The Cobra Effect: One Attempt to Exterminate Venomous Cobras Actually Made the Problem Worse; And What That Can Teach us About Economics and Risk.
During the sprawling age of British Colonialism, the crown had to learn many lessons the hard way out there in the thick of an ever growing world. One famous story involves dangerous, venomous cobras. And lots of them.
As the story goes the new British overlords understandably considered the large population of these deadly animals to be a major problem. Not wanting to deal with it themselves, nor to let the problem continue, they paid locals to take care of it. They offered a bounty per dead cobra, and that seemed to be that. The locals picked up the slack, brought in dead cobras for the bounty, and the population decreased. That is until some enterprising individuals realized how valuable a dead cobra now was and started breeding them.
Of course the British caught on eventually to their scheme, and stopped offering their bounty, but then you had several cobra breeders with now totally useless populations of cobras, which they of course released, thereby increasing the cobra population! And somehow this isn’t the only time in history this has happened.
Another prominent example happened in Vietnam under French colonial rule. The French needed to address a rat problem and so enlisted the locals. Not wanting to pay an hourly wage, or even a days wage, they instead also came up with their own bounty system for the rats. Local rat catchers simply had to present the French with rat tails as proof of a kill to claim their bounty. Of course the locals of Hanoi outsmarted the French and their scheme to come up with their own way of making more money. Instead of killing the rats, they simply removed their tails, turned those in for the reward, and set the rats back into the wild to breed and produce more rats with more tails, which were now a valuable commodity.
There’s even a term associated with this conundrum of a solution backfiring: The Cobra Effect. The term has been applied to all sorts of blunders like Prohibition, which was intended to suppress the alcohol trade but instead it created a booming market for criminals which kept them well funded for their other enterprises, and when it was over it had driven smaller brewers out of business and consolidated supplier power with the distillers and brewers large enough to wait it out. Similarly the War on Drugs is considered an example of the Cobra Effect for familiar reasons. A closely related effect “The Streisand Effect” was coined after another example of The Cobra Effect, whereby Barbra Streisand tried to remove a picture of her home from the internet with a lawsuit. Before the lawsuit only 6 people, including two downloads from Streisand’s Attorneys, had downloaded the image, but the publicity that the lawsuit brought drew thousands of downloads.
Another example, waiting hindsight data, might be the popularization of e-cigarettes. They are often marketed and purchased with the idea that they will decrease tobacco use, but anecdotal evidence suggests that they have simply made tobacco use, easier to access, more convenient, and more ubiquitous. Once again you can smoke indoors, and so smoking is no longer a break in daily activities, but always simmering on the back burner.
A more recent example might be attempts at gun buyback programs. These examples seem eerily familiar to our old colonial examples. The basic premise of these programs seems rather simple. The government offers a cash incentive to turn in your old firearms, and then they destroy it. One less gun on the streets, and a citizen walking away with some nice cash. It seems like a win win. Of course once again leave it to enterprising individuals to outsmart a government scheme. Although this one is, like our last example, a little bit tougher to verify, there are stories of people buying cheap handguns, bringing them to the government for money, and rising and repeating. Many of the stories also include anecdotes about the people using the extra cash to buy a better gun.
Now we don’t even know if the titular cobra problem is actually historically verifiable, but whether or not all of these things are 100% historically accurate isn’t the takeaway here. The point is that these schemes can create unintentional opportunities for savvy individuals to take advantage of. The lesson is to think like these savvy individuals, both to avoid creating more problems than you solve with your solutions, and perhaps to come out ahead when the would-be solutions of others aren’t quite as carefully thought out. It’s also a lesson in broad systems thinking, as well as a hard learned lesson that when owing bonds there’s no such a thing as no risk.
