Freeman

WABI-SABI

Um, Scarcity?

MARCH 06, 2014 by SANDY IKEDA

The new mayor of New York wants to make city streets safer. According to The New York Times:

Mayor Bill de Blasio on Tuesday unveiled a sweeping set of proposals aimed at improving street safety in New York City, pledging considerable police resources and even precious political capital in Albany to a most ambitious goal: eliminating traffic deaths.

Not just lowering traffic deaths, mind you. Eliminating them.

I posed the following question to my students: If His Honor did manage to eliminate all traffic deaths in the city, how might that policy actually raise the total number of deaths? The answer lies in understanding a very basic lesson in economics: Scarcity matters.

What Is Scarcity?

Scarcity is what gives something economic value. Scarcity results when our wants exceed available, want-satisfying resources. The air we breathe outside is ordinarily not scarce, while the air we need to breathe underwater usually is. Consequently, to those who want air to breathe, the value of outside air is low while the value of underwater air is high.

Although we are often tempted to ignore scarcity, it’s impossible to escape its consequences. For example, there are not enough hours in a day to consume as much leisure as I want and also to earn as much income as I want. But the more I work the less time is left for leisure, and vice versa. Scarcity entails trading off some ends for other ends.

Now, if I’m spending my own private resources to pursue ends of my choosing—to buy a shirt for myself or a gift for someone else—scarcity is hard to ignore. But it’s much easier to overlook if I’m spending someone else’s valuable resources—when someone else is footing the bill. And because modern governments sustain themselves precisely by spending other people’s resources (acquired through taxation or inflation), public officials are far more likely to ignore scarcity and its consequences than a private person is. They may not be aware of the costs of a choice, but those costs always fall on someone, somewhere.

I argued recently that you can almost define economics as “the science that explains why passing a law won’t get it done” because the unintended consequences of a government intervention tend to frustrate what its advocates want to achieve. In that essay I emphasized how an intervention generates unintended consequences because society is so complex. But often the problem is simply that public officials ignore the existence of scarcity. If they spend more of the government budget on traffic control, that means spending less on preventing violent crime, and they may not like the results.

Political Rhetoric or Social Science Fiction?

So when I read about de Blasio’s plan, it caught my eye. The article goes on to say:

The 42-page plan is rooted in a Swedish street safety approach known as Vision Zero, which treats all traffic deaths as inherently preventable. Perhaps the most significant changes involve the New York Police Department, whose officers will increase precinct-level enforcement of speeding.

I’ve developed a soft spot for Sweden lately because it has taken major steps at the macroeconomic level toward a freer economy.

We here in the United States should learn from these steps. So I visited the website of Vision Zero and found much to like in their approach, which tries to take into account the imperfection of human behavior. They claim that safety in Sweden has improved, presumably as a result of Vision Zero.

The trouble begins when you look closely at the underlying philosophy.

The first is the idea that “no loss of life is acceptable” if it’s caused by traffic. But why stop there? Why should traffic deaths be less acceptable than deaths by poisoning or by drowning or from the flu or from a myriad of other causes? The same arguments they make for eliminating traffic deaths could be made for those. But Vision Zero doesn’t make them, perhaps because if they did it might direct scarce resources away from their pet project, or because at some level they realize that it’s too costly to eliminate all accidental deaths.

Second, Vision Zero places the bulk of the responsibility for safety not on the imperfect driver or pedestrian but on the less imperfect “professionals” in charge. Aside from the uncomfortable paternalistic overtones of that attitude, as I explained in the column I reference earlier, making driver “safer” can cause more accidents. In order to minimize accidents, the driver and pedestrian must bear the costs of their actions, otherwise they have an incentive to act recklessly.

At any rate, in each of these cases the VZ folks can’t possibly mean what they are saying because it utterly ignores scarcity. The spokesperson says that people should be able to demand (and presumably get) freedom, mobility, and safety all at once. Since what Vision Zero is purportedly aiming for is perfect safety—which is what is supposed to make the approach novel—then he must also mean perfect freedom and perfect mobility as well. In world of scarcity, that’s fantasy, or to be more precise, it’s social science fiction.

Surely, it’s only political rhetoric. At least I hope so. But there’s another problem with Vision Zero.

Ought Implies Can

If drivers and pedestrians who put their lives at risk still make mistakes, why should we assume that traffic professionals who don’t have as much to lose won’t also make mistakes? They can’t possibly anticipate every contingency, nor would we want them to if the cost is going to be sky high. Everyone makes choices that might contribute to an accident.  But why can’t an accident, even a terrible one, simply be an accident? Why does it have to be somebody’s fault, every time? I think this is wrong-headed. 

I’m not saying that lowering traffic deaths isn’t a good thing. But making it a moral problem, by placing the main responsibility for saving lives on experts, is confused. Morality is related to economy, of course, but probably not in the way its proponents think.

As my colleague Steve Horwitz put it, “Ought implies can.” Economic concepts such as scarcity help us get a handle on what’s possible, the set of feasible choices, from among which we can choose. The “eliminate deaths” approach ignores the feasible and goes right to what we would like to see. Sure, bringing the number of traffic deaths to zero would be great, if it could be done at a reasonable cost. But I can say with assurance that the cost would not be reasonable.

That’s because “pledging considerable police resources” to eliminate traffic deaths necessarily means drawing police and other resources (for narrowing streets or installing devices that will penalize taxis for speeding) away from other areas, such as monitoring thefts or preventing violent crime and so on. In that way, Vision Zero could wind up taking away more life than it saves. The total effect would be an empirical question.

The mayor points out that last year there were 176 pedestrian deaths in the city. That works out to about 2.2 deaths per 100,000 persons, which is significantly higher than the national average of 1.58 deaths. Now, New York City has an above-average number of pedestrians per 100,000 persons, which might explain much of the difference, but it might be a good thing anyway to try to lower that number to somewhere closer to the national average. And that’s where people get uncomfortable with economists because we’ll often talk about the “optimal” number of deaths in such a case.

But when we say something is optimal, we’re not trying to morally justify those deaths. We’re only trying to make it clearer what the realm of the possible is—what we can do. Can we do better with existing resources? Almost certainly; our knowledge is never perfect and there’s always room for improvement. Can we increase government resources by increasing taxation and through inflation? Yes, we can!

That won’t solve the fundamental problem though. Even with a bigger budget, scarcity and the hard choices it entails won’t go away. The sooner real-world governments and their supporters realize it the better.

ABOUT

SANDY IKEDA

Sandy Ikeda is a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism.

comments powered by Disqus

EMAIL UPDATES

* indicates required

CURRENT ISSUE

December 2014

Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
Download Free PDF

PAST ISSUES

SUBSCRIBE

RENEW YOUR SUBSCRIPTION

Essential Works from FEE

Economics in One Lesson (full text)

By HENRY HAZLITT

The full text of Hazlitt's famed primer on economic principles: read this first!


By FREDERIC BASTIAT

Frederic Bastiat's timeless defense of liberty for all. Once read and understood, nothing ever looks the same.


By F. A. HAYEK

There can be little doubt that man owes some of his greatest suc­cesses in the past to the fact that he has not been able to control so­cial life.


By JEFFREY A. TUCKER

Leonard Read took the lessons of entrepreneurship with him when he started his ideological venture.


By LEONARD E. READ

No one knows how to make a pencil: Leonard Read's classic (Audio, HTML, and PDF)