Of the crocodile tears of today's liberalism, it has been said that, just as it is impossible to pump blood with the brain, it is impossible to think with the heart. Few better examples of this are available than that addressed in the paper by R. L. Keeney,
The problem is that the diversion of resources from private individuals often has a price - not just in money, but also in human lives. We understand this intuitively. If a family has less money to spend,
they may diminish the quality of their food with a concomitant diminution of their health. Alternatively, they may put off a car repair, so that they are at greater risk of accident. When millions of people are deprived of resources, the consequences may be fatal for some. This is true, but how do we put numbers with it?Keeney makes an effort to do this by fitting risk functions to the known data for mortality vs. income and then calculating mortality as a function of loss of income. Although this work is elegant and carefully quantitative, it is impossible to rid the calculations of assumptions that introduce systematic errors in the results.
Nevertheless, the order of magnitude of Kenney's results is probably right. These calculations provide, therefore, guidelines for thoughtful estimates of the cost in human lives of governmental regulations and other takings. For example, he calculates the induced fatalities in the United States from a federal government borrowing that increases interest payments on the national debt by $1 billion to be about 200 dead. Similarly, his calculations show about 1 additional fatality for each $5 million in increased expenditures caused by government regulations.
Transfer of resources from one group of people to another is not a zero sum game, because the marginal utility of money for each individual depends upon his total assets. Kenney estimates that a $100 loss for a household with a $20,000 income causes about 5 deaths per million per year, whereas a $100 loss for a household with a $40,000 income causes about 0.5 deaths per million per year. Regardless of so-called progressive taxation schedules, most government expenditures result in greater losses at the low income levels, while transfers tend to move assets from lower income households to higher income households. Kenney's calculations do not even try to estimate losses from economic distortions caused by government misallocation of resources. Also, in relying upon death statistics, he is calculating postponement of death rather than years of life lost.
Nevertheless, the overall value is about one full human lifetime lost per $100 million in "good hearted'' government regulations or expenditures. Even if this is high by an order of magnitude (It is more likely to be low.), the carnage is great indeed.
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Vol. 21, No. 6
Newsletter: Access to Energy Newsletter Archive Volume: Issues Issue/No.: Vol. 21, No. 6 Date: February 01, 1994 04:41 PM Title: Wild Cards
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