Suppose youíre out for a stroll one evening. A scruffy-looking stranger approaches you and says, "Hand over all your valuables, and make it snappy."
"Is this a stick-up?" you gasp, stupidly.
"Why, no," says the stranger, "itís merely the result of a cost-benefit analysis I just performed. I saw you come out of that nice-looking house over there, with the late-model car in the driveway. Youíre pretty well dressed, and thatís a nice Rolex youíre wearing. By comparison, the rentís overdue on my grungy apartment, my 12-year-old car needs its engine overhauled, my bank accountís overdrawn, and just look at these worn-out clothes Iím wearing. I estimate that the benefit to me of having your valuables outweighs the cost to you of losing them by at least two to one. So hand them over."
If the robberís logic wins any points with you, then Iíve got a new government program to sell you. Itís called national child care. Of course, itís not really new, but with all the recent talk about the "fiscal dividend", we can expect to see renewed hoopla over it in coming months.
An opening salvo was fired in March, 1998 with the publication of a study entitled "The Benefits and Costs of Good Child Care" by the University of Torontoís Centre for Urban & Community Studies. This study made national headlines because of its dazzling cost-benefit analysis. An expenditure of $5.3 billion on child care, it said, would generate benefits to children and parents of $10.6 billionóexactly double. Such a program should therefore be looked upon not as an expense, but rather as an "investment."
Unfortunately, the authors of the study make the same fundamental error as my fictitious robber. A cost-benefit analysis makes sense only when the costs are incurred and the benefits are received by the same person. If costs are inflicted on one person while benefits are reaped by someone else, it is simply impossible to say whether the world has been made a better place. For the person receiving the benefits, things have improved. For the person bearing the costs, things have deteriorated. But there is no way to measure the absolute quantity of either personís happiness.
Individuals can rank their preferences (having more money usually ranks higher than having less), but they canít quantify them. There are no units of satisfaction or contentment. Using dollars as proxy measuring sticks doesnít help, because each additional dollar a person acquires adds less to his well-being than the previous dollars. You canít measure something when the measuring stick itself continually alters in size.
If you canít measure one personís quantity of happiness, itís even more obvious that you canít compare quantities of happiness between different people.
Economists have recognized these concepts for years, yet some people insist on fudging the issue by speaking of costs and benefits to "society", as if we were The Borg of Star Trek fame, all controlled by a single communal brain, all willingly subordinating our individual personalities and goals to the will of the collective. We arenítóat least, not yet. (One canít help wondering, however, whether the push towards government control of the countryís children at ever younger ages reflects proponentsí desire to achieve a state of Borg-like submissiveness.)
The fact is, some people would be net beneficiaries of national child careóprimarily families with young children in which both parents wish to work outside the home. Other people would be net payersónamely, childless taxpayers, families with older children, and families who prefer to have one parent provide care to pre-schoolers at home. There is no fair, just or moral case to be made for harming the second group in order to indulge the first.
The study contains a second fundamental flaw. In computing the cost side of the balance sheet, the authors fail to include any estimate of the advantages that would accrue if the same $5.3 billion were spent on something other than child care. Somewhere out there, toiling away in some laboratory, there is undoubtedly someone who could make a plausible case for "investing" $5.3 billion on his own pet project--perhaps a cold fusion machine. If he were successful in inventing such a device, the benefits to mankind would be incalculableófar more than the paltry $10.6 billion that child care would supposedly produce.
The point is, there are always competing uses for any resource. In deciding how to invest resources, you donít look just at the potential returns from a single alternative. You compare the expected returns from many different alternatives.
We donít know what alternative uses taxpayers would find for their money if we simply gave it back and let them invest it themselves, instead of spending it collectively. We canít calculate the benefits their myriad individual projects would generate. We do know, however, that taxpayers would probably prefer this to all other alternatives. Otherwise, we wouldnít have to force them to pay their taxes on pain of imprisonment.
Thereís no space left to discuss the other dozen good reasons for opposing national child care. However, if itís going to be as effectual as the public school system, letís nip it in the bud.