A Cost-Benefit Approach to Public Policy

Release Date
October 17, 2011

Topic

Lobbying & Special Interests
Description

Dr. Jeffrey Miron at Harvard highlights two different approaches to libertarianism. The first approach, which he refers to as philosophical libertarianism, claims that individuals have rights. These libertarians believe that their rights are often infringed upon by government action, and therefore, are averse to most government action.

The second approach, which Miron spends the bulk of his time discussing, is referred to as cost-benefit libertarianism or consequential libertarianism. This approach attempts to analyze the whole set of effects of a particular policy. In this view, the net consequences of government action that actually occur in the real world are often negative.
Using the example of drug policy, Miron shows that, regardless of your personal views on rights, marijuana prohibition generates a large amount of negative consequences with little or no positive effects.

A Cost-Benefit Approach to Public Policy
Let’s look at all the consequences of various interventionist government policies, and let’s think about whether we think the whole set of effects that we get is positive or negative, aggregated together somehow.
I’d like to talk a little bit about two different versions of libertarianism. The more traditional and probably the better known, people refer to as “philosophical libertarianism.” And very, very crudely put, it’s the notion that people have rights—individual rights to freedom, to liberty—and government policies infringe those rights and therefore those policies are not legitimate or not appropriate, not desirable.
A different perspective, which I call cost-benefit libertarianism or consequential libertarianism, or sometimes just economic libertarianism, says that we don’t necessarily need to talk about rights per se, we should simply say, let’s look at all the consequences of various interventionist government policies, and let’s think about whether we think the whole set of effects that we get is positive or negative, aggregated together somehow. And my claim is that in a huge fraction of cases when you look at all of those consequences, you find that the net consequences that actually occur—as opposed to just those consequences that politicians talk about when they advocate these policies—the net consequences are pretty bad. And, therefore, whether or not you put a huge emphasis on individual rights, you still should come to the view that those policies are not such a great idea. A clean example is drug laws.
A philosophical libertarian might say, I have the right to control what goes on in my own body, so a government policy that outlaws marijuana is illegitimate. It makes it harder and imprisons me even, for just doing something that really only affects me. And that infringes my rights.
A consequential libertarian would say, leave that aside for the moment. The attempt to try to prevent people from consuming marijuana generates a black market, generates crime, corruption, quality-control problems, disrespect for the law, and so on. It has at best a small effect in reducing the consumption of marijuana. So whether or not you think people should have the right to consume marijuana—whether or not you think consuming marijuana is good or bad—if you consider the whole set of things that happen when we try to prohibit marijuana we’re getting a very, very bad combination of effects. And so even someone who doesn’t quite share the philosophical perspective can still come to exactly the same conclusion.