“In a World of Finite Resources We Have to Make Choices”

14 May

Contrary to the ignorant and naive (to put it gently) beliefs of people like Michael Moore, we do not live in a world of infinite resources.  Time, money, oil, life, whatever, all finite resources.  This is a fundamental tenet of Economics, so for those of you even remotely familiar with the field, feel free to ignore the following, as it is intended for those who flap their jaws making normative proclamations as if we lived in some magical utopia of the infinite.

In the link, above, economist Milton Friedman tears a young (allegedly) Michael Moore a new one, when Moore asks (in the form of a statement, a curious approach) how Ford isn’t wrong for deciding that spending $13/vehicle to make the Pinto (presumably) more safe would cost more than paying any lawsuits from (wrongful?) death lawsuits.  Let’s put aside for a second Moore’s assertion that “Ford produced it knowing full-well that in any rear-end collision the gas tank would blow-up,” based of an “internal memo” which was later revealed to have been nothing of the sort, or any of the other “facts” he states which were all easily refuted.

A simple fact of life, as economics teaches us, is that not only are resources finite, but as Friedman says in his reply to Moore, “these things are a little more subtle and sophisticated than you were at first led to believe. You can’t get easy answers along this line.”

Coincidently, I read about a real-life example of a problem similar to the (semi-imagined) one faced by Ford (according to Moore).  The fundamental question we – and Friedman – need to consider is whether in a world of finite resources, Is Reducing Risk Always Worth the Price? This is exactly the question Los Angeles citizens and politicians have been asking themselves for years over potential LAX runway reconfiguration plans which would reduce the number of deaths caused by runway accidents.

Barnett’s panel looked at three options: leaving the runways as is with the landing plane crossing the takeoff runway at an acute angle, moving them 100 feet farther apart and adding a third center taxiway that would enable the landing plane to cross the takeoff runway at a 90 degree angle, and moving them 340 feet farther apart and adding the center taxiway.

Using actual pilots and controllers, the panel did simulations and came to the conclusion that LAX’s north airfield was extremely safe under the current configuration with the risk of a passenger death caused by a runway collision being 1 in 150 million. But, separating the runways by 100 feet would reduce that mortality rate by 40 percent, and separating the runways by 340 feet lowered the mortality risk by 55 percent.

The panel’s conclusion? Don’t bother.

“If a number is incredibly small, reducing it even by 50 percent might not mean that much,” Barnett says.

In the last decade, 750 million passengers flew in or out of LAX. During that time there were five deaths caused by runway accidents and 75 deaths by other accidents, for a total of 80 deaths. Reducing the number of runway accident deaths by 40 percent lowers the actual number to 3 deaths, which, added to the 75 deaths by other accidents, brings total deaths to 78. Thus, the runway reconfiguration would save two lives in a decade.

I’m not one of those cold-hearted actuaries who use  opaque (to most) mathematical formulas to figure out the value of a life.  Quite the contrary, all it takes is a few seconds of putting yourself in the shoes of someone who’s lost someone to understand the very real sadness, grief, and suffering associated with death, a feeling I’d prefer none of us ever had to experience, were it possible. Unfortunately, death is not only possible, but inevitable, and we’d be only fooling ourselves to think otherwise, explicitly or implicitly.  The resources we use to prolong life/prevent (untimely) death both finite and scarce, but in using them for such, have a non-zero opportunity cost.

“If it costs a billion dollars you might say, ‘Might we not be able to spend a billion dollars in ways that might save more lives?” he says, suggesting improving highways or funding cancer research as possibilities. “In a world of finite resources we have to make choices.

“Air travel has become so safe that attempts to improve it marginally may not pass a cost/benefit test,” Barnett says.

People like Michael Moore live in a fantasy land where the production possibilities curve simply does not exist.  In such a world, we’d have unlimited money, time, labor, land and raw materials with which to update the runway layout to save those two precious lives/decade, but unfortunately – with my most sincere apologies for bursting the bubble of anyone still suffering from Moore’s particular set of delusions – such is not the case.

If you still don’t understand why, give it another read while not high or tripping on shrooms.  If, after doing so you’re still not convinced, please disconnect and go live on a hippy commune and leave the rest of us alone.  If you couldn’t tell, we have enough with which to deal without your ignorant rants/protests/vigils/etc.  Thanks in advance!


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