I thought this was really interesting, and a good application of economics. None the less it is an incomplete way to think about the issues he raises. Good policy is more than economic efficiency.
From Steven Landsburg | The Big Questions:
Let’s try for a little perspective. The BP oil spill threatens to cause something like $10 billion worth of damage. That’s pretty bad. By contrast, an extra trillion dollars worth of federal spending threatens to cause something like $300 billion worth of deadweight loss (that is, underproduction due to tax avoidance and disincentives to work). That’s 30 times worse. How is it that so much angst about the former seems to be coming from people with a history of shrugging their shoulders at the latter?
I think one can say the cost of the spill is 10 billion treating the losses as only lost fishing and other losses to human consumption. Measuring that is a good question for an economist. But is consumption the big loss here?
I’d argue that fouling God’s creation in this way is immoral, and I’m not sure what cost you would put on that. I suppose you could be compensated for the shame, but in some sense I think it’s bigger than that. On the other hand the benefits of programs that make society more equitable are hard to measure also. I don’t a value to equity is being included.
I think the piece is interesting, but incomplete.
Steven Landsburg | The Big Questions: Tackling the Problems of Philosophy with Ideas from Mathematics, Economics, and Physics
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