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For the Umpteenth Time: Costs Are Not Benefits

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Commenting on this post [2], Ed Rector – opening with a quotation from my post – writes:

” – – – – the beef that we export is a cost. ” !!??!!

No it isn’t. It is a source of additional income (and jobs) for US beef producers.

Responding to Mr. Rector’s comment, Steve Peterson writes:

Opportunity cost.

Mr. Peterson is correct, but let me here add more.  Mr. Rector doesn’t understand cost.

“Cost” is not a synonym for “net loss” or even “loss” (despite “cost” often being mistaken for such).  Cost is that which is foregone whenever a choice is made.  (Notice, by the way, that every choice entails a cost – and every cost is the result of a choice having been made.  Cost and choice are inseparable from each other.)

In the case of American beef exports, they are indeed, as Mr. Rector says, “a source of additional income (and jobs) for US beef producers,” yet this reality does not mean that they are not a cost.  The beef exports – or, more fundamentally, the additional goods and services that would otherwise have been produced had not the exported beef been produced – are sacrificed in order to get the revenue on the foreign sales of this beef.  Because U.S. beef producers would prefer to get those earnings without having to ship beef to foreign buyers, the exported beef is clearly a cost.  It might well be a cost worth incurring – that is, it might be a cost that is smaller than the benefits that its incurrence makes possible – but there’s no denying that it’s nevertheless a cost.  American beef exports are the price American beef producers pay in order to buy whatever goods and services they buy with their export earnings.  No exports; no export earnings; no export earnings, no ability to acquire whatever goods and services those earnings are used to purchase.

Also note, Mr. Rector errs also when he suggests that jobs on cattle ranches and in beef-processing plants are benefits.  They, too, are costs.  I’m quite sure that all of those workers perform those jobs chiefly as a means of earning incomes.  The time and effort that these workers devote to the beef-producing processes are what these workers give up in exchange for the ability to consume the goods and services that they purchase with their incomes.  From the perspective of society, worker time and effort spent producing beef is worker time and effort not spent producing other goods and services.  These forgone other goods and services are the costs of producing beef for export.  Again, the fact that forgoing these other goods and services might be made worthwhile by the greater value of the additional good and services the consumption of which is made possible by the beef exports does not render* the jobs themselves a benefit.  They are a cost.

I ask anyone who truly believes that jobs as such are a benefit rather than a cost to contact me immediately.  I have lots of opportunities for you to enjoy many benefits at my home.  You can start by painting my house.

…..

* Pun intended.

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