In a recent post, “Interventionism and Positive Feedback Loops”, I examined a cybernetic view of government intervention in the economy. I also pointed out, via an outstanding example from Mises, the ever increasing problems that can result from a seemingly innocuous intervention.
Christopher Westley wrote an interesting blog post, “Planning for Failure (Latest Greek Edition)“, about a mess created by the Greek government’s intervention in the petroleum market. This is an excellent example of the cybernetic, positive feedback view of interventionism as well as the law of unintended consequences.
“The Greek government places price controls on many types of fuel, and to the extent that the controls correlate, more or less, to existing supply and demand conditions, they are harmless in an economic sense. But today’s news tells of a smothering smog enveloping Athens as Greeks increasingly choose lumber over heating oil to warm their houses.”