and it just goes on and on and on…

I picked this example because it’s the easiest to explain, but the concept is the same for every single regulation.

Take any regulation and you’ll notice the same pattern over and over again. It tries to solve a problem that waa created by a previous policy.

Every law is like a coin. It has two sides: the good intention side and the other side is the negative effects and all the ways in which the law can be abused.

One can draw a logical conclusion on what the root cause is.