Government intervention: is there anything it can't fix make worse?

If you liked the stimulus bill that brought us double-digit unemployment, "Cash for Clunkers" that cost $24,000 a vehicle and the AIG bailout, then you'll love Kiribati's plan to save the fish. NPR: "Reef Conservation Strategy Backfires"

Kiribati (pronounced KIR-a-bahs) has a simple economy. People either catch fish, or they pick coconuts from their trees and produce coconut oil. Sheila Walsh, a postdoctoral researcher at Brown University, says most people do a bit of each.

The Kiribati government was concerned about overfishing. So it came up with a plan: It would subsidize the coconut oil industry.

"The thought was that by paying people more to do coconut agriculture, they would do less fishing," says Walsh. "And this would fulfill two goals: One, they would reduce overfishing; and two, people would be better off. They would have higher incomes."

Walsh wanted to know whether this plan was working, and the government invited her to study the issue. So, as part of her graduate work at the Scripps Institution of Oceanography, she flew to Kiribati to interview fishermen.

"And it turned out that, actually, the result of paying people more to do coconut agriculture was to increase fishing," she says. In fact, fishing increased by a startling 33 percent. The reef fish population dropped by an estimated 17 percent, putting the whole ecosystem at risk.

"It was a bit of a surprise, and we were wondering: What's going on here?"

The answer was simplicity itself. Walsh's study concludes that people earned more money making coconut oil, which meant they could work less to support themselves. And they spent their new leisure time fishing.

"It hit us like a bumper sticker saying - a bad day fishing is better than a good day working. And that's sort of the story here," Walsh says.

Here's Chief Brody advising Quint on how to spend his coconut profits: