Hearing the expressions "laughter is the best medicine" and "walk on the sunny side of the street" for years, We can now rest easy because research has now demonstrated the truth behind these upbeat propositions. A short article by Anahad O'Connor in The New York Times' Science section details the results of an 8,000 person study which revealed the unintended consequence of a person being more pleased with their life: a lower heart attack risk. Perhaps this is not too surprising. After all, we also have expressions like: "he died of a broken heart." This finding together with what we know about cholesterol and diet can contribute to a reduction in deaths from heart attacks.
This study builds on the work of Dr. Lester Breslow who died April 14 of this year. Dr. Breslow performed the studies which proved that a healthy lifestyle, eating,drinking, and sleeping in the right proportion, contributes to a person's longevity. Put together this unintended consequence suggests that walking around with a smile on one's face after a good nights sleep and having a moderate amount to eat and drink is the way for people to live a longer lifespan.
If you are like me and count yourself among the millions of people who must be careful about sunlight and its relationship to skin cancer, you know that dermatologist strongly recommend the use of sunscreen. Cosmetic companies have moved into this market segment and are competing amongst themselves offering higher levels of SPF protection designed to reduce ultraviolet radiation. Additives providing SPF protection are now found in moisturizers and sunscreens. Since most skin cancers take a long time to develop, empirical evidence to support this trend may be a long time in coming, but this probably falls into the category of better to be safe than sorry.
An article in The New York Times by C Claiborne Ray, “A Face in the Sun,” discusses the unintended consequence of daily application of sunscreens. He notes in response to a reader's question that sunscreens by putting a barrier between a person's skin and the sun reduces the individual’s production of vitamin D. Vitamin D is an important substance which for most people is synthesized from sunlight by their bodies. It is useful to avoid bone softening, osteomalacia, and is thought to be associated with lower mortality rates amongst women.
This unintended consequence may be overcome by consuming a diet rich in vitamin D, such as milk, yogurt, fatty fish such as salmon, or whole eggs. Like other unintended consequences, sunscreen provides benefits but also produces problems; fortunately this problem is one which can be defeated.
The release yesterday by the Labor Department of data showing that the top 10% of wage earners experienced a 7% growth in their wage levels during the last 11 quarters while those in the bottom 10% experienced only a 2.5% growth in wages has generated a firestorm of controversy centered on the proposition that income inequality needs to be reversed. The data play into the hands of the Obama administration and its quest for a higher tax rate to be imposed on the “wealthy.”
Income inequality is an unintended consequence, and in fact a good unintended consequence, of America's movement away from a manufacturing-based economy to become a knowledge and service-based economy. Pining back to the good old days in the 1950s when CEO compensation was closer to the wages of the worker on the factory floor ignores the technological and scientific progress our society has achieved in the past half-century. The $1 billion transaction between Facebook and Instagram, a less than two year old company with 10 employees, is representative of the huge values that CEOs can bring to companies in the modern world. Each of the two founders of Instagram will become centimillionaires as a result of the transaction. Facebook is paying this exorbitant sum because it views the creators of Instagram are worth every penny. Likewise people whose lives are saved by skilled surgeons, shareholders of successful corporations, and others directly or indirectly paying top dollars for highly skilled providers don't object because they think top talent is worth every penny. This is where the wage gap comes from: top performers demand top salaries. No one objected to the Denver Broncos paying Peyton Manning $96 million to play football for five years why then do they object when a doctor who went to school for over 20 years and who graduated with $400,000 in debt earns a lot more than the lowest paid worker?
Unintended consequences crop up everywhere. Sometimes they crop up mysteriously and we don't even recognize them when they occur. That a widening wage gap is an unintended consequence of an economy transitioning to a modern platform may surprise some but it has been documented before. An early discussion of this phenomenon can be found in The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us by Robert H. Frank and Philip J. Cook. It is a great book worth reading at a time like this.
A recent joint study Involving dentist and cardiologist has reversed a long held belief that there was a relationship between gum disease and the incidence of heart attacks and possibly strokes. The new work evaluated hundreds of previous studies and combine their data sets to reach the new conclusion.
The unintended consequence of the mistaken identification of gum disease as a heart attack risk factor was that thousands of people took better care of their teeth by improving their dental hygiene. They experienced a positive benefit in having healthier keys and those who interact with them experience the positive benefit of a reduction in halitosis. It's nice to know that all unintended consequences are not negative.
In a front-page story in today's Wall Street Journal we learned that Mark Zuckerberg the founder and CEO of Facebook never consulted with his board of directors before negotiating a $1 billion deal to acquire Instagram. Normally a board of directors is comprised of individuals with disparate skill sets who advise and consult with the CEO on corporate issues including strategy. A visitor to my class on restructuring at Northeastern University, a former bankruptcy judge, remarked once that in his opinion most bankruptcies are caused by CEOs who ignore their board of directors. Obviously no one would suspect that Facebook is a likely bankruptcy candidate; but that does not mean that Mr. Zuckerberg was right in what he did.
I suspect that his behavior was an unintended consequence of his previous success. My friend the bankruptcy judge explained that successful CEOs had to fight naysayers on their way to success. He felt that this caused many of them to assume a me against them mentality - even when they're all on the same team such as with the Board of Directors. I don't think Mr. Zuckerberg had too long or too arduous a battle on his way to Facebook success. In fact, I suspect this unintended consequence derives from his arrogance as a result of rapid and unprecedented success.
This unintended consequence is not going to bankrupt Facebook. After the company goes public however, public shareholders may object to his handing out 1% of their company for an acquisition of a firm with no revenues and no profits. After all, Instagram was not the only photo sharing and photo manipulating app out there.
Living in a big city as many of us do we sometimes walk out to get our car and either find it booted or towed away. There are probably few jobs in our society less loved than the traffic enforcement-department tow truck driver. I'm surprised that there are neither TV shows or movies ( other than Repo Man) about this occupation.
This weekend reading the book review section in The New York Times I read a wonderful review by Kevin Baker on the book Enemies written by Tim Weiner. In it I learned about an unintended consequence of traffic enforcement tow truck drivers. Baker says that in 1973 the Iraqis planned to kill Golda Meir, the Prime Minister of Israel, on her state visit to New York City. The plot involved two cars packed with explosives that were parked near her route. The unintended consequence of the assassin's mistake of parking the two vehicles in a no parking zone was that before Mrs. Meir arrived the two cars were towed away by city employees.
The fight against terror is normally conducted by James Bondesq agents, high level military planners, and special forces troops. Sometimes the most effective anti-terror actions are taken by tow truck drivers.
Most people remember the inconstant behavior of the pigs in George Orwell's Animal Farm. As they gain control over the farm they soon take on characteristics and behaviors of the humans whom they expelled. According to Dominic Holden in his New York Times editorial today “Smokeless in Seattle,” legal medical marijuana merchants in the State of Washington have worked to check the full marijuana legalization movement which is on the November ballot. How odd that this unintended consequence should arise between current sellers and prospective sellers of marijuana in Washington.
This unintended consequence is similar to the mutation that took place on the farm in Orwell's book. Power and profit lead to greed and suppression of opposition. Like the pigs in the book, purveyors of medical marijuana in Washington perceive full legalization as a threat to their economic well-being. To protect those profits they have worked diligently to persuade the public to vote against the full legalization proposal. Economic interests create strange bedfellows. In Washington State, they have induced medical marijuana advocates to align themselves with more reactionary interests.
Unintended consequences are a powerful force that surface everywhere affecting everyone. The most damaging unintended consequences are those involving government or legislative decisions since those affect the most people. But decisions made by people and companies also have unintended consequences. Everything you do today may lead to something that you don't expect - that would be an unintended consequence.
Yesterday Janet Yellen vice chairwoman of the Federal Reserve spoke about the need to maintain a near zero interest rate policy until 2015. Her comments belie the fact that the economy has not responded to years of a low interest rate environment with a massive increase in spending as she and other Fed officials probably wished. There has not been a great rush to buy cars or technology or houses or anything normally associated with borrowing. The only thing which has been affected by the low interest rates are the amount of money devoted to speculation. The scenario for speculators is simple: borrow money at 20 basis points and then take on speculative risk earning them 500 to 700 basis points. The real side of the economy has responded to rising exports driven by the low value of the dollar partly caused by the low interest rates. Many Americans are looking for a job and this policy is not helping. Yet the Federal Reserve persists in believing in its policies as opposed to a policy of lower tax rates and other incentives proven to create new companies and new jobs during a crisis or a liquidiy trap.
The unintended consequence of their hubris will probably show up in three or four years in a massive burst of inflation. Not unlike the European Central Bank which is lending money to private banks so that they can buy "bad" Eurropean government debt, our Federal Reserve seems to be overly focused on near-term problems at the expense of longer-term issues. The low interest rates are likely to create another wave of bankruptcies down the road amongst companies obtaining financing in the junk bond market despite their lack of credit standing. The situation is not dissimilar to the Fed's encouragement of the housing bubble a decade ago or the Internet stock bubble. Economies don't do well going from boom to bust. That is the problem with unintended consequences: they don't show up immediately and so people/businesses/government make bad choices. This may be another one.