The subtitle of this post alludes to a line in Alice in Wonderland, where the Red Queen declares that “sometimes I’ve believed as many as six impossible things before breakfast.” Social welfare is (at least) the seventh impossible thing.
The notion of social welfare arises from John Stuart Mill’s utilitarianism, which is best captured in the phrase “the greatest good for the greatest number” or, more precisely “the greatest amount of happiness altogether”.
From this facile philosophy (not Mill’s only one) grew the ludicrous idea that it might be possible to determine, by some mystical process, that “society” would be better off if the government were to do such and such.
The pseudo-scientific version of utilitarianism is cost-benefit analysis. Governments often subject proposed projects and regulations (e.g., new highway construction, automobile safety requirements) to cost-benefit analysis. The theory of cost-benefit analysis is simple: If the expected benefits from a government project or regulation are greater than its expected costs, the project or regulation is economically justified.
Here is the problem with cost-benefit analysis — which is the problem with utilitarianism: One person’s benefit cannot be compared with another person’s cost. Suppose, for example, the City of Los Angeles were to conduct a cost-benefit analysis that “proved” the wisdom of constructing yet another freeway through the city in order to reduce the commuting time of workers who drive into the city from the suburbs. In order to construct the freeway, the city must exercise its power of eminent domain and take residential and commercial property, paying “just compensation”, of course. But “just compensation” for a forced taking cannot be “just” — not when property is being wrenched from often-unwilling “sellers” at prices they would not accept voluntarily. Not when those “sellers” (or their lessees) must face the additional financial and psychic costs of relocating their homes and businesses, of losing (in some cases) decades-old connections with friends, neighbors, customers, and suppliers.
How can a supposedly rational economist, politician, pundit, or “liberal” imagine that the benefits accruing to some persons (commuters, welfare recipients, etc.) somehow cancel the losses of other persons (taxpayers, property owners, etc.)? To take a homely example, consider A who derives pleasure from causing great pain to B (a non-masochist) by punching him in the nose. A’s pleasure cannot cancel B’s pain. And I am willing to prove it by punching a “liberal” in the nose.
Yet, that is how utilitarianism works, if not explicitly then implicitly. It is the spirit of utilitarianism (not to mention power-lust, arrogance, and ignorance) that drives politicians and bureaucrats throughout the land to impose their will upon us — to our lasting detriment.
Related posts: