Newton’s third law of physics posits that every action has an equal and opposite reaction. From the kickback on a firearm to the lift provided by chemical propellants in a rocket, nothing in this universe acts in perfect isolation. This dictum applies equally to everything in the universe; from muon to man. Human action will also induce a feedback-based response; love begets love and violence begets violence. When the actions are voluntary and un-coerced we tend to see predictable outcomes (if I am kind, you are quite likely to be kind in return, but, if I hit you, you are most likely going to hit me back). When the actions are involuntary or otherwise unduly influenced then the results become unpredictable. Economic interventionism is like plugging a car’s tailpipe to silence it; it may bring temporary silence, but the building pressure will soon be relieved. The only question is when and where.
So just as plugging a tail pipe to silence a car is a fool’s endeavor, so too are forced attempts to mold society and the economy to suit the ideological leanings of those in power. Such attempts at societal meddling always end badly, typically in the form of increasing that bad thing one was trying to eliminate. The interventionist approach has all the logical soundness of hitting people in order to reduce violence in the world, yet the politicians continue to do such things everyday. For example, paying people to be unemployed augments, rather than diminishes, the number of unemployed. Likewise, subsidies for certain industries results in a whole array of undesirable side effects. Subsidization of corn production in combination with tariff-based protection of the domestic sugar market has distorted the economy and our health. Tariff-fueled high domestic sugar prices creates an incentive for sugar users to seek a lower cost alternative, which just so happens to be state subsidized HFCS (high fructose corn syrup). The state is simultaneously constraining supply of one product and expanding supply of another to make up for the ongoing constraint. This distortion alters the market in ways that would not exist absent this intervention. It has caused HFCS to become the dominant material used in domestic food production – pushing the somewhat healthier straight sugar out the door. That the overwhelming prevalence of HCFS has recently been implicated in the obesity epidemic (and all the costs associated with obesity related health ailments) should give anyone pause the next time a politician tells you they have the perfect solution to a problem.
Another side effect of agricultural interventionism is in of all places immigration. When the government guarantees a price floor for certain agricultural goods it creates a natural incentive to over produce those goods. The excess is then dumped at low subsidized prices into other countries (such as Mexico). Farmers there can’t compete with the low prices and soon go out of business. Those farmers are now desperate for work. So they come to the US. And then people wonder why so many “illegal” immigrants are pouring into the country. Time again for the government to fix the problem they created. You’ll never go out of the tire business if you keep dumping nails in the road.
The height of absurdity though is that when those in power are faced with the reality of the damage caused by subsidies they find it easier to expand those subsidies rather than to contract them. The most inane example of this is the fact that the US government pays Brazilian cotton farmers the same subsidies it pays US cotton farmers so that they can better compete with cheap US imports.
The moral of the story here is that economic interventionism (supported by the implied violent power of the state) will cause parties to behave differently than they otherwise would absent such threats. These differences lead others into altering their behavior so as to neutralize the effects of the initial intervention in a predictable sort of feedback loop. Plugging the tailpipe merely reroutes the exhaust. Equal and opposite reactions are on net a null.