THIRTEENTH ESSAY 11-9-00
Moral Economics - Essays On The Relation of Economic Theory to the Moral
Perspective in POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE.
[www.wfdd.org.uk/]
This is the thirteenth of an occasional series of short essays about how
economic theory interacts with a moral perspective. Readers are invited to
discuss and to re-post widely, but please quote the source. To receive past
essays, please send a private email to: [log in to unmask]
DEVELOPMENT INCLUDES EVERYONE, ESPECIALLY THE DISADVANTAGED
"...disadvantaged individuals, groups, and cultures need to be protected and
supported to engage in the development process, as do disadvantaged
nations...Experience has shown that the use of short-term cost effectiveness
as the ultimate crtierion has generally left the poorest and most
marginalised people waiting in vain for benefits to trickle down to them,
and in this way has contributed to the failure to eradicate poverty."
[POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE, para 5.2]
COST-BENEFIT ANALYSIS FAILS TO PROTECT DISADVANTAGED
Many economists use cost benfit analysis to make decisions about social
policy in the mistaken belief that maximizing easily measurable, short term
benefits will ultimately benefit the society more than other approaches. The
effects of this approach are to concentrate resources on those sectors of
the population that are most likely to show an immediate benefit; as such,
it ties in neatly with the free market approach to decision making and leads
to such business decisions as locating factories in less than subsistence
wage countries with minimal environmental protections while selling the
factory output in developed markets.
The long run effects of such a policy are further environmental degradation,
continuance of a wage gap between developed and underdeveloped countries and
a slow erosion of living standards in developed countries. These costs are
hard to measure and thus difficult to factor into cost benefit analysis;
nevertheless, they are real.
ALL BOATS MUST BE LIFTED IN ORDER FOR THE TIDE TO RISE
An old aphorism says that 'a rising tide lifts all boats'; this is
demonstrably not true in economic development. It is time to turn around the
approach.
The moral approach to economic development protects disadvantaged
populations and countries, even though such protections reduce the
cost-benefit analyses.
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