A Simple Thing Called Consequences
By Connie Pulotu


There is a simple thing called consequences in this world. It is a wonderful natural law that I believe helps the world maintain a sense of order. It works in a very natural way: Fire is hot and burns, don't touch the fire or you will be burned. You touched the fire, therefore you were burned. It is an important matter.
Unfortunately, in the world of parenting, sometimes the natural consequences are not realized. Parents who think they are showing love often circumvent the law of natural consequence and allow the child to fore go the opportunity to learn a valuable lesson. The child usually turns out bad.
I think the idea of consequences has a lot to do with economics.
Let's suppose I am a twenty-five year old graduate student. I have been extended many credit cards by various banks. Justifying the use of all these cards as a way to help me through school, they are all “maxed out”. The natural consequence of this careless behavior is the opportunity to take fifty years to pay back these companies for letting me use their money. But what if I can't find a job after I graduate? What if I don't have the money to pay it back? Well, more than likely I will have to file bankruptcy and will be labeled a bad investment in the future. That is the consequences. But what about the bank?
Let's look at this from the bank that issued the credit card. They knew I was a student because when I applied I gave truthful information. They knew I had only a part-time job. They decided to take a chance on me. Well, because I filed bankruptcy, they will only recover a portion of my balance. That is the consequence.
How about a bigger example? Let's suppose a government has a policy to get involved in lending money for mortgages. This policy is aimed to help lower-income households qualify for loans that they might not have qualified for. The government has said they will back the loans if the individuals default. So big banks begin issuing lots of loans. A consequence: the housing market soars. New types of loans are created. The banks are making lots of money. Construction companies are making lots of money. Everyone is making lots of money. An economic bubble is formed. This is a consequence. But like all bubbles, it finally bursts. Now the natural consequences of a burst bubble are painful. Housing prices plummet, construction companies go belly up, everyone loses money. Well, not quite everyone. There are some big banks that will not feel the natural consequences. There will be some individuals who will actually gain from the crisis. But, just like a parent who interferes will the natural consequences of her child, the outcome is never good.
I think these are the things that bother me about the Keynesian view of economics.
Keynes says, “Individuals acting independently by the method of trial and error in such a way that those individuals who move in the right direction will destroy those who move in the wrong direction. This implies that there must be no mercy or protection for those who embark their capital or their labour in the wrong direction”
Keynes gets passionate when he discusses the idea that no mercy is extended to those businesses that can't compete. Should we show “mercy or protection” to those who move in the wrong direction? Would we not be like the parent raising a bad kid? Wouldn't that encourage other businesses to move in the wrong direction?
Those businesses which move in the right direction benefit our community. They increase capital and create new jobs. Should we limit them by legislature? That just doesn't make sense to me.
So I am a proponent for consequences. As painful as it maybe to experience the consequences of our decision, I think it is fundamentally important to learning. Oh, and government needs to stop interfering in the natural consequences. The child usually turns out bad.