This is a slightly puzzling argument. Yes, of course government action has unintended consequences. But then again, so does private action, and government action is of course a substitute for private action since resources are limited. Moreover, who's to say the consequences are bad? Advocates of larger government frequently cite the numerous technologies which have spun off from government programs - touchscreen computers and MRI from space programs, and the internet from the military. In this sense, they are making the same mistake as us smaller/no government advocates when we cite "unintended consequences" against a specific policy. Yes, there are unintended consequences and depending upon whether or not they are - on average - good or bad, this makes a prima facie case for generally larger or smaller government respectively, but they provide little if any reason to advocate particular programs.
I'm surely not the first person to have noticed this. The fact that the argument not only remains on the A-level syllabus, but continues to sound convincing to most people could be down to a number of reasons:
- We have reason to suspect that the unintended consequences will tend to be negative. If this is the case, then I see no particular reason to believe that an unbiased analyst will foresee positive consequences more often than negative ones. This would suggest that most people, including the people setting the syllabus, share the typical libertarian's scepticism of the motives of government officials, at least to some degree.
- Advocates of government intervention have taken over the A-level syllabus writing committee, and are teaching students to use weak arguments for their opponents' positions.
- Most people - including people intelligent enough to become senior examiners - do not tend to think to hard about an argument in front of them in order to see the problems with it.
- We care more about negative unintended consequences. There are reasons this might be the case - for example, due to the endowment effect (or just simple diminishing returns) we would care more about losing £10m than gaining £10m.
- Less government is just good policy, and societies producing people with a bias towards wanting less government will do better and so by natural selection this kind of government-restricting belief will tend to form.
There are probably plenty of other possible reasons I have neglected. Of the ones I have suggested, 1,3 and 4 seem highly plausible; 2 seems overly paranoid and fanciful; and while 5 might have some truth to it, it seems rather implausible as anything approaching an entire explanation when there are so many other factors affecting our psychology.
Ultimate moral of the story: Not all arguments against government are correct, not all arguments for government are wrong. (If you don't share my political views, you should of course reverse that). Each argument should be evaluated critically upon its own merits.