I just finished reading the book Retaking Rationality: How Cost-Benefit Analysis Can Better Protect the Environment and Our Health, which lays out a convincing argument for why progressives should be embracing cost-benefit analysis instead of refusing to engage with the process on moral principle. It serves as an action plan for environmentalists to push for the reform of the federal government's approval process for environmental and safety regulations.
Since Ronald Reagan's 1981 Executive Order 12,291 established the requirement for a cost-benefit analysis for all proposed regulation, the process has been defined and dominated by an anti-regulatory approach. The assumption has been that all regulations are overreaching and overly stringent, so cost-benefit analysis should serve as a check to that power by making agencies prove that a proposed regulation will not place an undue economic burden on the affected group. The assumption that regulators are power-hungry empire builders is a false narrative that industries and small government ideologues have developed to vilify those that are trying to protect the American people and our environment. Environmental, health, and safety regulations are often times the only resource for the less powerful to be protected from those without our best interests in mind - the actual power-hungry empire builders: corporations.
When corporations are told that they need to put the public good above their bottom line, they feel their freedom to make as much money as possible is being infringed upon. So, since Reagan's presidency, industry has pushed for less and less regulation in the name of economic growth above all else. They have rationalized this process through cost-benefit analysis by assigning costs to things that are not currently traded in our economy, i.e. the cost of a human life. The cost to industry to implement a safety regulation is balanced against the benefits of the regulation, usually in terms of the monetary value of the number of lives saved. If the costs are more than the benefits, the regulation is not implemented.
There are obvious moral problems with assigning an economic value to intangibles such as 'life' or 'the beauty of nature' - which is why progressives have historically dismissed the very practice of cost-benefit analysis. However, for the past 30 years this is the way that decisions have been made about how our health and environment are being protected. By removing ourselves from the debate on moral grounds, we have ceded the development of the methodology of cost-benefit analysis to the anti-regulatory crowd. This has led to an imbalanced process where the costs of proposed regulations are vastly overstated and the benefits are grossly underestimated. Those undervalued benefits need to be more accurately represented by changing the methodology used to calculate values, such as 'clean air to breathe.' When the formulas and surveys used to establish these values have been developed by the people who don't want regulations to pass, it's no surprise that fewer stringent regulations will pass cost-benefit analysis tests.
By refusing to engage in the process, we lose the ability to argue rationally for protecting our health and environment. Pro-regulatory groups can be written off as tree hugger activists or as big government zealots if they aren't speaking the same language of economics as anti-regulatory groups. If the current system were reformed, we could get rationality back on our side by showing that the actual value of protecting our health and environment is much higher than has been previously represented in regulatory equations. For example, it is common when calculating the costs of a regulation to include any unintended risks that may result from implementing the regulation. However, unintended benefits are rarely included. This is not rational, and this methodology must be reformed to adequately reflect the actual effects a regulation would have. There are many, many institutionalized practices such as this that make no logical sense, yet are being used to make critical decisions about which regulations are implemented. If pro-regulatory groups push for reform of these types of obviously irrational methods, a more balanced system can be developed.
While some may advocate for the all-out elimination of cost-benefit analysis, this seems unlikely and irresponsible. It is unlikely because our society, for better or worse, is currently structured around economic valuation - if you can't put a price on it, it doesn't have value in our marketplace. It's irresponsible because elimination of cost-benefit analysis has been the approach of environmental groups for 30 years, and the lack of involvement in its development has had tragic consequences for the implementation and stringency of regulations.
Cost-benefit analysis seems to be here to stay, so we should sit down at the negotiating table instead of ceding victory by default.
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