Quotation of the Day…

by Don Boudreaux on August 6, 2017

in Environment, Reality Is Not Optional, Seen and Unseen, Virginia Political Economy

… is from page 253 of Randy Simmons’s 2011 Revised Edition of his and the late William Mitchell’s 1994 volume, Beyond Politics, which is a superb primer on public-choice scholarship:

Sacrificing immediate self-interest for long-term environmental interest has been the message of activists, academics and politicians since the first “Earth Day” celebration in 1970.  Enormous amounts of attention and resources are devoted annually to “saving” the environment, reducing pollution, preserving wildlife, creating more environmental amenities, keeping fit, vacationing in the wilderness and purchasing fashionable hiking shoes, backpacks, bicycles, and ski equipment.  Morally enraged attacks on industrial polluters and obscene profiteers are fashionable in dinner table conversations.  Humans, we are told, do not live on bread alone; poetry, the mind, and environmental amenities must also be cultivated in civilized societies.  In short, what economists label as externalities, social costs, or neighborhood effects have become a staple of daily conversation.

This concern over the amenities of life is made possible, paradoxically, because of the tremendous economic growth engendered by capitalism.  As material goods have become more plentiful, their marginal value has, as the law [of diminishing marginal utility] says, diminished; at the same time, the “quality of life” attributes have increased in value, posing further allocative choices.  The problem becomes one of determining what combination of material and quality of life goods we wish to consume.  For example, poor people place higher values on scarce material things, while richer people seek scarce, more costly amenities.  But, any sacrifices from preserving environmental amenities are expected to be shared by all, rich and poor alike.

DBx: A basic understanding of economics – including of public choice – goes a long way toward preventing someone from committing the common error of mistaking his or her moral fervor for reasoned analysis.  Here are just a few of the insights conveyed by such an understanding:

– Because different individuals have different preferences, because those preferences change over time, and because the costs of supplying the goods, services, and amenities that satisfy those preferences differ from place to place and (like the preferences themselves) change over time, there is no one ‘correct’ amount of any good, service, or amenity.

– Because individuals’ preferences are subjective – and because, ultimately, the costs of satisfying any and all preferences are also subjective – preferences and costs are not directly observable; they are revealed (and in many cases actually discovered by each chooser) only in the process of actually choosing; therefore, even if preferences were far more uniform than they are in reality and even if they never changed, there is no way for any politician, bureaucrat, professor, priest, or pundit, no matter how brilliant and filled with public spirit, to determine independently of actual choosing processes what is the ‘correct’ or ‘optimal’ mix of goods, services, and amenities.

– The attention of those who truly wish for outcomes that, as closely as possible, satisfy as many as possible of the preferences of as many as possible of the people is focused not on the attainment of particular outcomes but on a comparison of alternative institutions within which choosing takes place.

– Collective choice – both when it is considered to be necessary (as for deciding on the provision of pure public goods, such as national defense) and when it is used even though it isn’t necessary (as when government assumes the power to set ‘minimum’ conditions in labor contracts) – inevitably forces some individuals to consume a particular bundle of goods, services, and amenities that, given the cost that each of these individuals must bear to help supply this bundle, these individuals would prefer not to consume.  A well-to-do resident of San Jose or of Brussels might value an extra increment of carbon-emissions-reduction enough to pay his or her share of the cost of supplying this increment of reduction.  But the not-so-well-to-do resident of Stockton or of Rio de Janeiro might prefer to forego that increment of carbon-emissions reduction and instead get the extra gallon of orange juice or the extra increment of automobile safety that is made impossible because that increment of carbon-emissions reduction is supplied.

– Well-to-do people are often very clever at using democratic processes as mechanisms for transferring wealth to themselves from people who are poorer than they are.  And part of this cleverness lies in creating the false appearance that the democratic processes are being used to promote the public good.  Because so many intellectuals never bother to look beyond or beneath superficial appearances, intellectuals leap to the conclusion that those who oppose policies that superficially appear to genuinely promote the public interest necessarily are enemies of the public interest.  Too many intellectuals are too lazy or too stubborn to do the hard work of looking past appearances.  Too many intellectuals become, therefore, unwitting dupes for private interests who abuse collective-choice mechanisms for ends that these intellectuals would be horrified to learn that they – these intellectuals – in fact help to further by their taking so much government activity at face value.

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