While occupying Delhi in the early 20th century, British forces found themselves confronting an unfamiliar and fearsome pest: cobras.
Though natives had long since adjusted to uneasy coexistence with the vipers, the British were less sanguine about the snake’s near-ubiquitous presence. Seeking to eradicate it, authorities devised a bounty program to reward anyone presenting a cobra tail.
Tail-less cobras found their way back into densely populated regions.
The bounty quickly incentivized an increase in the quantity of severed cobra tails supplied, while simultaneously presenting enterprising individuals with a profitable opportunity: snake-breeding.
The Cobra Effect
Snakes need their tails neither to live nor to reproduce, enabling a single snake to generate a stream of tails by way of countless offspring. Government transformed what was once a dangerous menace into a valuable financial instrument that would continue yielding “payments” as long as the snake could reproduce.
Confronted with tail-less snakes now slithering through the streets in greater numbers than ever, the British abandoned what had so recently presented itself as a surefire scheme. The dismantlement of the program saw snake-breeders releasing their now-worthless assets into the wild, where they found their way back into densely populated regions. The infamous results, known as the “cobra effect,” depict those apparently innocuous government interventions which generate more than the “garden variety” unintended consequence. Some cases of government intervention are like pouring gasoline on a smoldering fire.
These instances of government meddling often appear the most innocuous at first glance.
It was Mises who famously observed that a single government intervention typically spawns subsequent interventions to address the problems created by the first. Simply put, government intervention has unintended consequences.
But only a special few interventions decidedly encourage the very thing they were enacted to curtail. Curiously, these instances of government meddling often appear the most innocuous at first glance – the type of intervention even defenders of the market might not think are worth opposing. How could government cause serious damage merely by setting a price on a previously unpriced item?
Rats in Hanoi
While the historical accuracy of the cobra tale has been questioned, there can be little doubting the veracity of other, similar cases. While French rule of Vietnam in the early 20th century exhibited a veneer of sophistication, household pests such as mosquitoes, cockroaches, and rats were so pervasive that one daughter of a colonial administrator referred to them as the true “native government.”
Fearful of the health risks posed by the rats, the French instituted a bounty for rat tails in 1902. Bounty administrators’ optimism soared as the new program incentivized civilians to bring in tens of thousands of rat tails daily. Observers, however, soon noticed a new oddity: rats without tails. Before long, authorities realized that resourceful rat-catchers were trapping the rats, severing their tails, and releasing the rats back into the sewers where they could breed, providing the bounty-hunters with the next generation of profitable rat-tails.
The cobra has reared its dangerous head in countless contemporary contexts.
An additional development was soon unearthed in the Hanoi suburbs: rat farms springing up in direct response to the increased profitability of supplying rat-tails to the authorities.
The cobra effect doesn’t only plague historical, seemingly “primitive” communities. The cobra has reared its dangerous head in countless contemporary contexts too.
Feral Pigs in Fort Benning
In July 2007, the military base at Fort Benning, Georgia implemented a reward for feral pigs which had infested the surrounding region, offering a bounty between $25 and $40 per pig. To collect the bounty, Fort Benning residents needed only present a pigtail to authorities. In the case of Hanoi, it was not long before casual observers “smelled a rat” – tail-less vermin were visibly scurrying through the streets. At Fort Benning, however, it took the intuition of a wildlife sciences Ph.D. student to suspect failure of the bounty.
A year after the bounty was instituted, records showed that though many pigs had been slaughtered, the pig density in Fort Benning had increased dramatically. Interviews of local butchers revealed that the implementation of the bounty program was swiftly followed by phone calls inquiring about excess tails they might be planning to discard. Domestic piglets – which often sold for $5-10 – became a target for their tails.
Unlike private firms, governments have little incentive to learn from their mistakes.
In addition to overt fraud, Fort Benning residents began to devise techniques for luring the pigs into the open. Hunters spread cafeteria slop along the edge of the woods. When the pigs came to feast, bounty-seekers would pick off a few while the rest retreated to the forest more well-fed than ever. As caloric intake is critical to the hog’s reproductive success, this strategy quickly lead to a burgeoning of the pig population.
Three years and $125,000 in (tax-funded) bounties later, military administrators disbanded the “Pig Eradication Program.”
The Wrong Incentives
Unlike private firms, disciplined by the lure of profit and the threat of loss, governments have little incentive to learn from their mistakes. Were entrepreneurs to repeatedly implement bounties, only to find their designs foiled by fraud, they would either adjust or earn losses.
The same can’t be said for governments, which raise revenues via taxation.
Authorities in Australia’s Shire of Banana recently announced a bounty for feral cat scalps.
Should it be any surprise, then, that the city council in Petaling Jaya, Malaysia implemented a bounty on rats within the last year and a half. Similarly, Fayette County, Texas has a bounty on feral hog tails and ears, and unsurprisingly, there is suspicion of fraud. Caldwell County, Texas has a bounty on feral hog tails. Authorities in Australia’s Shire of Banana recently announced a bounty for feral cat scalps. Just this year, Louisiana’s Terrebonne Parish considered increasing the size of payments in its long-standing rat bounty program because the current program is failing to make a dent in the rodent’s population. Florida has a bounty on pythons.
Nor is the cobra effect necessarily confined to instances of pest control. For example, Peter Van Buren, in his 2011 book, We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People, discusses how the US occupying force in Iraq quickly confronted a major problem: mountains of uncollected garbage. This posed a significant public safety risk because insurgents often used trash piles to conceal explosives. In response, the US occupying force began paying Iraqi trash collectors a wage that was significantly higher than alternative lines of employment. Van Buren suggests that this led Iraqis to simply increase trash production rather than to collect existing garbage.
Advocates of voluntary exchange have no shortage of instances where government intervention generated unintended consequences. But regulations that themselves directly worsen the problem they’re designed to fix are truly a case-in-point.
No matter how simple or seemingly commonsensical an intervention may appear, there is no escaping the fundamental problems with government meddling in markets.