> I'm talking about social benefit, not narrow
> private benefits, as per standard welfare
> economics. In this framework, it should be
> clear why private, self-interested organizations,
> particularly business firms, are intrinsically
> ill-suited to providing public services.
>
Right. But even in social cost benefit analysis, CBA means something much more specific than weighing the pros and cons of something. Everything has to be translated and compared in money terms and that means that many things that do not (and should not) have a market value have to be assigned $ values (like the value of a human life, human health, a species, nature, etc.) and this raises a lot of technical, and ethical, problems.
Of course we have to weigh arguments for and against something when faced with any decision. And part, but not all, of the factors considered concern costs. Then these are political decisions that have to be made, hopefully through a democratic political process. With CBA, the economics determines the *ends* of policy, like how much pollution to allow or how much wetlands to preserve. In cost effectiveness analysis the ends are politically stipulated and then economics is used to find the most cost effective means to attain those independently determined ends. This is much better. But I would even go as far as to say that there are cases where the most "cost-effective" means should not necessarily be chosen. Because other means may be more socially beneficial. But if one is more optimistic than I am about the ability to identify and measure social costs and benefits in money terms, than I suppose one could argue that the more socially beneficial means would be identified through the analysis. But I am not that optimistic about the ability to identify and measure all social costs and benefits in $ terms, and in some cases don't believe $ values should be assigned for ethical reasons, and I think that putting everything in $ terms misses a lot of the qualitative dimensions of the issue at hand.
> A basic prejudice harbored by the public with
> respect to government is that it is indifferent
> to cost, that it would help everyone to any
> extent without regard to taxpayer wishes.
> "The heart is bigger than the wallet," the
> conservatives like to say.
>
Well, having said above that cost should be one consideration, i think we would be better off working to combat the misconceptions about government deficits and the national debt and the myth of scarcity in a society with unemployed resources, etc. This is why I have a problem with the groups that put a lot of emphasis on the dangers of the national debt when they say we can clean up the environment and eliminate the national debt by taxing pollution. It buys into the myth that government is financially strapped and can't pay for the things we need. I understand the appeal of the political strategy of trying to tap into that kind of sentiment, but I think it's more important to try to work to eliminate these misconceptions about the State's inability to pay for important programs.
Of course, bureaucratic corruption, waste, etc, is another matter.
I hope these comments address some of the issues you brought up below (political vs. technical; financing public services; my blanket statement that CBA is terrible, etc.) On the impact assessment, I was saying that in the 60s and 70s this is how early environmental legislation was developing. Things were turned upside-down in terms of priority by 12291.
Mat
> Rejecting any efficiency criteria with vague
> talk about the wealth of society reinforces
> this prejudice; it says the advocates don't
> care about the after-tax incomes of ordinary
> people. It's silly, since any semi-conscious
> worker knows that it is not, by and large, the
> rich who are going to finance public services.
> It's the worker.
> >Firms in the private sector are compelled by capitalist
> >competition to adopt certain technologies, methods
> >of production, capital-labor ratios, etc., but the state needn't make
> decisions based on such criteria. The
> >state is not forced to operate within the same narrow confines as a private
> firm, and it shouldn't. Instead
> >the state can make decisions based on social well-being, etc.
>
> O.K. Suppose something costs $1 million, but
> it provides some measure of "social well-being."
> How do we decide whether to buy it, rather than
> some other source of such well-being, or rather
> than higher after-tax incomes, another type of
> social well-being?
>
>
> >
> >Cost-benefit analysis is terrible.>>
>
> You see to be going well beyond a technical
> critique of the way c-b is done, or could ever
> be done.
>
> \<< Cost-effectiveness analysis is better, but still unacceptable for some
> public activities. Reagan's executive order 12291 (superceded by a Clinton
> Exec order that is little different) made every piece of regulatory
> legislation pass a cost-benefit test.>>
>
> You are equating a political decision (the exec
> orders) with an analytical technique. The problem
> is political, not technical. If we put Steve Marglin
> in charge of cost-benefit analysis, we could see lots
> of projects approved.
>
> << So instead of OSHA and EPA having final word on worker health and safety
> legislation and environmental legislation, the final word was with the OMB!
> Previously, any government sponsored 'development' project had to pass an
> environmental impact assessment;>>
>
> I'm puzzled by this. We just had a mammoth
> highway bill passed and I would stake my life
> on the proposition that few, if any, of its included
> projects passed any such 'impact assessment.'
>
> << now the tables are turned and any environmental legislation has to
> demonstrate it's "cost-beneficial." There are so many problems here I can't
> list them all. Jim Campen's book on Benefit-Cost analysis is still good,
> anyone interested i can give more references.>
> >We should not hang ourselves with the rope of "efficiency."
>
> We're swinging by the privates right now,
> because the public thinks we want to tax
> them into penury to buy them stuff they
> don't want for people they don't like.
>
> Even for liberal trade unionists, I have
> found, expanding the public provision
> for social well-being is not an easy sell.
> All the more reason to demonstrate (and
> live up to) a commitment to social efficiency.
>
> Cheers,
>
> Max