Toward the end of class a discussion began to take shape over whether government institutions should be held to a metric of economic efficiency to measure their success. I was suggesting that the success of a program or agency should be measured by how effectively in fulfills its legislative mandate, e.g., how effectively the environmental protection agency protects the environment, how effectively the department of education educates K-12 public school children, etc.
Mr. Kil’s suggestion—that public and private are always inevitably locked in a struggle for scarce resources—needs to be taken seriously. Should not economic efficiency provide at least part of the rationale for the success of public institutions?
My answer is that economic efficiency should provide at least part of the rationale, if (weak), and only if (strong), economic efficiency is among the criteria of measuring the success of a legislative mandate. Thus, for example, it makes perfect sense for economic efficiency to be included in the criteria measuring the success of recovering penalties from corporations that conceal capital gains from the government. It also may make sense to make economic efficiency a criteria for bidding for public projects (quality and timeliness of project completion relative to cost).
However, if a legislative mandate is passed for, let’s say, ensuring that public schools are adequately funded—including a set of reasonable achievement-based benchmarks backed by sound research—then does it make sense to fold economic efficiency into these achievement-based criteria? No one doubts that we can “educate” children for less. Questions arise when the verb “to educate” is held to represent a clearly-defined set of skills and knowledge whose conditions bear a price-tag above the “market rate” for education delivery systems.
Over two millennia ago, Aristotle already identified the slippery slope down which we begin to slide when (his examples) courage, or medical capability, or winning a war are subjected to an economic metric. Everything does have a price. But some things are still “priceless,” notwithstanding Gary Becker’s objections to the contrary.