costs & benefits

[afterzir]

People justify gov't and its activities by claims that the good outweighs the bad.

 

Examples:

a) IRS takes peoples' money (bad), but gives it to the needy (supposed good)

b) People forfeit some liberties to gov't (bad), but get order & sense of security (supposed good)

 

The problem, as I see it, is that you are comparing apples & oranges.  

E.g. if someone punched another person then gave money to charity, he can't

claim that the good he did outweighs/offsets the bad he did (since they're two different things).  

 

There are many other problems with gov't as well, but what I was wondering was if this applies

to CBA (cost-benefit analysis).  Good & bad are similar to benefits & costs in a way or am I stretching it too far?

Is comparing costs and benefits like comparing apples & oranges?  If I reworded example b) as: "the benefit that government provides to individuals is greater than the costs which it imposes on them", wouldn't that be cost-benefit analysis, and wouldn't it be comparing apples and oranges?

 

So basically, the main thing I'm wonder is if CBA is well-defined. 

[apples and grapes]

The difference would be measurement or standards. In the IRS takes peoples' money (bad), but gives it to the needy (supposed good) example, the standard for "good" and "bad" is left undetermined by statists. 

With cost-benefit analyses, the standard is money.You can measure the costs and the benefits with money, leading to the ability to determine nifty things like ROI 

 

You produce a good for $500, and plan to sell it for $2000. These dollar values reflect the various cost of production (determined by prices) and the determined market price. You can continue to determine your net revenues, ROI (300%), etc.

 

Of course when things like positive/negative externalities are brought into the analysis, then the criticism stands because there is no objective standard for determining such externalities and so any attempt for measurement is arbitrary at best. Were measurement of these externalities to be possible, we'd just call them costs and add them to the costs the analysis. For example we can determine the cost of property damage as a result of pollution and compare it to the cost of installing preventative, anti-pollution measures.

 

What if I'm your employee and I tell you that the production of the good makes me unhappy? 

 

If part of your costs lack the measurement of money, then you rely on guesstimate as the new cost must be translated to a price denomination. You can't say in your Investment proposition that it'll cost $500 and 2 units of Happiness to built, you'd have to translate 2 units of Happiness to $80 per unit or something. But there are no units by which we can measure Happiness and so definitely no manner to convert these non-existent units to money. So the now $660 costs is incorrect and any subsequent determination of CBA must be incorrect, rendering those CBAs largely useless. 

[PGP]

As regards government and taxes etc., this is a zero-sum game with a middle-man taking a cut and spinning the plates. 

IMO, the future of CBA will centre on things like EIA ( http://en.wikipedia.org/wiki/Environmental_impact_assessment ) under the overarching structure of Agenda 21 and "Our Common Future". Once you start digging around and learning about this stuff, it (for me at least) becomes a mind-f*ck. There are alot of conspiracy theories espoused about Agenda 21 etc. There shouldn't be IMO, as it's all there in black and white, total central-control and administration. The "officials" of the old Soviet Union will now be "professionals" with a valuable signature that allows people to proceed in their endeavours in business or life in general. All scientifically based of course. In my experience, the vast majority of people have no idea about any of this stuff except of course for the "sustainability" initiatives they come in contact with in schools. This would be worth ten shows from FDR IMO. Governments will be old-hat, this is the end-game as far as I can see. Happy reading!!!