American Life Worth Less Today

I stumbled upon this one a few days ago. Apparently the government places a dollar value, currently $6.9 million in today’s dollars, according to the EPA, on each American life in order to determine whether an environmental regulation yields a sufficient return on investment when compared with the supposed cost to the private market for a regulation. In other words, when considering whether to limit or at what level to limit acid rain producing pollutants or carbon emissions into the atmosphere, mercury into the water, et cetera, the government weighs the cost to industry versus the projected number of lives to be saved by the policy.

Once you get past the appalling nature of applying a dollar value to a human life, this becomes nothing more than a fairly standard cost-benefit analysis, which is used successfully in business all the time. The problem with government managing by these figures rather than with common sense and logic is that numbers, like these, are easily manipulated to achieve an end as charged in this case.

As a businessman, I agree with the practice, but in this case, disagree with the application. I wonder if anyone has considered, in all of the US government’s wisdom, that it might be possible that the mere act of polluting could have severe repercussions, which at present, are immeasurable due to the myriad unknown contributing factors.

Consider the example provided by the author: a hypothetical regulation that costs $18 billion
to enforce but will prevent 2,500 deaths. At $7.8 million per person
(the old figure), the lifesaving benefits outweigh the costs. But at
$6.9 million per person, the rule costs more than the lives it saves,
so it may not be adopted.

Ignoring the fact that the government, as illustrated in this example, expects to pick up the tab of enforcement rather than using the profit motive of the private sector as enforcement, this practice of governing, in my humble opinion, cannot and therefore does not take into consideration the unanticipated costs to the economy such as productivity loss due to illness, natural disasters and other often difficult to predict occurrences. I’d also argue that money spent to alleviate those events, like buying drugs when sick and rebuilding New Orleans after a hurricane (wait, you’re telling me that never happened?), should also be included in the cost because those funds could be allocated to otherwise productive activities, rather than simply digging out of a hole.

A more appropriate approach, would be to govern with logic. If it’s unnatural and harmful to people and the environment, then we should limit the emission of these pollutants into our fragile, unpredictable and irreplaceable ecosystem. All it takes is a bit of faith in human ingenuity and acknowledgment of our own limitations: that we don’t know what we don’t know and that what we don’t know can hurt us. Besides, other businesses, jobs and industries will sprout up to replace "lost" productivity from polluting firms. Don’t believe me? You probably would have agreed that mass production would result in fewer jobs as well.