I suggested above that the provision of train service to remote districts makes social sense even if it is economically "inefficient." But this, of course, begs an important question. Social democrats will not get very far by proposing laudable social objectives that they themselves concede to cost more than the alternatives. We would end up acknowledging the virtues of social services, decrying their expense...and doing nothing. We need to rethink the devices we employ to assess all costs: social and economic alike.
Let me offer an example. It is cheaper to provide benevolent handouts to the poor than to guarantee them a full range of social services as of right. By "benevolent" I mean faith-based charity, private or independent initiative, income-dependent assistance in the form of food stamps, housing grants, clothing subsidies, and so on. But it is notoriously humiliating to be on the receiving end of that kind of assistance. The "means test" applied by the British authorities to victims of the 1930s depression is still recalled with distaste and even anger by an older generation.
Conversely, it is not humiliating to be on the receiving end of a right. If you are entitled to unemployment payments, pension, disability, municipal housing, or any other publicly furnished assistance as of right—without anyone investigating to determine whether you have sunk low enough to "deserve" help—then you will not be embarrassed to accept it. However, such universal rights and entitlements are expensive.
But what if we treated humiliation itself as a cost, a charge to society? What if we decided to "quantify" the harm done when people are shamed by their fellow citizens before receiving the mere necessities of life? In other words, what if we factored into our estimates of productivity, efficiency, or well-being the difference between a humiliating handout and a benefit as of right? We might conclude that the provision of universal social services, public health insurance, or subsidized public transportation was actually a cost-effective way to achieve our common objectives. Such an exercise is inherently contentious: How do we quantify "humiliation"? What is the measurable cost of depriving isolated citizens of access to metropolitan resources? How much are we willing to pay for a good society? Unclear. But unless we ask such questions, how can we hope to devise answers?
Tuesday, December 01, 2009
Costs and Benefits
Tony Judt, in the New York Review of Books (emphasis mine):