Unintended Consequences from the “Naked Economies”


Charles Wheelan considers global economy as naked amidst the current economic challenges in the book, Naked Economics. The book critically analyzes the concept of unintended consequences by integrating the aspects of individualism and the society as the contributors of globalization and its impact on economic growth. This paper will, therefore, analyze the ideas of Wheelan regarding unintended consequences in economic expectations in relation to other scholars.

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The findings indicate that there are negative as well as positive consequences that emerge from certain decisions make within and outside an organization that contribute to the overall outcome. The outcomes normally influence the economic impacts on an individual, society, and the entire globe.

While addressing the virtue of “Undressing the Dismal Science,” Charles Wheelan identifies that decision-making in regard to ethics and moral regulations are the major contributors of unintended consequences. According to him, the unintended consequences can either be an unexpected benefit or a drawback that result from an introduced policy or regulation (Wheelan 25). Noting that production is the key to an economic development, Wheelan observes that every agent is entitled to optimize output in a way that benefits the society and the organization at large. The productivity is seen to be on the increase upon globalization. Through the emergence of global economies, determining factors such as skills, education, and governmental policies are improved. Consequently, individuals gain the ability to control and manage resources, leading to a positive impact on the economy (Wheelan 77).

Nevertheless, it is important to consider the fact that globalization may result into negative effects. Wheelan maintains that the United States’ government has some of the best global economic policies. The government ensures checks and balances in the monetary and market value to promote fair trade (Wheelan 102). However, the unintended consequences are inevitable. First, developers and agents tend to emphasize on their own benefits. The resultant effect is normally a negative outcome on pricing as well as the working environment. Moreover, the problem mostly affect the strong economies whereby much control over the workforce in terms of skills, level of education, and health leads to lower productivity (Wheelan 123). Secondly, globalization increases outsourcing, including hiring workers from overseas. Consequently, the local professionals lose their jobs while the growing economies absorb them. Essentially, wheelan’s assessment indicates that the outsourcing concept is beneficial at first as it saves time but eventually becomes disastrous as the economic growth is slowed down.

Negative consequences

An example of a negative economic consequence is the move by the federal government to impose minimum “Corporate Average Fuel Economy (CAFE)” standards for some types of vehicles. According to Mims (Np), there was the need to regulate the fuel consumption in a bid to improve the environment. However, poor structuring of the rules led to some leakage, especially in States like California. Some manufacturers continued to sell low-fuel-economy vehicles to other states amidst the higher-fuel-economy policy in California. By so doing, they were able to satisfy the state’s as well as the national standards. Some economists averaged the leakage in California to be 74%, a much higher level as compared to the national regulation (Mims Np). Therefore, the intention to reduce the emissions was not met, hence, the continued negative effect on the environment.

Elsewhere, Mittelstaedt et al. (68) reiterated that the United States suppressed the production and supplies of alcohol in the 1920s. This move led to the closure of many small-scale manufacturers and opened up the market for large-scale producers and eventually, high demand as well as rise in the prices. Few years later, it was realized that many illegal alcohol industries cropped up across the country and held more criminal organizations which funded the brewers. Similarly, the prohibition intended to improve the war against illegal drug trade but instead strengthened the drug dealers by enhancing their power and profitability (Mittelstaedt et al. 68). Initially, the use of illicit drugs and abuse of alcohol was seen as a factor that lowered the productivity. However, the introduction of strict laws led to a new problem that was associated with rising capital to fight the emergent illegal trade and the drug cartels.

Positive Economic Consequence

Christopher Mims’ article in the Wall Street Journal indicated a positive consequence on the introduction of the Automated Teller Machine (ATM) as from the 1970s. From his article, Mims said that “the lower cost of ATMs allowed the banks to expand into more branches, thus employing more people” (Mims Np). The primary intention of introducing the devices was to expand the banking services, and more so for the entrepreneurs and the government-owned premises. However, the expansion has also led to the increase in the number of tellers and other operators. Besides, there are more manufacturers, servicemen, and software operators, all who benefit from the business either directly or indirectly.

In yet another observation, medicines have unintended consequences which are mainly considered as side effects. Conversely, some of the side effects are beneficial. A good example as explained by Dahler-Larsen is aspirin (Dahler-Larsen 12). Dahler-Larsen explains that aspirin is an anticoagulant as well as a pain reliever. Apart from these actions, the drug is also beneficial in the prevention of heart attack and the reduction of the severity of thrombotic strokes. Similarly, Viagra was initially designed as a drug the lower blood pressure. Later, during clinical trials, it was discovered that one of its side effects was genital stimulation which is the most current and widely used purpose (Dahler-Larsen 16). All in all, the primary consequence of an action or economic benefit can eventually yield a new and positive benefit upon utilization.

Individual motives

Individuals have different motives that are critical in influencing unintended consequences. The author, Wheelan, observes that people work hard to make their lives better, mostly for their own benefit (Wheelan 44). Actually, the products that make life enjoyable and easy are always on high demand, a fact that enhances the growth of an economy. However, different people have different preferences. There is, therefore, a sharp distinction between various groups including those working within the same organization. For instance, the rich do not worry about their basic needs as compared to the poor (Wheelan 53). At times, the less fortunate get humiliated as they work in the private sectors where they feel that they benefit the wealthy proprietors. On the other hand, the proprietors are sometimes not sensitive to the needs of their workers. These perceptions normally become a great setback to productivity, thus poor economic performance.

Scholars provide an idea that as far as someone does something to profit him or herself, others also benefit. Essentially, the fundamental intention of any investor is to make profit from the resources available. Mittelstaedt et al. (68) considers the virtue of ownership of a property. Through his observations, he notes that the owner exercises some rights to it to a point of imposing obligations which may be negative to the consumers. At the end, both the owner and the consumer can develop reliable expectations about the property. For example, the buyer may be in a position to assess the end price. If the expectations are not achieved, the seller may lose the buyer or end up disposing the product at an unintended price (Mittelstaedt et al. 68). It is, therefore, important to evaluate individualism in a bid to plan and execute the likely consequences.

Social structures

Wheelan expresses the social structures in the context of global economies and the gap between the poor and their employers (Wheelan 43). The rich form small groups that seem to enjoy subsidies that risk the overall economy over time. The groups normally develop powers that enable them to manipulate the laid down policies by blocking the legislations that would benefit the whole society. As a result, the global perspective of trade and the efficiency in driving the economy is interfered with in a way that favors the few. On the other hand, the poor continue to depend on them and remain undermined by their inability to influence the political class and the respective investors (Wheelan 177). At times, the upcoming businesses meet restrictions that promote the concept of monopoly. Through monopoly, the producers do not have enough driving force to improve the quality of their products because of lack of competition; hence, the continued loss of productivity and innovations.

Regardless of whether the outcome is positive or negative, the unintended consequences are greatly dependent on human social settings. Since the masses are not certain about the course of human choices or nature, they only depend on guesses (Mittelstaedt et al. 69). Economists hold on the fact that personal decisions must be considered while interacting with others opinions for the purpose of minimizing the risk of failure (Mittelstaedt et al. 71). In essence, the knowledge of the expectations helps in analyzing social perceptions and different ways of making moral decisions.


As mentioned earlier, increasing productivity is the main driver to a successful economy. To optimize the production, entrepreneurs employ the concept of incentives to motivate the employees who in turn work towards their own benefit as they get the rewards. These incentives can either be in form of compensation, recognition, rewards or appreciations. Naked Economies, therefore, tends to expose the idea of individualism in the entire economic development processes since both the employers and the employees work hard upon the promise of reward (Dahler-Larsen 12). It is true to say that economies do well where there are motivators.

Primarily, incentives are used with the intention to achieve the expected goals in an organization. However, the expectations are not met while in some cases, they are exceeded. According to Mittelstaedt et al. (68), one of the major drawbacks of incentives is risking the virtue of teamwork or cooperation. Providing an incentive to individual performance tends to break collective responsibility as the individuals tend to improve work output at personal level. It is important to influence a collective role by designing programs that target the general behavior rather than a divided culture. For positive consequences, the recognition activities must be built on transparent and trustworthy approaches where no employee is unequally treated or demoralized (Dahler-Larsen 12).

Equilibrating forces

Equilibrating forces in an economy are normally influenced by the empirical trends in the demand and supply of a commodity. These are the forces that determines the market price of a product or service; hence, becoming the legitimate as well as realistic drivers of the economy. The main role of the forces is to ensure an acceptable balance between the quantities supplied and demanded (Mittelstaedt et al. 68). Therefore, an economy is referred to be at equilibrium when the opposing forces are balanced in both static or dynamic states and either in a single or multiple markets.

In most cases, the equilibrium is not attained; thus, the emergence of unintended consequences. These consequences are normally brought about by economic shifts that comprise of factors such as change in customer preferences, financial crises or deflation, government policies, and natural calamities. For instance, if the preference for a certain product drops, the demand lowers while the supply exceeds the market requirement (Boudon 17). This experience leads to a temporal state of imbalance and the expected price is lowered. Boudon’s analysis indicated that the 2008’s financial crisis led to imbalance in the housing business (Boudon 32). On the other hand, natural disasters such as fire outbreak may lower production and consequently, the supply but an increased demand while floods may increase the need for the replacement of the damaged goods. Basically, any prompt change in the quantities demanded or supplied to the market is highly unexpected; hence, unintended consequence.


The findings indicate that there are negative as well as positive consequences that emerge from certain decisions make within and outside an organization that contribute to the overall outcome. The outcomes normally influence the economic impacts on an individual, society, and the entire globe. Charles Wheelan identifies that decision-making in regard to ethics and moral regulations are the major contributors of unintended consequences. The unintended consequences can either be an unexpected benefit or a drawback that result from an introduced policy or regulation. All in all, the consequences are controlled by the prevailing factors such as the involved individuals or parties, the society, appropriate use of incentives, and the equilibrating forces that control pricing. Therefore, it is important to make proper decisions for the sake of minimizing negative impacts while maximizing the positive impacts.

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