The Strange Distorions of Cost-Benefit Analysis

In my book, Manufacturing Consent, I described how business-friendly forces have pushed to eliminate any regulations that cannot survive cost-benefit analysis, where virtually all non-monetary benefits are dismissed and those that are counted are low-balled, which the costs to business are overestimated. In the beautifully-named GWOT (Global War on Terror), the costs of actions are ignored while the benefits are greatly magnified. Here is Dick Cheney’s take on this.

Suskind, Ron. 2006. The One Percent Doctrine: Deep Inside America’s Pursuit of Its Enemies Since 9/11 (NY: Simon and Schuster).

61: Cheney sat for a moment, saying nothing. “We have to deal with this new type of threat [that Pakistani scientists were helping Al Qaeda build a nuclear bomb] in a way we haven’t yet defined,” he said, almost to him”

62: “With a low-probability, high-impact event like this …. I’m frankly not sure how we engage. We’re going to have to look at it in a completely different way” “If there’s a one percent chance that Pakistani scientists are helping al Qaeda build or develop a nuclear weapon, we have to treat it as if it is a certainty in terms of our response,” Cheney said.

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