From The New Central Planners:
To disguise the value judgments inherent in their regulatory agendas, economists and policymakers justify their proposals as hyper-rational, politically neutral responses to "market failures." To prove these proposals enhance economic efficiency and societal welfare, they produce "cost-benefit analyses." Free markets and price signals work better, they tell us, when we embrace their recommended taxes, subsidies, and mandates. Any rule that requires $1 million of equipment to reduce by 1% the risk of death for 100 people is just common sense; one requiring $1 billion of equipment to reduce by less than 1% the emission of carbon dioxide for one year is the only responsible choice.
All this may be true on classroom blackboards and in abstract computer models. But technocrats armed with sharpened pencils and boundless egos tend not to calculate reliably which market prices are "too low" or which resource re-allocations would produce benefits that exceed costs. The easy recourse to the language of market failure — the claim that somewhere some social cost is going unpaid — reflects a subjective policy preference when we do not know the cost's size or incidence, the extent to which it is unpaid, or what countervailing benefits might be lost through a correction. A cost-benefit analysis that summarizes how many "lives" a rule will "save," how many "jobs" will be "created," and how much these achievements are "worth," is little more than marketing propaganda when the terms are unhelpful abstractions and the estimates unreliable.
