Gayblack Canadian Man

Foreign Policy Analysis
A Cost-Benefit Approach to Public Policy

A Cost-Benefit Approach to Public Policy

Let’s look at all the consequences of various
interventionist government policies, and let’s think about whether we think the whole set
of effects that we get is positive or negative, aggregated together somehow. I’d like to talk a little bit about two different
versions of libertarianism. The more traditional and probably the better known, people refer
to as “philosophical libertarianism.” And very, very crudely put, it’s the notion
that people have rights—individual rights to freedom, to liberty—and government policies
infringe those rights and therefore those policies are not legitimate or not appropriate,
not desirable. A different perspective, which I call cost-benefit
libertarianism or consequential libertarianism, or sometimes just economic libertarianism,
says that we don’t necessarily need to talk about rights per se, we should simply say,
let’s look at all the consequences of various interventionist government policies, and let’s
think about whether we think the whole set of effects that we get is positive or negative,
aggregated together somehow. And my claim is that in a huge fraction of cases when you
look at all of those consequences, you find that the net consequences that actually occur—as
opposed to just those consequences that politicians talk about when they advocate these policies—the
net consequences are pretty bad. And, therefore, whether or not you put a huge emphasis on
individual rights, you still should come to the view that those policies are not such
a great idea. A clean example is drug laws. A philosophical libertarian might say, I have
the right to control what goes on in my own body, so a government policy that outlaws
marijuana is illegitimate. It makes it harder and imprisons me even, for just doing something
that really only affects me. And that infringes my rights. A consequential libertarian would say, leave
that aside for the moment. The attempt to try to prevent people from consuming marijuana
generates a black market, generates crime, corruption, quality-control problems, disrespect
for the law, and so on. It has at best a small effect in reducing the consumption of marijuana.
So whether or not you think people should have the right to consume marijuana—whether
or not you think consuming marijuana is good or bad—if you consider the whole set of
things that happen when we try to prohibit marijuana we’re getting a very, very bad
combination of effects. And so even someone who doesn’t quite share the philosophical
perspective can still come to exactly the same conclusion.

81 comments on “A Cost-Benefit Approach to Public Policy

  1. Meh, not a fan of consequentialism.
    If we could triple GDP and increase the standard of living for everyone by enslaving a precise 35.805% of the population (assume that I could prove this beyond the shadow of any doubt), slavery would still be wrong.

  2. this man proves exactly why gary johnson and ron paul should be the republican nominees for president and vp

  3. @hollaatyaboy12 No it proves the opposite. Ron Paul is so engrossed in the whole liberty mantra that he doesn't realize the consequences of some of his outdated naive policies. Now thats not saying government interventionism isn't bad in most cases. Its also not saying that people have rights, and governments often infringe upon them. Ron Paul doesn't seem to understand how the world in 2011 works and him as president would be scary.

  4. I agree that MJ should be legal. That said "it only effects me" is a BS arguement. YOU DO NOT EXIST IN A VACUUME! I call this "nacissistic libertarianism" because people like to pretend that they are the sole authors of their destiny, and they ignore that we are embedded in a complex culture that places very real boundry conditions on us and gives very real privledge to us.

    Take responsibility for your actions, but don't kid yourself that you are "self made." You are a product of culture.

  5. @rjrice85 Ron Paul doesn't do it in a rational way. Ron Paul thinks liberty is the be all end all for a society. Take, for say, poverty spending. If the government stopped spending money to help the poor, certainly society would be made more free by some definition. Taxes would be lower, people would be free to succeed or fail on their own merits. But a good many people would starve to death. In that case I'd say the cost to society is higher if you stop at least minimal poverty spending.

  6. @JaysGOP Were people dying in the amounts you were referring to before the New Deal initiatives? Was Unemployment lower or higher after this that era as well? Also, just to point this little fact out, the top Marginal Tax rate was at 90% for a couple of decades, I'm assuming the poor would be vastly better off during this time period as well?

  7. @dannation1987 I am a libertarian, and I do think that slavery is absolutely wrong.
    The point of my (in retrospect, poorly-constructed) hypothetical scenario is that everyone here opposes slavery, but we oppose it because of a *moral principle* that slavery is wrong, not because of any kind of cost-benefit analysis.

  8. Everyone believes in cost-benefit. It's just that people put more importance on different costs/ benefits. That's why we have different oppinions. I might say that the small amount of marijuana reduction is worth all the problems. You might say it's not. We both used the same system but came to 2 different conclusions.

  9. @goodatbasebal Yes actually. In the days immediatley proceeding the Industrial Revolution, when capitalism was in its purest form. there was massive suffering and poverty in urban areas. Only a moron would argue in favor of a return to that. You're pretty typical of a Paul supporter actually. No idea how the actual world works, just sputtering off random facts trying to make sense of your distorted reality. I would like Ron Paul a lot more if he wasn't idolzied by millions of morons.

  10. @shamgar001 Mr Miron does a rather rubbish job at describing Consequentialist Libertarianism. He doesn't differentiate between Consequentialist Libertarianism and Utilitarianism. See the master Milton Friedman give a much better description!!! tinyurl(.)com/bez6dk "The smallest least intrusive government, consistent with the maximum freedom for each individual to follow his own ways and values provided he doesn't interfere with anyone elses doing the same"

  11. I'm a philosophical libertarian, but I have to admit that the cost/benefit or consequantialist arguments tend to work much better to persuade others.

  12. @shamgar001 that is because what he describes is not libertarian, but utilitarian. How much utility are you worth. AcedemicEarth org has a philophy class from yale, and covers this. Anything that says cost-benefit is a utilitarian view, because it is trying to convert all aspects into one value, and then judge on that value. Problem is, the value of items calculated change, daily.

  13. So what happens when cost-benefit say that there is a need to restrict civil liberties? The protests on wallstreet, they cause disruption, cause economic damage of loss of consumer confidence, and they produce nothing. It would be outlawed in a heartbeat under cost-benfit, unless we step into opinions, and then we are back to philosophical debates.

  14. I think this approach to political economy is going to be more persuasive to those who are not already Libertarians.

    While I do not buy into outright utilitarianism (I agree with Nozick's criticism on that), most people who hear someone say "You have a RIGHT to keep everything you own and shoot up whatever you want" will not be immediately convinced – at least not nearly as much as if someone showed that we as a society can expect to live better off if such things were not illegal.

  15. For all the deontological Libertarians out there, is there any form of government intervention you would support if you rejected a natural rights approach in favor of pure consequentialism?

    The most persuasive thing to me about natural rights take on policy is that Libertarian principles (specifically NAP) do not contradict each other anywhere near as much as positive rights do.

  16. Im not affiliated with any party whatsoever and i plan to try and keep it that way, but I do agree with much information stated here.

  17. Since peoples values are different how can you determine whether something is good overall or not? That being said I think that consequentialism can be used for many many things, such as marijuana. I could see that if having marijuana legal caused more problems then having it illegal (which isn't the case right now obviously) then I would grudgingly say that it should be illegal. But for everything that consequentialism isn't very clear on we should revert to rights as the baseline.

  18. @shamgar001 – It's kind of ironic: how do you increase the standard of living for all while enslaving some? I'm guessing that you mean that it would improve standard of living for all other than slaves. Even then, consequentialism isn't just a single point. It does have a spectrum that allows for some universal values.
    Let's rephrase your example: If in order to triple GDP, we had to enslave 35%, then is it just? Most consequentialists could argue the slavery is the consequence, thus is immoral.

  19. @goodatbasebal Wow.. I was trying to have a descent conversation among adults, but I see that you can't take part in that. All I was asking for was some data that you could point me towards. All you gave me was ad hominem attacks…

  20. Why is it this guy says individual liberty is infringed upon by government when we all know private organizations like corporations, wall street and other non-governmental organizations actually infringe more and government is there to represent the individual rights against the powerful.

  21. @shamgar001 That's not particularly true, the only force I could imagine enslaving 35.8% of the population is government, and most libertarians if not all want smaller gov't….and they believe in freedom as long as it does not interfere with someone else's 🙂

  22. @rgnko7 Are we to assume all organizations (collectives) infringe? The responsibility rest squarely on individuals withing a collective to use their brains and not be manipulated. In order to do that being well informed and educated are very important. While any organization (collective) can infringe many enable the individual, others are neutral and others harmful. Education doesn't just mean white collar or executive jobs only the ability to adapt to the world as an individual.

  23. @bluefootedpig Mr Miron does a rather rubbish job at describing Consequentialist Libertarianism. He doesn't differentiate between Consequentialist Libertarianism and Utilitarianism. See the master Milton Friedman give a much better description!!! tinyurl(.)com/bez6dk "The smallest least intrusive government, consistent with the maximum freedom for each individual to follow his own ways and values provided he doesn't interfere with anyone elses doing the same"

  24. @dmg46664 I have watched a great deal of milton, but he strikes me more of a philosophical libertarian. There must be some rule of law, such as to protect what you said, not interfering with others people liberty, but again, that is just classic libertarian. Maybe I still don't see the difference. From what this guy describes, is merely using utilitarian models where it promotes liberty and freedom to convince people who may not believe in liberty to still give it.

  25. @bluefootedpig No it's not Classical liberal. Classical liberalism has more to with John Locke… and a framework of conscent tinyurl(.)com/6gom7dn . Did you watch the previous link I posted? Did you see the difference between Ayn Rand's Libertarianism and Friedman's. Friedman is prepared to give up some freedoms to maximize freedom overall. Not give up freedoms to maximize utility (the slavery example). Rand is not prepared to do that… a doctrine of "no force".

  26. @dmg46664 you are correct, yeah I did watch that. I watched it acedemicearth, which actually features this class as the top rated show. But as you pointed out friedman is willing to give up some, which at least to myself is closer to classic libertarian, as it says that the only way government can do anything is if it does it to everyone equally. Ayn was against it in all forms, she in a great sense I think was just anarchist. Careful though, you used liberalism, which is not libertarian.

  27. @dannation1987 You are embeded in a network of relationships. If you are stoned, you are not there for those relationships. This fact is often ignored by addicts. I'm not saying "don't get stoned" but what I am staying is recognize that the cost of getting stoned is not only born by you. It is born by your family, friends and workplace.

    And do so responsibly.

  28. @StateExempt
    building roads, water treatment, fire and rescue, armed forces, police, education, farm subsidies, rural health centers, small business loans, contracting with major corporations and smaller business, product R&D, Social security including disability, unemployment insurance, toxic waste cleanup, National parks and monuments, historical archives, disaster relief, aid to states for infrastructure and other purposes, foreign policy and treaties, standards for consumable quality etc.

  29. @martinstillwater – How the hell are those examples of corporations infringing on personal rights???

    Forget it, I am screen-capping this…

  30. @StateExempt Sorry I thought you were asking how government helps individuals.
    Corporations oh like the Savings and loan scandal , Enron (Protected by Bush) , Haliburton war profiteering while their ex CEO is Vice Pres, Shoddy practices of the oil industry while reaping ungodly profit, putting millions out of work AFTER being given unprecedented tax breaks and destroying the equity of homeowners while insuring Executive raises, poisoning food, air and water. Unsafe cars, and buying the govmt

  31. @martinstillwater Last I checked, corporations do not imprison people for having a leaf in their pocket. Nor do corporations force people to buy their products or services…unless they have the support of the government. Corporations do not tax people, government does.

  32. @dannation1987 I find it interesting that you emediately went to "debt and owe" type language, as if your emotional, intellectual and social presence in the lives of your loved ones was some sort of commodity. You are more valuable than the services you render to anyone.

    Didn't you know that?

  33. "Aggregated together somehow". That's precisely the problem with this approach. You can't weigh the utility of the cop who was hired and can support his family only thanks to the war on drugs against the negative utility of the people put in prison.

  34. @martinstillwater
    Individual liberty can be infringed upon by any individual or group. Difference is, in any stable society an individual who denies your rights (a criminal) is punished in some way.
    Corporations can get away with the crime longer and affect more people, but will eventually be punished economically or by an uncorrupt government.
    When governments deny people's rights, they affect almost everyone within the borders, and will get away with it.

  35. @martinstillwater
    You say government is supposed to defent the individual against the powerful, and this was the founding belief behind our government. But it is not always the case, especially in places around the world. Oftentimes, the government is the powerful, or in the case of our government, allows the corporations to get away with more than they should.

    I find that the position many libertarians hold is that government should be good, but it isn't nor can it truly be trusted to be so.

  36. @TombaFanatic you said "Oftentimes, the government is the powerful, or in the case of our government, allows the corporations to get away with more than they should." I totally agree and we need change but then again we do create our government with votes. I am always curious, however, why libertarians seem to prefer the GOP who favor corporations over the individuals in our country.

  37. @kev3d I never said corporations are bad but there can be problems with corporations that leads to harm of individuals or take away their choices. I especially worry about goods or services that are essential. Housing, Energy, food, water, clean air, medical care, education. When we are talking about necessities no company or corporation whose mission is maximization of profit and little or no competition are a danger to individual freedom and opportunity & destroys the law of supply & demand

  38. @martinstillwater The problem with voting is that it's limited by choices. It's not so much a "government that the people support" and more of a "government the people don't hate." Or with the two party system that the US has, when both major politicians offer the same thing, there is no real choice.

  39. @martinstillwater As for why we prefer the GOP, I think it's because the GOP is more accepting of our ideas. Both parties, no matter what they say, favor corporations over individuals. Democrats just do that in addition to supporting welfare. Libertarians share a lot of ideas with the left, but because we don't agree with affirmative action/social welfare, the left will often demonize us. The GOP, on the other hand, will glorify the similarities and ignore the differences most of the time..

  40. @martinstillwater – I agree Enron was perpetuated by government, I agree that the government was wrong in creating the perfect storm for Halliburton to get revenue, elaborate on these so-called "shoddy practices" of the oil industry, I also agree that the economic policies of the past several administrations do not promote job growth, when have markets poisoned food, air, water, or any other property more than the government has already, and as for the unsafe cars…


  41. @TombaFanatic Too often 3rd party organizations feel the need to run presidential candidates when they need to start on the congressman level. There are so many opinions on what to do we often end up with the what is for us the perfect candidate. I'd prefer making all elections runoffs if no one person gets more than 50% of the vote. In my opinion 3rd party candidates would have a better chance for election and no one has to vote for a candidate they only slightly believe in.

  42. @martinstillwater
    Right, but even on the congressional level choices are limited, but better. I like the idea of "approval voting." Where people get two votes. That way they can vote for the candidate they like the most instead of against the one they hate the least.

  43. @martinstillwater Of those essential things, do you really find there is a shortage? There is a duty for government to protect "the commons", that is, air and water that is not owned, but everything else the government does an abysmal job. Take the government near-monopoly of education. Choice suffers, quality declines or stagnates, costs rise. Housing? Need I remind you of the bubble? Government is what destroys competition, by picking winners and losers.

  44. @StateExempt Exxon Valdez, a myriad of offshore leaks and spills, ruptured pipelines for starters. Not coming clean about the sources of our Oil where Canada and Mexico together are twice the Saudi/Middle east. Refining our supplies and shipping them to other countries, false shortages, being part of the pricing on purchase and distribution of oil & gas creating a vertical monopoly, buying congressional votes (blame the congress as well) price fixing raise 10 lower 5 on prices always going up.

  45. @kev3d There is tremendous choice in education from public, private and in-home educational support. Choice suffers most in education with under funding. If we want choice, fund education, enable innovation and encourage historical truth. The lenders encouraged the bubble that would never have become the disaster it was with strict regulations just like the Savings & Loan crisis. When banks played fast and loose with other peoples money. Homeowners lost their equity and banks were bailed out.

  46. @TombaFanatic I totally agree I can't remember when the government denied anyone rights. I see corporations redistributing OUR wealth overseas and in offshore bank accounts. As far as individuals go yes we do have laws which can and should be observed and criminals, Individual, corporate persons and government employees and staff should be held accountable.

    What rights were you denied by the government, Federal, State, County, City? Why blame the Federal govt long lines at the DMV?

  47. @martinstillwater Underfunded education? UNDERfunded? Surely you jest. And why is it that the teachers unions oppose school voucher programs? No, most communities do not have the choice that, say, rich people get. As for the housing bubble, what were those financial institutions called, Fannie Mae and Freddie Mac…why its Government Sponsored Enterprises! No wonder there was a bubble, if the Govt is going to completely guarantee bad loans.

  48. @TombaFanatic Even if you don't trust the government (I agree) shouldn't you recognize that for the most part our government works hard to be fair. No one likes knowing there is an entity that is so powerful and that includes all levels of government, corporations, banks, financiers who could throw our lives into chaos through poor management. I've worked within some huge corporations and can tell you they are often more inefficient than most federal entities at wasting $ or gouging individuals

  49. @TombaFanatic You mean like Lani Guinier's suggestion of proportional voting? One person one vote. And make it easy to vote Oregon has a mail in ballot system that works very well once you register rather than making voting so difficult it's almost impossible for large numbers of people. Of all people the Libertarian Party should be talking out about individual's right to vote. Are they?

  50. @kev3d No I do not jest about education it's given me opportunities to succeed from a very poor family. I can't speak for teachers unions but I suspect vouchers could be a tool to eliminate public education. Do you think vouchers would be free? If anything they would or could be a greater cost than public schools. Fanny and Freddie had regulations that were ignored under the Bush Admin and yes they need to clean house but derivatives and predatory lending created the bubble driving prices up

  51. @martinstillwater And public education holds back millions of children from reaching their potential. I urge you to look up the desperate mothers who clamor for school choice and the vicious opposition that Teachers Unions put up against it. And no, vouchers are not free, the point is to put the money with the child, and spent where the parents chose, rather than where the district believes it should be spent. I hope it does destroy the public schools the same way the car destroyed the horse.

  52. @martinstillwater What *specific* regulation was ignored allowing the government to back loans? I suggest you read A Government-Mandated Housing Bubble in Forbes Magazine and The Government-Created Subprime Mortgage Meltdown by Thomas DiLorenzo for starters. Also look into the artificially low interest rates in the mid 2000s and the unintended consequences of the Community Reinvestment Act, among other things.

  53. @martinstillwater "shouldn't you recognize that for the most part our government works hard to be fair. " Now I KNOW you are joking. The government is not being fair when it jails people for having a plant in their pocket. The government is not being fair when it bails out failing institutions. It is not being fair when it paradoxically subsidizes the production of a thing, then over-taxes the consumption of that thing, and funds campaigns against that thing's use. Tobacco in this case.

  54. @kev3d There are problems with government that reflect the politics of the time. The war on drugs started years ago and somehow we never looked at the punishment vs crime very hard. I agree there is great overkill and it varies from state. Is it the government responding to the call of the people. How long would anyone in office last if the called for shorter sentencing in a world where jurors make statements like hang 'em before even seeing the evidence. It is a human failing not government

  55. @kev3d There are three:
    The Depository Institutions Deregulation and Monetary Control Act of 1980 (allowing similar banks to merge and set any interest rate).
    The Garn–St. Germain Depository Institutions Act of 1982 (allowing Adjustable-rate mortgages).
    The Gramm–Leach–Bliley Act of 1999 (allowing commercial and investment banks to merge).

  56. @martinstillwater Why have vouchers schools should be funded based on number of students. Why no just include private schools in the distribution of funds by student. I attended private schools from kindergarten through high school and my parents were not wealthy by any means. They chose to do without a few things for my education. So I understand the call for vouchers. Wouldn't it be better to improve the public school system so every child has a better education?

  57. @martinstillwater – It is very unfortunate that the Americans with Disabilities Act prevented Exxon from being able to keep Joseph Hazelwood from being hired for the job he had because he was an alcoholic.

    And please provide sources to these assertions.

  58. @martinstillwater – That is technically what vouchers do. They allow you better freedom of choice in education by not keeping parents and students stuck with a given school simply because of where they live.

  59. @shamgar001 Consequentialism is a great way to influence people who do not share your libertarian view. It's what made me abandon my leftist views

  60. @StateExempt Freedom from the responsibility helping our public schools succeed. If parents and the community were as involved with supporting their schools the choice would be the local schools. There are public schools on a par with private schools where the schools are supported with tax dollars and community involvement. I doubt the voucher program would anything to build community only build divisive cults of the rich and the poor.

  61. @diurdi – I am with you on this one. The only reason I adopted Libertarianism a few years back was because the outcomes of Libertarian policies seemed more desirable than that of anything else.

    Take the war on drugs for example. If people opposed to it had argued nothing but "hey, it's their right to do shoot up and snort coke" I would probably still be in favor of drug prohibition now.

    If one were to make a consequentialist argument, it would look more like this:


  62. @martinstillwater – Two things:

    1. School choice means not only choosing from multiple local schools but also online virtual academies and what have you. Nobody chooses to go to a certain restaurant solely because it is close by, nor should we assume that parents will automatically send their kids to the nearest school.

    2. As for the claim that there are public schools on par with private ones, that might be a possibility, but as for overall trends, see the following:


  63. Good point. I wish, using your own method of analysis, you would finish the thought with explaining the opposite – making the thing legal – and what negative "net effects" would that entail.

  64. Libertarianism totally ignores ethics. You can't make a pragmatic argument to justify freedom. Cost benefit analysis is not a convincing argument if it goes against what people think is ethical and you don't challenge that.

  65. @MrApplewine

    The whole point of utilitarian libertarianism is to avoid making value judgements and just choose policies that lead to an agreed upon end. Philosophical libertarianism is completely based in deductive ethics. A system of property rights is derived from which the entire libertarian agenda can be deduced. I would urge you to read Mises to better understand utilitarian libertarianism and Rothbard to understand deductive libertarian ethics.

  66. I guess I'm a consequential Libertarian by the way Dr. Miron described it. Philosophical Libertarianism is a philosophy that can't be used easily with others that don't share that perspective, but I think at some level we can all agree that a bad result should deter someone from enacting a certain policy no matter their ideological affiliation.

  67. Ethics and morale are subjective. If you accept the notion that majority should dictate what is ethical and what is not, then you are saying majority owns minority.

  68. You have to make a moral argument for self-interest. Utilitarianism is not the right morality and also inherently is bias toward some person doing that utilitarianism in a position of authority. If you want freedom you have to base it on morality. Objective Freedom dot com explains.

  69. I'll agree as far as marijuana, but in regards to harder drugs, as a consequential libertarian, shouldn't you look at the social costs to society of addiction and the rate of family abuse among users of hard drugs? There is no doubt that drug use has social costs, and to completely ignore those social costs does not make sense to me.

  70. I don't advocate COMPLETELY ignoring the social costs of drugs. My argument is that the social costs of drug prohibition is both more costly than the social cost of the drug itself, and not as effective as other means of curbing drug use. Drug abuse is statistically stagnant, neither higher nor lower, now than it was when the war on drugs began. In contrast, Portugal has been very successful in both legalizing drugs AND lowering drug use, and therefore the social costs, with their policies.

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