Miles Kimball would like to find out the truth about infrastructure projects. The truth about infrastructure projects? What does he mean by the truth? According to his post, he would like to discern whether any given project is A. super solid from a cost-benefit perspective or B. a shiny bauble for voters or C. more crony capitalism. Hmmm... there's got to be a more efficient way to describe this truth... right?
Maybe like so...
Kimball would like to discern whether any given project is A. super solid from a cost-benefit perspective or B. not super solid from a cost-benefit perspective.
Which is basically the same as...
Kimball would like to discern whether any given project is super solid from a cost-benefit perspective.
Is this how you would describe the truth that you would want to know? Personally, I think I'd say something more like...
I would like to know whether any given project is the most valuable use of our taxes.
Do Kimball and I have the same definition of truth? Is his cost-benefit standard the equivalent of my most valuable use standard?
Perhaps Kimball would give a thumbs up to some project that was the second most valuable use of our taxes. I sure wouldn't. Why in the world should I settle for the second most valuable use of my taxes?
In order to define and grasp "value"... let's imagine Kimball seeing this blog entry of mine. What would go through his mind? Would it be fundamentally different than what went through my mind when I saw his blog entry? When I saw his entry I thought to myself... "Is responding to Kimball's post the most valuable use of my time? Is it really worth the opportunity cost?" Well... here I am so you know how I answered the question! Clearly I was willing to sacrifice the alternative uses of my time which means that I valued them less than I value this use of my time. This, right here right now, is the most valuable use of my time.
Whether a project is as small as a reply to a blog post or as large as the Great Wall of China... the real truth of its value can only be determined by giving everybody and anybody the freedom to decide for themselves whether it's worth the opportunity cost. The fact of the matter is that we can only derive the truth via earner valuation. Earner valuation is the epitome of inclusive valuation. It's where everybody can put their own money where their mouths are. The truth of a project is the sum of everybody's valuations. It's the aggregate of valuations. The more valuations that are left out... the greater the departure from the truth. Our public sector, which is a command economy, fails because nearly everybody's valuations are left out.
What if Kimball decides that replying to my post is the least valuable use of his time? Do I have to like the truth of his valuation? Nope. But even if I could I wouldn't override his valuation. This is because it's all kinds of awesome that the only way I could possibly change his valuation is by sharing whatever information I have that leads me to believe that he's making a mistake.
Truth be told, I'm guessing that Kimball will not post a blog reply to this entry. There's a lot of evidence which supports my guess... but sharing this one piece should suffice...
The Inadequacy of the Opportunity Cost Concept
In that blog entry I really encouraged the liberal economist John Quiggin to address the same points that I'm making here. But if you look through his blog... you won't find a reply. We could have had a nice and friendly public debate about discerning the truth of public projects but he decided not to show up.
If Quiggin was willing to forfeit... then I'm pretty sure that Kimball will also forfeit. If both Quiggin and Kimball forfeit... then so would Paul Krugman.
They won't be able to hide their forfeits forever. As more and more people notice their reluctance to publicly debate a pragmatarian... liberals will start to doubt their economic champions. Eventually their champions will have no choice but to defend their faith in exclusive valuation. Their defense, which has to be flimsy, will make it abundantly clear why their first choice was to bravely run away. If their defense was truly strong then their first choice would have been to stand their ground.
Perhaps you're wondering whether they'll even see this post. Please feel free to bring it to their attention. If you do so then you can be absolutely certain that they'd really prefer not to publicly highlight their absurd assumptions.