Opportunity costs redux (crosspost from CT)
Harry Brighouse has a question about my post on consequentialism and opportunity costs, as applied to the Iraq war, which raises a couple of important points about consequentialism, and also leads me to suggest a specific correction to my post on this topic.
The first is a general one, which is obviously inherent in the notion of opportunity costs, but also arises with consequentialism in general, namely that, when we are evaluating a course of action, the question is always â€œcompared to whatâ€?. This is, I think, a strong point for consequentialism as a way of assessing public policy, since that always involves a choice between feasible alternatives. By contrast, in a theory of individual morality, itâ€™s often sufficient to divide actions into â€œpermissibleâ€? and â€œimpermissibleâ€? and leave people to choose whatever permissible action seems best to them.
The second question, is â€œwho is supposed to be applying the theoryâ€?. As Harry says, the question â€œIs X a good thingâ€? depends on â€œWhat alternative Y could I promoteâ€?, and so depends on the position we are assuming.
Now letâ€™s start thinking about the war. As Harry says, the obvious interpretation of my post is that I am advising the Bush Administration, but assuming that they have suddenly acquired an interest in the welfare of the American public. I think, though, that my analysis would be a reasonable one for a member of Congress proposing an amendment to measures authorising the war and the associated expenditure.
Supposing we are looking at things from the position of the British and Australian left, as Harry suggests. I think the opportunity cost analysis applies pretty well to the expenditure by the British and Australian governments. The Australian government estimated costs of $1 billion, and itâ€™s always short of money for health. So we can estimate that it could have spent the money on health, with an implied saving of 100-200 lives. Alternatively, if you agree that Australian public expenditure priorities arenâ€™t radically skewed, you can say that if the money wasnâ€™t spent on health, it would probably have been spent on something equally valuable at the margin (say education, or firefighting). I assume much the same would be true to the UK.
But if we want an analysis that doesnâ€™t rely on some particular position from which choices are being made, it would be good to have a neutral alternative assumption. This kind of problem comes up all the time in policy modelling: if your policy option increases government revenue, what should you assume about the way that revenue is allocated?
Given the performance of the Bush Administration so far, it is tempting to agree with Harry that any money saved from the Iraq war would have been wasted elsewhere. But I think this is incorrect, in part because thereâ€™s no sign that the Bushies recognise a budget constraint. For them, the war is free: it isnâ€™t even included in the regular Budget which is, in any case, massively in deficit with extra items regularly added to the slate. The bills will have to be paid in the end, but thereâ€™s no easy way to predict who will pay or in what form.
This suggests to me that a reasonable neutral assumption (fairly common in economic modelling) is that US consumption will be reduced, proportionally across the board, to meet the financial cost of the war. That means about 75 per cent of the cost would be private consumption (foregone tax cuts, if you like), of which about half would be borne by the top quintile. About 15 per cent would come from health (public and private) and more from other desirable forms of spending.
A fair slab, as Harry says, would come out of luxury spending for the well-off. Pro-war British lefties are I think, entitled to disregard this component of the cost, consistently with their general views, while Bushies and libertarians are not.
So, a more careful analysis would certainly qualify the argument I put forward last time, but would not eliminate the general point that war is always costly in blood and treasure, and needs large and clear benefits if it is ever to be justified.