Thursday, August 23, 2007

Standing and Cost-Benefit

Digression: When did 'cost-benefit analysis' become 'benefit-cost analysis'? The former term is the one with the weight of tradition, but the latter is starting to predominate. Are we economists trying to shuck the label of 'the dismal science' by emphasizing benefits?

Okay, Free Exchange poses the following query:
However, given the extremely high marginal value of money for low-skilled workers in less developed country, and the relatively high standard of living of even very poor people in highly developed countries, might not the redistribution of opportunities for lower-skilled workers create larger overall welfare gains than the redistribution of higher-skilled opportunities? If so, then why should we worry especially about lower-skilled outsourcing? It seems that we shouldn't—unless it is permissible to favor the welfare of our domestic low-skilled laborers over the welfare of even less-privileged foreign workers.

Is it?

Yes, it is entirely permissible for a national government to sacrifice worldwide welfare gains in order to favour their own citizens. In fact, if they weren't doing that, I would be irritated and vote for someone else. People who are not citizens have extremely limited or no standing in terms of CBA, and I agree with that.

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