Check out this graph that I created... I wonder how many of you suffer from math PTSD. Let me know if you felt any anxiety when you saw this chart. Ok, so here's the logic. At any given time you have a finite amount of resources at your disposal. Just having these resources though isn't as important as how you use them. Each particular use (allocation) of your resources will provide you with x amount of value and others with y amount value. Given that that no two allocations of your resources will create/destroy the same exact amount of value, every single possible allocation of your resources can be plotted on a different point on this graph. Where would you plot the following? Forgetting to wear deodorant Helping your friend move Realizing after it's too late that there isn't any toilet paper Donating $100 to your favorite cause Pranking your friend Going to a party instead of studying for an exam Having sex with your best friend's significant other Curing cancer Losing $1000 at the race track Starting WWIII When you compare any two points on the graph, whichever point is closest to (10,10) is the more efficient (less wasteful) allocation. A mistake is when the less efficient allocation is chosen. The size of the mistake can be determined by subtracting the shorter distance from the longer distance. We're all fallible, but we're not all equally fallible. It's a given that some people are going to make less mistakes than other people. Markets work because people can give you positive feedback (money) if your resource allocations create value for them. As a result, the more value that you create for others, the more influence you'll have over how society's limited resources are used. This fail safe device limits the amount of resources that end up in the hands of the people who make the most mistakes. If we can't give people feedback on how well they are using society's limited resources, then too many resources will end up in the wrong hands. Even when resources do happen to end up in the right hands...producers will be decentivized because the size of the carrot will not depend on their effort to research and accurately predict the most valuable allocations. If anybody is interested in a critique of dollar voting please read On the Phenomenon of Bull(*)(*)(*)(*) Jobs by David Graeber. For a short and sweet rebuttal please read BS Jobs and BS Economics by Alex Tabarrok. For a longer, but relatively accessible, rebuttal I highly recommend reading Democracy, the Market, and the Logic of Social Choice by Samuel DeCanio.
Many government actions are just knee-jerk reactions to problems. This is clearly demonstrated when different government policies work against each other. A quick example that I can think of, one law that requires a businesses to have to do something stupid to "use less energy", and other laws which result in wasted energy for unnecessary "safety" purposes or disabled accessibility. Because of the government mandates, the business has to use crappy fluorescent lighting everywhere so that there is enough power for the electric chair lifter next to their pool, or keeping the temperature uncomfortably low. (if you do not know what I am talking about, the government has all sorts of stupid mandates on businesses most Americans are not aware of) Usually government is only thinking about one objective in imposing mandates on private businesses, without thinking about unintended consequences.
You stated that cost-benefit analysis is rarely properly done. That is invalid. Making bobbins up won't give you an argument
Cost benefit analysis depends entirely on the criteria for measuring benefit, which is not often directly economically measurable due to the myriad of indirect benefits, both expected and unexpected, that accrue from many government expenditures. Government expenditures also bring long term permanent economic benefits that are not amenable to standard cost benefit analysis. The infrastructure expenditures of the US government during the great depression, by a short term cost benefit analysis at the time would indicate the cost as far exceeding the benefit but the long term benefit of the new roads and bridges they built has been calculated as returning over 600% of their cost in increased tax receipts over the next fifty years, similar to government expenditures in the interstate highway system which began a few decades later. Anti-poverty programs are government expenditures that are very difficult to parse as direct short term economic benefits from but so are expenditures for public safety. It is not possible to say that more police has brought a larger benefit in crime reduction in poor areas than increased spending on anti-poverty programs since increasing police in poor areas is a big part of making them safer so poor people can avail themselves of the increased opportunity offered by anti-poverty programs. There are things that only the government can accomplish and these are the things that create the venues for private enterprise to flourish. Even Hayek, who was so free market, thought that greatest danger to society was from those who adopted overly simplistic axioms, especially the sort of laissez-faire that demonizes all government.
Hogwash! Its not difficult to factor in 'permanent' gains. Now you refer to 'short term' cost benefit analysis. You don't seem to really have an argument!
