Monday, June 27, 2005

Workplace Safety

Don Boudreaux responds to a critic regarding the economic approach to workplace safety. Here is the critic's view and then Boudreaux's answer, in part:
Increased safety standards don't necessarily decrease production, if the costs avoided - for example premature death, risk averse behavior leading to less work and so on - are less than the costs of safety standards themselves. They might as well assert that immunization reduces the total production. What safety standards do change is the ability of some individuals to externalize their costs on to other people by health pollution. We should expect the people externalizing costs - that is making money from others misery - to object. But that doesn't mean that their ability to improve their position at the expense of others adds to total productivity.

Mr. Newberry misunderstands the argument. The argument is neither that increased workplace safety has no benefits nor that these benefits are small. Of course there are benefits to increased workplace safety. But even benefits are not free.

To build a sturdier factory, to equip it with more fire extinguishers, sprinklers, and first-aid stations, to ventilate it better – whatever improvements in safety are supplied require resources for their realization. These resources have alternative uses. The value of the goods and services that these resources would have been used to produce were they not used to enhance workplace safety is the cost of enhanced workplace safety.
If you are interested in workplace safety and especially the economics of workplace safety, then Boudreaux's post is worth reading.

I'm thinking Mr. Newberry wouldn't do well on the Economy in Heaven question. He seems to think scarcity is not pervasive here on earth.

No comments: