RE: Cost benefit analysis
One problem with applying CBA to policy formulation is ensuring reliability and objectivity. Too often, CBA is manipulated for predetermined policy positions. EPA once produced a Regulatory Impact Analysis that contended that benefits from the phaseout of CFCs are $8 trillion to $32 trillion. In such cases, CBA does more to confound, rather than illuminate, rational policy formulation. Is there a practical way for policy makers to assess the reliability and objectivity of CBA? Walt Warnick -Original Message-From: Driessnack, John [mailto:[EMAIL PROTECTED]]Sent: Thursday, February 13, 2003 9:56 AMTo: [EMAIL PROTECTED]Cc: [EMAIL PROTECTED]Subject: RE: Cost benefit analysis In defense you can say that almost all of the weapons related spending (Procurement and RDT&E budget – almost half of the budget when you consider the spare purchases) is accomplished having gone through some CBA in the process of deciding the approach to develop, procure, and then maintain the equipment. An Analysis of Alternative is required along with estimates (actually by several layers of organizations). The other source to look at would be the Federal Acquisition Regulations (FAR). This policy drives use of CBA for certain purchases. So you could estimate off of this policy! jdd John D Driessnack, PMP, CCE/A Professor, Defense Acquisition University PMT-250/352, DAU Risk/Tools Subject Matter Expert DAWIA PM, Acq Logi, FM Level III NE-Capital Campus, Faculty Department Program Management and Leadership 9820 Belvoir Rd, Building 205, Room 115B Ft Belvoir, VA 22060-5565 703-805-4655 (DSN-655) [EMAIL PROTECTED] FAX 703-805-3728 -Original Message-From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] Sent: Tuesday, February 11, 2003 11:16 PMTo: [EMAIL PROTECTED]Subject: Cost benefit analysis Does anyone know how often CBA is actually used in making policy? What percent of the federal budget (or state or local) has been determined by CBA?Cyril Morong
RE: Tax cuts and US citizen responses
Despite what you may read in the press, the overall effect of the President's previous round of tax cuts was to make the tax system more progressive, not less progressive. In other words, those with high incomes end up contributing a higher percentage of tax revenues after the cuts than they did before the cuts. Regarding the current round of tax cuts, I would like to see an analysis of the expected net effect on progressivity (not that I am advocate for progressivity). While some provisions make the system more progressive, others make it less progressive, but what is the net effect on progressivity? Walt Warnick -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] Sent: Monday, January 13, 2003 8:51 AM To: [EMAIL PROTECTED] Subject: Re: Tax cuts and US citizen responses In a message dated 1/13/03 7:33:09 AM, [EMAIL PROTECTED] writes: << Can anyone explain why ordinary Americans are not objecting to tax cuts (such as dividend tax cuts) that will only favour the top percentiles of the wealthy ? Koushik >> In absolute terms, the tax cut would favor those with higher incomes (rather than "the wealthy") because those with higher incomes pay much larger absolute amounts of actual taxes. The top half of the income distribution in the US pays almost 100% of the taxes. If the government cuts the amount by which it taxes everyone by the lesser of his or her actual tax and, say $1,000 to simplify, the people paying $1,000 and above will obviously get much larger tax cuts than those paying less than $1,000. Proprotionally, however, everyone playing $1,000 or less gets a larger percentage tax cut (100%) than everyone paying more than $1,000. Someone paying $100,000 a year gets only a 1% tax cut. With my low income--let's say I'd have to pay $200 in tax otherwise--I get a 100% tax cut, which pays for weeks of groceries for me, I don't care that someone who pays $100,000 in taxes get times as large a tax cut as I do. Someone might say, "hey, the rich got a tax cut five times as large as yours" to try to get me angry, but meanwhile I get my100% tax cut and buy my groceries. I'm reasonably happy. If I compare myself at all with the person paying $99,000, I'm envious not of his or her 1% tax cut, but of his or her ability to earn so much income that he pays more in taxes than I earn in income. As a CPA tax-professional at the now-imfamous Arthur Andersen back in the 1980s I often prepared tax returns for clients who paid more in taxes than I earned in salary. :) David Levenstam
RE: Babynomics
For what it is worth to those on the list who are not parents, here is my experience as a parent. Children understand the concept of property before the age of 9 months. Before the age of 12 months, they understand that certain behaviors bring about favorable or unfavorable reactions from parents, which is tantamount to a trade of behaviors between parent and child. (My theory of parenting holds that parents are likely to be happy with the life-long behavior of their child if at the pre-toddler stage the child wants to please the parents; and the pre-toddler is most likely to want to please the parents if the parents (especially the mother) have encouraged an exchange of favorable and unfavorable behaviors.) Also by age 12 months, children can understand exchange of goods; e.g., give up one toy in exchange for a more desired toy; the concept of exchange is more easily grasped by the child than are the words that describe the exchange; in other words, the concept of exchange is more easily communicated by demonstration than by words, as the child's verbal understanding lags behind. Hope this helps those on the list who are not parents. Walt Warnick -Original Message- From: fabio guillermo rojas [mailto:[EMAIL PROTECTED]] Sent: Saturday, January 11, 2003 10:46 AM To: [EMAIL PROTECTED] Subject: Re: Babynomics > > Question: At what can humans engage in economic behavior? Are there > > studies showing when children learn to trade ? > > Fabio > > Humans start to engage in economic behavior as soon as they are born. > Trade is not a necessary characteristic of economic behavior. The issue is > rather whether infants are consciously choosing their actions. It seems to > me that the genetic basis for behavior is the same in an infant as in an > adult. > Fred Foldvary I think this is a vacuous answer. By that logic, animals are economic actors - animals seem to choose their actions. Perhaps, then, my original question was vague. The question I have is: when do humans start to engage in *sophisticated* economic behaviors not found in animals? For example, at what age are children able to understand the concept of interest? At what age do children understand that exchange can make you better off? Fabio
RE: (book review)The Case against Government Science
Francois-Rene Rideau reads much more into the discussion than was said. Except for 1) his incorrect inferences about my views about topics important to economics, 2) improperly paraphrasing what I wrote, and 3) the name calling, I agree with his points, and always have. As for being part of a statist economy, I plead guilty, along with many other members of this list whose salaries come from government schools, private schools sustained by government funds, and government agencies. It may be presumptuous of me to speak on behalf of those of us who are part of the statist economy, but I suspect that we would rather be judged by what we write or do (more precisely, which future among achievable alternatives do we help to create), than on where we work. Perhaps an analogy might help. In 1993, a popular movie was made about Oskar Schindler, who was a member of the Nazi party and a profiteer during World War II. But this is not why the movie was made; rather, the movie was made because Schindler saved lives; i.e., he created a future that was much preferred over achievable alternatives. While none of us on this list face anything like that degree of risk, my guess is that, with few exceptions, those on this list have consciously risked careers and opportunities to help create a future more consistent with the themes of this list. Walt Warnick -Original Message- From: Francois-Rene Rideau [mailto:fare@;tunes.org] Sent: Thursday, October 17, 2002 9:52 PM To: [EMAIL PROTECTED] Subject: Re: (book review)The Case against Government Science On Tue, Oct 15, 2002 at 11:28:04PM -0400, Warnick, Walt wrote: > Anecdotal evidence abounds to show that basic research selected and funded > by the Federal government has produced enormous benefits. [...] I am amazed to find here such a blatant example of the "What is seen and what is not seen" fallacy. The point is not whether government did some good. By that measure, the russians being richer in 1991 than in 1917, we could say that communism was a wonderful experience (please replace by whichever phenomenon you love to hate, that lasted long enough - absolute monarchy? slavery? protectionism? belief in a flat earth? some or some other official religion?). The fallacy is that you don't choose between the past and the future. You choose between several futures. Comparing the state of science in 1950 to the state of science in 1980, and saying "hey, government did great!" is an utter fallacy. What you must compare is the state of science in 1980 under some assumptions to the state of science in 1980 under some other assumptions - and then find which assumption is more favorable. But even then, science is not the only thing to consider so as to judge - and you must consider other factors, too. When comparing benefits, you must compare the cost - and time itself is part of the cost; it is a resource that could have been used in different ways. Said other wise: only choices matter. The only costs are opportunity costs, and so are the only benefits. > Determining an optimal level of funding for basic research is a problem that > has not, so far, yielded to analytic solution. Rather, setting levels of > research is an entirely political process. In recent years, NIH has been > growing by leaps and bounds. You speak like a technocrat: your discourse is full of anerisms, and false solutions to false problems. The emptiness of your discourse is directly tied to your statist point of view (see the origins of the word "statistics", e.g. in the recent book "Damn Lies and Statistics"). Statist economy is an intellectual fraud, and I'm afraid you're part of it. I thought this mailing-list was precisely about showing how the praxeological "economist" point of view applies to all fields of human action. I suppose it also shows how statist economists may invade just any field of knowledge, so as to further their sick memes. [ François-René ÐVB Rideau | Reflection&Cybernethics | http://fare.tunes.org ] [ TUNES project for a Free Reflective Computing System | http://tunes.org ] There is no such thing as a "necessary evil". If it's necessary, then it cannot be evil, neither can it be good: it's a datum.-- Faré
RE: (book review)The Case against Government Science
Yes, such unpredictable paths occur all the time. For example, Alan Cormack won the 1979 Nobel prize in physiology for his work which underpins computer reconstruction of CAT scans and MRI. Cormack's original purpose had nothing to do with physiology; rather, his purpose was to analyze data from particle detectors in the field of high energy physics. See http://www.osti.gov/accomplishments/cat.html Walt -Original Message- From: john hull [mailto:[EMAIL PROTECTED]] Sent: Tuesday, October 15, 2002 8:16 PM To: [EMAIL PROTECTED] Subject: Re: (book review)The Case against Government Science That's not to say that basic research is not valuable, but it evidently follows strange and unpredictable paths. The Nobel winning chemist Dudly Herschback traced the path of work starting with Otto Stern 75 years ago on molecular rays (or beams) to test a prediction of quantum physics. It lead to the discovery of the laser, radio-astronomy, and nuclear magnetic resonance which lead to the MRI. Chemists who wanted to study crossed beams layed the groundwork for the discovery of the Buckyball, with the study that discovered it being motivated by studying interstellar spectra. And the Buckyball, in turn, may prove a key to shutting down an enzyme that governs the HIV virus' replication, not to mention the value it has as a strong and lightweight material. He ends the story by noting that, "No funding agency would find plausable a research proposal requesting support on supersonic beams or interstellar spectra as an approach to AIDS. But many such historical paths can be traced that celebrate hybridizing discoveries from seemingly unrelated patches of scientific gardens." -jsh __ Do you Yahoo!? Faith Hill - Exclusive Performances, Videos & More http://faith.yahoo.com
RE: (book review)The Case against Government Science
Anecdotal evidence abounds to show that basic research selected and funded by the Federal government has produced enormous benefits. For example, at the Department of Energy, papers have been prepared over the years to present this evidence, and the compiled papers are now available via the web. See http://www.osti.gov/accomplishments , "a central forum for information about the outcomes of past DOE R&D that have had significant economic impact, have improved people's lives, or have been widely recognized as a remarkable advance in science. An R&D accomplishment is the outcome of past research whose benefits are being realized now." Among the better examples are nuclear medicine and nuclear power, which are both directly traceable to the old Atomic Energy Commission. Other research agencies boast their own anecdotes. For example, government funding was central to development of the internet. On the other hand, there are lots of dead ends, and it is difficult or impossible to show any benefit from the great bulk of basic research projects. Further, the current methods of selecting projects, whether by peer review of proposals or by pork funding, have well known shortcomings. It would seem to be possible to improve the methods by which projects are selected. Bell Labs used a diferent model for science management, and it was highly successful until the money dried up. (The development of the transistor, by itself, would seem to justify all of Bell Labs' expenditures.) Bell Labs found exceptionally trusted and competent science leaders, and then gave them tremendous feedom to direct a program. This was also the model used for the Manhattan Project, but it is little used in government today. Determining an optimal level of funding for basic research is a problem that has not, so far, yielded to analytic solution. Rather, setting levels of research is an entirely political process. In recent years, NIH has been growing by leaps and bounds. Walt -Original Message- From: Alypius Skinner [mailto:[EMAIL PROTECTED]] Sent: Tuesday, October 15, 2002 12:50 PM To: [EMAIL PROTECTED] Subject: Re: (book review)The Case against Government Science - Original Message - From: Warnick, Walt <[EMAIL PROTECTED]> > In the natural sciences, basic research at universities tends to be funded > by the Federal government. > Basic research funded by corporations is very small. > > Walt Warnick This has always been my impression. I suppose a key question here is to what extent basic research ultimately contributes to discovery and invention in applied research. Has anyone investigated this question? ~Alypius Skinner > > > -Original Message- > From: Alypius Skinner [mailto:[EMAIL PROTECTED]] > Sent: Sunday, October 13, 2002 9:26 PM > To: [EMAIL PROTECTED] > Subject: Re: (book review)The Case against Government Science > > > > - Original Message - > From: john hull <[EMAIL PROTECTED]> > > That the expense of cushy jobs for > > okay scientists was more than offset by the gains from > > getting only the best scientists to go to Bell Labs, > > or MIT, or wherever. > > > Pardon my ignorance, but is MIT a private or public institution? (I thought > it was public, but that is merely an assumption on my part.) For that > matter, would not even private universities have enough direct or > indirect government subsidy to blur the lines between "government science" > and private science? Should only corporate science be considered private > science? > > ~Alypius Skinner > > > > The review didn't seem to > > indicate that that was addressed. > > > > -jsh > > > > > > --- Alypius Skinner <[EMAIL PROTECTED]> wrote: > > > > > > > > > > > > > > http://www.cycad.com/cgi-bin/pinc/apr2000/books/ff_govscience.html > > > > > > The Case against Government Science > > > The Economic Laws of Scientific Research > > > Terence Kealey > > > St. Martin's, New York, 1997 > > > 382 pp, paper ISBN 0-312-17306-7 > > > Reviewed by Frank Forman > > > > > > > > > Ayn Rand dramatized the case against government > > > funding of science in Atlas Shrugged, but a > > > dramatization is not evidence. The problem is that, > > > according to standard economic theory, research is > > > almost a perfect example of a "pure public good," a > > > good that once produced can be consumed by all > > > without any possibility of exclusion by way of > > > property-rights delimitation. Such goods will be > > > underproduced in the market, since the producers can > > > capture only the benefits of
RE: (book review)The Case against Government Science
In the natural sciences, basic research at universities tends to be funded by the Federal government. The funds come through grants from a number of agencies, the largest funders being the National Institutes of Health, the National Science Foundation, and the Department of Energy. Much basic research is also conducted by research laboratories associated with Federal agencies. Often, such laboratories are operated and staffed through government contracts. Applied research is funded by both the Federal government and corporations. For example, there is a great deal of applied research done by pharmaceutical companies. Basic research funded by corporations is very small. Once upon a time, Bell Labs, which was funded mostly by AT&T, was arguably the premier basic research institution in the world, but it prospered only because it had an assured revenue source which could afford to support it by virtue of its insulation from competition. The insulation from competition benefitted the relationship with Bell Labs in two ways. First, it meant that AT&T could generate the revenues needed, and, second, it meant that the main beneficiary of the research was AT&T. Once it was determined that AT&T would no longer enjoy such insulation, the decline of Bell Labs was assured. One can argue that the break up of the phone system was a good idea or not, but the effect on the amount of basic research sponsored by that industry is not arguable, and was predictable. The same principles apply to the Electric Power Research Institute. Walt Warnick -Original Message- From: Alypius Skinner [mailto:[EMAIL PROTECTED]] Sent: Sunday, October 13, 2002 9:26 PM To: [EMAIL PROTECTED] Subject: Re: (book review)The Case against Government Science - Original Message - From: john hull <[EMAIL PROTECTED]> That the expense of cushy jobs for > okay scientists was more than offset by the gains from > getting only the best scientists to go to Bell Labs, > or MIT, or wherever. Pardon my ignorance, but is MIT a private or public institution? (I thought it was public, but that is merely an assumption on my part.) For that matter, would not even private universities have enough direct or indirect government subsidy to blur the lines between "government science" and private science? Should only corporate science be considered private science? ~Alypius Skinner The review didn't seem to > indicate that that was addressed. > > -jsh > > > --- Alypius Skinner <[EMAIL PROTECTED]> wrote: > > > > > > > > > http://www.cycad.com/cgi-bin/pinc/apr2000/books/ff_govscience.html > > > > The Case against Government Science > > The Economic Laws of Scientific Research > > Terence Kealey > > St. Martin's, New York, 1997 > > 382 pp, paper ISBN 0-312-17306-7 > > Reviewed by Frank Forman > > > > > > Ayn Rand dramatized the case against government > > funding of science in Atlas Shrugged, but a > > dramatization is not evidence. The problem is that, > > according to standard economic theory, research is > > almost a perfect example of a "pure public good," a > > good that once produced can be consumed by all > > without any possibility of exclusion by way of > > property-rights delimitation. Such goods will be > > underproduced in the market, since the producers can > > capture only the benefits of the research that they > > themselves use. Rational citizens, all of them, > > might very well empower the state to provide for the > > provision of research and other public goods. Not > > every citizen would actually benefit from each good > > so provided, but under a well-designed constitution, > > each citizen would presumably be better off as a > > result of constitutionally limited state provision > > of public goods than without it. This would mean > > unanimity of agreement-a social contract-and hence > > no initiation of force. > > > > But what about government funding of science? Nearly > > every scientific paper, it is true, seems to > > conclude with an appeal for funds for "further > > research," but even so the case for public funding > > is accepted by nearly everyone except a few > > ideological extremists. Along comes a bombshell of a > > book by Terence Kealey, The Economic Laws of > > Scientific Research, that argues that government > > funding of science at best displaces private funding > > and in fact diverts research into less productive > > channels. I am surprised that this book has not > > gotten much more attention from the free-market > > community. > > > > The book is essentially a history of science and its > > funding, with the number of pages per century > > increasing up to the present. The author argues that > > technology drives science, even basic science, just > > as much as the reverse, which is awfully reminiscent > > of John Galt and his motor. Kealey describes the > > work of several engineers and other practical men > > turned scientists, such as Carnot, Torricelli, > > Joule, Pasteur, and Mendel.
