I've just about had it with Opportunity Cost arguments...
Even the Guardian annoyed me this week with its "...How many nurses and teachers and firefighters can we get for Stephen Hester's bonus..." crap. This is really cheap, hacking journalism because things just don't work that way, do they? If they did, then Osborne or Cable or Dave would have simply sacked Hester (but they couldn't because that's not how it works either), employed another twenty-five teachers and scored a media victory that would be forgotten in five minutes or until they attempted to sack another quasi-public servant.
| Hester's Bonus Equals How Many of These? |
That's how ridiculous the opportunity cost argument is, and will always be. Because it's not about value...it's about relative value. And the relativity is more often than not completely arbitrary depending upon who is making the relative comparison. OK, the monetary value of Stephen Hester's bonus would (after tax) be sufficient to pay the salaries of a few dozen key public sector workers. But Hester's bonus, should he choose to eschew it, would not automatically be returned to the public purse and Hey! Presto! there's fifteen nurses and ten primary school teachers the following day. Most of our politicians believe that the opportunity cost argument plays well with the electorate, and I don't blame them for thinking this because we all use the argument from time to time. For example, I've just paid three hundred pounds to get my car serviced. For three hundred pounds I could have bought groceries for four weeks thus ensuring that, for the month of February, I wouldn't starve. What isn't included in that specious argument is the real chance of my brakes failing on the moor road over to Alnwick in the snow that has just fallen tonight with the sure and certain outcome of death from the plunge into the boulder-strewn valley two hundred feet below. The one thousand pounds that I chose not to pay for life assurance premiums in order that I could buy a new i-Mac would then seem to have been a poor opportunity cost decision.
Notwithstanding these arguments, there is a place for opportunity cost, but only in the outrageousness of the relative and presumed value of some things, like:
1) Stephen Hester's Salary (not bonus) would cover Wayne Rooney's wages for about five matches. This isn't really an opportunity cost argument in view of the unlikelihood that Hester would ever put on a Manchester United shirt (in order to play for Ferguson as opposed to just dressing up) and the even more ridiculously unlikely scenario of Rooney being appointed as a CEO of a public company or a state owned bank (although that might prove to be hilarious in these miserable times). The obscenity of Premiership footballers' wages is...let me see now...er, obscene? The value, relative or otherwise, of Hester's contribution to the nation compared to that of Rooney might well be open to debate but for the latter to paid more than six times that of Hester and, while we're on, five hundred nurses worth, seems to me to be utterly fucking nuts.
2) The equally utterly incomprehensible daubs, structures and "installations" by the likes of Hirst and Emin and other GBAs, sell for millions of pounds. Madness. I don't blame the "artists". Good luck to them. If the idiotically rich arseholes that are prepared to pay that sort of money just so they can own something that some other stupid billionaire jealously desires, get a kick out of it, then who am I to judge. Well, I'm the "man in the street" that wants to judge. Here's one of the few instances where opportunity cost makes a bit of sense. A painting, or a bird on a stick, or a pile of soiled bed linen or a white brick on a white floor in a white room attracts a rich bastard's cheque book for no other reason than to prove that his or her cheque book is bigger than someone else's. That's not art. That's just showing off. Why don't they 'show off' by paying the wages of fifty nurses or firefighters? It might make some other stupidly rich twats pay for the wages of one hundred nurses or firefighters just so they can show off even more. Or maybe buy three lifeboats. Philanthropy isn't quite dead yet, but it's on life support, as far as I can see.
3) The law. If you have ever been in a situation that has required legal advice and paid the fees that are associated with it then you will know about opportunity cost. And the opportunity you will have wished for is, usually, to have not sought legal advice. Law is important. It underpins society in many ways. It protects citizens and deals with those that operate outside of it. But for both private citizens and bodies corporate it is just so unimagineably and unconscionably expensive! Lawyers, on the whole, cannot afford to have a conscience and this leaves them able to afford everything else (including silly works of art and, if we're lucky, lifeboats and firefighters). The law appears, to the lay person, to operate to serve itself. One precedent leads to another, etc., and thereby, one lawyer leads, inevitably to several more to argue the precedents that each have established beforehand. Big fleas have little fleas, upon their backs to bite them; little fleas have smaller fleas...and so on...ad infinitum. The opportunity cost argument is lost when it comes to the law, because the cost is as unfathomable as the opportunity might become and therefore cannot be calculated in the spurious currency of nursing or firefighting...
4) Finally, The Department for International Development is the subject of one of the most trenchant arguments on opportunity cost. The UK Government commits hundreds of millions of pounds each year to DFID, which is spread around the globe on "worthy" causes in the "Third World". The "Third World", these days, includes some former and current UK Commonwealth countries with a GDP that we'd probably kill for ( and probably do) and, here and there, nuclear weapons capability. Oh, and poverty. It's probably the one and only macro-economic opportunity cost argument that makes any real sense. The dispensation of aid to some of these nations is pointless, occasionally dangerous and serves little purpose bearing mind that the majority of it is spread around for political capital and a lot of the money simply lines the pockets of despots and warlords. And it would pay for few hospitals, let alone the nurses to work in them, and most of the fire and rescue service and quite a few lifeboats.
Whilst I've had it with Opportunity Cost arguments generally...there are a few that make sense. So I don't rest any case here. I just think it's too easy for Government and Opposition to use the arguments to score political points and we should be wary of things like the Hester Bonus / Nurse arguments that may add up on the front page of the press but don't stack up at all in the real economy.
There - I've gone all serious. This could be the end of the blog....for ever.
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| Opportunity Cost Finally Explained... |
3) The law. If you have ever been in a situation that has required legal advice and paid the fees that are associated with it then you will know about opportunity cost. And the opportunity you will have wished for is, usually, to have not sought legal advice. Law is important. It underpins society in many ways. It protects citizens and deals with those that operate outside of it. But for both private citizens and bodies corporate it is just so unimagineably and unconscionably expensive! Lawyers, on the whole, cannot afford to have a conscience and this leaves them able to afford everything else (including silly works of art and, if we're lucky, lifeboats and firefighters). The law appears, to the lay person, to operate to serve itself. One precedent leads to another, etc., and thereby, one lawyer leads, inevitably to several more to argue the precedents that each have established beforehand. Big fleas have little fleas, upon their backs to bite them; little fleas have smaller fleas...and so on...ad infinitum. The opportunity cost argument is lost when it comes to the law, because the cost is as unfathomable as the opportunity might become and therefore cannot be calculated in the spurious currency of nursing or firefighting...
4) Finally, The Department for International Development is the subject of one of the most trenchant arguments on opportunity cost. The UK Government commits hundreds of millions of pounds each year to DFID, which is spread around the globe on "worthy" causes in the "Third World". The "Third World", these days, includes some former and current UK Commonwealth countries with a GDP that we'd probably kill for ( and probably do) and, here and there, nuclear weapons capability. Oh, and poverty. It's probably the one and only macro-economic opportunity cost argument that makes any real sense. The dispensation of aid to some of these nations is pointless, occasionally dangerous and serves little purpose bearing mind that the majority of it is spread around for political capital and a lot of the money simply lines the pockets of despots and warlords. And it would pay for few hospitals, let alone the nurses to work in them, and most of the fire and rescue service and quite a few lifeboats.
Whilst I've had it with Opportunity Cost arguments generally...there are a few that make sense. So I don't rest any case here. I just think it's too easy for Government and Opposition to use the arguments to score political points and we should be wary of things like the Hester Bonus / Nurse arguments that may add up on the front page of the press but don't stack up at all in the real economy.
There - I've gone all serious. This could be the end of the blog....for ever.
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