The “actions speak louder than words” argument is not as strong as it looks: Collective action problems mean individuals cannot show their valuation even if they care deeply. Also, as Olson explained long ago, small concentrated losers organize while diffuse winners free ride. That is why the Bay view homeowners will fight to the death while I will not fight for my share, ie twelve cent gain. Real people facing concentrated loss do not suffer quietly. Maybe I am listening to mike munger too much, but I say that politics and their (its?) transaction costs cannot be ignored. As I recall from chem 1403, there are some/many energetically favorable reactions that don't take place because of the activation energy barrier. it's fatuous to bemoan this, as the kinetics are (is?) just as real as the thermodynamics. so too in political economy.
But the real point of that argument (which curiously enough Bryan has disputed in another context when defending the use of indifference curves by mathematically-oriented economists) is that since outsiders can't directly observe an individual's utility scale, their values can only be reliably inferred from their actions and not from their words. It is an actual payment for acquiring a good that reveals one's preference to others.
If I pay $70 to acquire a pair of jeans, you can immediately infer that at that point in time I preferred those jeans to the $70. I have revealed that jeans occupy a _higher_ rank on my utility scale than $70 does, though exactly how much higher still can't be known to others, since an external observer has no way of knowing for certain how much I was actually willing to pay.
If I claim that jeans are actually worth a very great deal more than $70 to everyone, and argue from that government ought to step in to supply free jeans even to people who can't afford to pay $70 for them, the implication then is that no one will mind the extra taxes or fiat money creation needed to produce the additional (and likely more costly) jeans because jeans happen to occupy such a high rank on everybody's utility scale. But then would my claim that jeans are valuable enough to justify their universal provision be based on any credible evidence? As I noted in another reply, the real shortcoming of such reasoning is connected to the free-riding and to the price-abolition associated with the collectivization of decision-making. This is true regardless of the nature of the goods involved.
Reframing the problem in terms of collective goods instead of the jeans example doesn't alter the underlying problem with collectivized cost/benefit decision-making. In principle, an individual could consent to pay for their _pro rata_ share of the costs of a collective good on the condition that everyone else in some specified group also participates in the contract, so it remains the case that individual action can also signal one's private values with respect to collective goods. It is sometimes the case in closely-knit communities that a formal contract like this isn't required; the risk of gaining a negative reputation as a free rider can be sufficient to motivate near community-wide support for what are in a legal sense are charitable activities for providing a widely-desired collective good to the entire community.
Of course, it is harder to get a larger, more diverse group of people to unanimously or near-unanimously agree on anything, but that simply reflects the fact that overcoming transaction costs is always part of the overall cost of a good, just as creating and enforcing ownership rights (and thus preventing externality problems) are also an inherent part of the costs of producing and consuming goods. A failure to get voluntary consent to paying for a collective good (or to paying for free jeans for everyone, etc.) is prima facie_ evidence that the alleged benefits don't cover all of the costs involved. A person who merely talks about how valuable something has provided neither credible evidence of how valuable the benefits actually are nor any price information that profit-seeking/loss-avoiding entrepreneurs can find actionable.
This is childish thinking. If open borders were a "trillion dollar idea," then people in France, the African Mediterranean countries, Mexico would be forming human chains to prevent the trillion dollar migrants from leaving. Academic economists would get rich by chartering 747s to fly to Haiti, Somalia, and Honduras and auctioning their trillion dollar cargo to the highest bidder.
Nobody on earth practices "open borders." Not Israel, not Singapore, not George Mason University, not the Bryan Caplan household. Even a hypothetical anarcho-capitalist polity would have to screen for sociopathy, communicable disease, hostile takeover, and available living space.
This is pretty feeble. A household is emphatically not a nation or country. A private property has a rightful owner who can legally and validly set limits on who can and can not enter.
Can one adduce any argument to support the bare assertion "A country is owned by its citizens" ?
There are counter-arguments. Where is the title deed to ownership? Which court can one go to to resolve ownership disputes?
And if a country is an owned thing, what is the status of individual parcels of land within the country which are also owned by individual citizens? Can there be a hierarchy of ownership?
That's all sovereignty is, not magic pieces of paper.
Of course it can be clothed in terms like ownership. I occupy a piece of land and exercise dominion over it. I band together with like-minded people and we kick the Redcoats off. Now it's our land not the King's land.
Anarcho-capitalism is really just feudalism (not there's anything wrong with that) and people will still be drawing lines around themselves and telling others they can't come in. Also I've never seen an anarcho-capitalist other than Hoppe acknowledge that in an anarcho-capitalist society there are no immigrants, only owners, tenants and trespassers.
There is simply a lot of dishonesty in this debate on the libertarian and ancap side with the exception of Hoppe, and I apologize if I came across as accusing you of it.
I think a society organized on ownership rather than mercenary democratic government is unavoidably feudal, and that is probably what is coming whether the anarcho-capitalists or the statists want it or not.
Regarding open borders ... there seem to be very few "open borders" proponents who acknowledge the major problems with "open boarders" -- the freeloaders who come for the welfare, the room and board and cash; the criminals who are fleeing their home country; and the refugees who chose to flee trouble, not to come here, don't like what they find here, and the communities they are dumped in have no choice in the matter.
As an example of the refugee problem, there was that city of 60,000(?) in Indiana(?) which had 20,000(?) refugees plopped down with no planning. I don't know what the actual numbers were because both sides were exaggerating for the propaganda effect, including all the stories of eating cats, which may or may not be true, but do not really matter; Even if there were only 1000 refugees dumped in a city of 100,000, that's still too much of a financial shock to absorb easily in a short time. and no "open borders" proponent wants to discuss that.
I have never seen any cost benefit analysis of "open boarders".
I am all in favor of pre-1900 style open borders -- no government handouts, period, and no virtually kidnapped refugees; they come here voluntarily, and they rely on themselves, their families, friends, and community. I think immigrants, both legal and illegal, commit fewer intentional crimes, but the bums and thugs commit more crimes, and the refugees don't care what the local definition of crime is. I believe immigrants, both legal and illegal add to society and the economy, but the bums and thugs intentionally commit crimes, and the refugees don't really care.
Until "open borders" proponents address the bums and thugs and refugees, they are going to lose the cultural war. You can only sweep so much dirt under the rug before people notice.
Bryan still speaks as if massive government subsidies weren't going to illegal immigrants. The zero-support, make it on your own system we had at the turn of the 20th century is not our reality. We in fact have the counterfactual, which is massive subsidies contributing to the societally destabilizing $2 trillion *per year* deficit we have been enjoying.
There's also getting outnumbered in your own town, then getting outvoted, then noise ordinances get changed, and next thing you know, you're getting blasted by a loudspeaker call to prayer at dawn every day.
Valuing equality….and moving to a place with more “equality”….is one thing. But being otherwise perfectly happy where you are, and not wanting that to change (for the worse on net) due to “open borders” is a different thing.
Cost benefit is also not in a vacuum. So in practical terms, if you lived in a place that previously did not have rape and grooming gangs (or sharia law), but now does under the condition of “some” immigration, what might be the cost benefit analysis of the immigration that has occurred to date? And what would be said analysis for a future with even less discerning immigration control?
As they say, drinking water is a net good. Drinking unlimited amounts of water will kill you.
And from a science perspective, if you assert that “open borders” is a net good, burden is on you to prove it. Find or create an entity with open borders to prove that it is all that and a bag of chips, and it would be easier to convince others of your initial wisdom.
How many times does he have to prove it? In terms of previous entities, the US until 1920 and Hong Kong until the Chinese take-over are examples. They both benefitted greatly from unlimited immigration.
That's a fair question and I don't have an answer, or at least not a short one. I was responding to the assertion in the previous comment that intimated Bryan hasn't proved the upside of immigration.
He’s not talking about merely the “upside” of immigration. He’s talking about “open borders” which would mean unlimited and unselected immigration. Burden of proof in a contemporary setting still rests with him for that particular version of immigration.
It is indeed unlimited and unselected. That IS what “open” means in this context.
Yes, in past posts Caplan has indicated he views the Gulf model favorably as a way to get around the inconvenient truth of having a generous welfare state.
Read the blog post again. The upside from immigration is so huge that it's the naysayers who needs to come up with objections beyond "some immigrations might do something bad."
The “theoretical” upsides are huge….says Caplan. That’s not proof. That’s his opinion. That and $3 gets him on a bus.
The actual real-life downsides include rape and grooming gangs, and Sharia law. And that’s not even with “wide open” immigration. So what he’s proposing may have even worse downsides that we’ve yet to see IRL.
Cuz again, he’s not merely proposing “some” immigration. He’s talking about unfettered immigration with zero controls (ie literally open borders, or effectively no borders).
Out of all the "trivial" problems you mentioned, the risk of a terrorist is the least trivial. You acknowledge that your Critics would say a single terrorist attack is worth a trillion dollars in damages. You then say "actions speak louder" than words but proceed again to dance around the elephant in the room and talk about how people don't put their money where their mouth is with regards to income inequality.
Sir, address the elephant in the room! Do people's actions really show that they don't actually believe that a terrorist attack is $1 Trillion worth of bad?
I think critics have a hard time visualizing how a trillion dollar idea would actually bring that value to regular people. They don't understand it'd result in lots of real value for lots of regular people. Like people being able to afford bigger homes, better transportation, better/more AC and heating, being able to forgo environmental damage because you can now afford to replace coal with solar, more childcare workers, more accessible personal tutors, more high end PCs, etc. They think the number going up means merely extra yachts for billionaires, or stuff they don't personally care about like more options for bottles of ketchup in the grocery store.
Critique of Cost-Benefit Overreach: Money, Time, and the Lessons of Immigration and Democracy
Economist Bryan Caplan’s “Cost-Benefit Analysis Crushes GDP” 2025-08-28 argues that bold reforms such as open borders, educational austerity, and deregulated housing should be adopted because they promise trillions of dollars in net social benefits. His framework is unapologetically utilitarian: when the scale of benefits is so vast, critics’ objections amount to mere “rounding errors,” not reasons for hesitancy. At first glance, this cost-benefit reasoning appears refreshingly pragmatic — sweeping aside emotive resistance in favor of clear-eyed efficiency. Yet beneath its simplicity lie significant flaws.
This essay argues that Caplan’s approach suffers from three fundamental errors. First, it grants money an undue and exclusive authority to measure value, thereby distorting what societies choose to prioritize. Second, it privileges today’s measurable benefits over tomorrow’s uncertain but potentially transformative consequences, underestimating path dependence and systemic risks. Third, it institutionalizes humanity’s tendency to undervalue the future, writing off looming dangers as negligible when discounted in present dollars. These flaws are not abstract quibbles. They have real-world consequences, as demonstrated by France’s troubled experience with immigration from North Africa and by the United States’ drift toward plutocratic governance under the influence of money.
Money as the Master Metric
Caplan’s framework elevates monetary valuation as the decisive arbiter of worth. If one cannot attach a “price tag” to an objection, then in his accounting it barely registers. The problem is that money is not a neutral measure of social value but a skewed one, amplifying the voices of those with wealth and marginalizing what cannot be commodified.
Many of the goods societies hold most dearly, democratic legitimacy, cultural cohesion, environmental stability, or equal dignity, resist easy monetization. To insist that every consideration be converted into willingness-to-pay figures is to allow markets, and thereby the preferences of the wealthy, to dictate human priorities. This reduces plural values into economic comparables, erasing those elements of life and governance too sacred or too fundamental to buy and sell.
The American political system illustrates this error dramatically. Formally, the United States remains a democracy where each citizen has a vote. In practice, policy disproportionately reflects the preferences of wealthy elites and organized lobbies. Research by Martin Gilens and Benjamin Page (2014) showed that average citizens’ views have negligible independent impact on policy outcomes, while elites’ preferences track strongly with legislative results. Elections continue, but governance increasingly resembles what might be called government of the money, by the money, and for the money.
This dynamic reflects precisely what occurs when money becomes the defining metric: those with more of it wield disproportionate power, while non-monetary values such as equality, voice, and legitimacy fade from view. When preferences are measured exclusively in money, the rich define outcomes, and crucial human goods vanish into the blind spots of analysis.
Today’s Oversized Power Over Tomorrow
Cost-benefit analysis is attuned to the present because it relies on known prices and near-term certainties. Yet many policy decisions produce effects that unfold across decades, shaped by technological change, cultural adaptation, and institutional evolution. Caplan’s assumption that trillions in immediate gain outweigh modest harms glosses over how temporary today’s background conditions may be.
France’s postwar immigration experiment exemplifies this error. In the 1950s and 1960s, the French state encouraged migration from Algeria, Morocco, and Tunisia to fill urgent labor shortages. The logic seemed airtight: more workers meant industrial output, GDP, and fiscal contributions. A contemporary cost-benefit analysis would have highlighted the clear, short-term net gains.
But history did not stop in the 1960s. Deindustrialization hollowed out the jobs migrants once occupied. The French integration model, built on secular assimilation, clashed with enduring cultural and religious differences, leaving many North African immigrants and their descendants concentrated in disadvantaged banlieues. The long-run result has not been seamless prosperity, but entrenched unemployment, cycles of alienation, periodic unrest, and a growing populist backlash. These outcomes were “invisible” to short-term economic calculations yet now dominate the French political landscape.
Looking forward, the French labor experiment shows signs of worsening rather than stabilizing. Structural unemployment among immigrant communities is likely to deepen as automation and advanced AI and robotics displace jobs across the economy. At the same time, cultural disparities between secular French republicanism and more religious immigrant communities remain unresolved, risking further social fragmentation. With each new generation raised in segregated suburbs (banlieues) where poverty and exclusion are the norm, grievances can harden into enduring identity-based divides. The political consequences will be equally sharp: a feedback loop of populist backlash on the right and alienation on the margins, making immigration not only a social stressor but the central fault line of French politics in the decades ahead.
Similarly, in the United States, the money-driven nature of democratic politics incentivizes leaders to focus on donor needs in the next election cycle rather than structural challenges decades away. Tax priorities, deregulation, and subsidies are tuned to immediate capitalist interests, while infrastructure, climate, or education - pillars of future national health - are deferred. Today’s monetary clout dictates tomorrow’s trajectory.
The error here is not failing to count but failing to look ahead. Caplan’s insistence that massive present benefits swamp all objections mirrors the same myopia that seduced France into ignoring integration costs and that tempts American leaders to treat democratic legitimacy as a secondary concern compared to donor satisfaction.
Systematic Discounting of the Future
The final flaw is the explicit undervaluing of long-term consequences. Economists typically use discount rates to reduce future costs and benefits to present values. While defensible for routine financial calculations, this habit is catastrophic for intergenerational policy. A trillion-dollar harm in a century’s time effectively vanishes from today’s decision-making when discounted, even though the number of affected people may dwarf today’s population.
Caplan’s reliance on revealed preferences, insisting people do not “really care” about terrorism, equality, or other non-monetary goods because they do not make costly sacrifices, doubles down on this error. Observed present action becomes the sole test of value, consigning the poorly mobilized interests of the future to irrelevance. Yet history is replete with examples where societies failed precisely because they prioritized immediate benefit over long-run survival.
France’s immigration policy and America’s money-driven politics both confirm this problem empirically. The French failed to foresee how integration challenges would compound across generations; Americans fail to reckon with how plutocracy corrodes democratic legitimacy and erodes long-run stability. Both demonstrate what happens when the future is discounted into insignificance.
Toward a Future-Sensitive Framework
The shortcomings of Caplan’s stance do not mean cost-benefit reasoning has no place in policy. Its insistence on quantification and scale provides a useful check against alarmist but superficial objections. Yet as a master framework, it is dangerously incomplete. What is needed is a future-sensitive evaluation model: one that explicitly recognizes non-monetary values, incorporates the dynamics of social and technological change, and gives proper weight to the claims of future generations.
This might mean developing plural evaluative approaches: pairing standard cost-benefit with cultural and ethical impact assessments, embedding scenario forecasting into policy planning, and bounding economic calculations within frameworks of democratic legitimacy and intergenerational justice. Only such a broadened model can prevent the tyranny of money and present bias.
Conclusion
Caplan’s trillion-dollar reforms appear sweeping in their promise, but his framework rests on three fundamental errors: enthroning money as the sole measure of value, privileging present gains over uncertain futures, and discounting away tomorrow’s consequences. France’s immigration history reveals how short-term labor logic can devolve into permanent cultural fault lines and political unrest. The United States demonstrates how wealth’s capture of politics transforms democracy into plutocracy, substituting monetary power for civic equality. These are not “rounding errors” but epochal lessons about the costs of mistaking dollars for destiny.
The lure of cost-benefit analysis lies in its clarity: add up the numbers, and the choice is supposedly obvious. But human societies are not spreadsheets, and their stability, legitimacy, and flourishing cannot be reduced to present prices. If we fail to see beyond today’s quantifiable gains, we risk sacrificing the priceless goods of tomorrow: democracy, social cohesion, and the endurance of civilization itself.
Let us presume that the insights where completely the product of an LLM rather than a collaboration, is that invalidate the analysis? Your thinking is clearly not consistent with intelligent use of compute capabilities and is typical of a human being threatened by advancing intelligences.
But there are further crucial points to be made with respect to cost/benefit analyses.
Each individual has their own unique value scale and unique circumstances, so it is only possible to perform a cost/benefit analysis at the individual level. Even if an advocate for a particular measure to fix a given problem could put a price tag on resolving their complaint, another person will likely put a different price on it. The claim that a net benefit exists is necessarily a subjective, personal judgement. It the advocate is not seeking the voluntary consent of everyone who must bear the costs, then the people who do perceive a net benefit from imposing the costs are taking a free ride on those on don't.
Moreover, there is no way to compare what the net benefit of fixing one problem might be relative to fixing some other problem unless an individual is internalizing both the costs and benefits of each proposed course of action. Even if the vast majority of people think there is a net benefit from implementing a particular measure, the measure might be suboptimal in the sense that the very same inputs could have been applied to solving a different problem and yielding an even greater net benefit. Rational cost/benefit calculations are possible only in the context of _laissez-faire_ market prices.
Indeed, the price problem goes beyond just prospective cost/benefit calculations; it also applies to doing retrospective accounting for profits and losses, which is crucial to detecting and correcting errors in earlier allocations of inputs.
I’m surprised that in all the comments to date no one has turned Bryan’s argument from “The Myth of the Rational Voter” against him:
People don’t vote with their feet re: “more equality” because the costs of doing so are high and far outweigh what the actual benefits in the real world would be for them, because the “more equality place” doesn’t yet exist. But that is NOT evidence that that particular belief is insincere.
And (ironically) the fact that about half the country continues to vote for Democrats despite that choice being objectively against most of their interests economically and on a bunch of other issues actually *is* evidence that they value “equality”.
[For the record, on Bryan’s 3 multi-trillion dollar ideas, while I’m against him on open borders (‘cause welfare state as biggest objection, plus a couple others; though I do agree we should have a whole lot more legal immigration and essentially unlimited high-skill immigration), I’m with him re: education austerity, and strongly with him on Build, Baby, Build.]
“A 1 percentage-point fall in the murder rate is a big deal, but a 1% fall is not.”
This is likely a sly joke that perhaps no one else has picked up on, since I don’t believe any country or city ever - outside the context of a war - has had a murder rate as high as 1% of the population per year.
But while a 1% fall in the murder rate I agree is not that big a deal, surely a 96% fall is, right?
Which means you therefore are for copying and implementing in our biggest cities the policing and incarceration tactics of El Salvador President Bukele, right?
Because the costs of doing so would be a rounding error compared to the safety benefits for, say, the people living, working or being tourists in D.C. and other crime-infested cities, no?
When people say, "You're just valuing GDP", it's another way of saying, "You're just valuing abstract numbers." So what if the "trillion dollars" is not be entirely attributable to GDP? We know how our life quality declines when you get a bunch of Haitians to move nearby, but it's harder to see what the "trillion dollars" look like in actual benefit or how it makes up for it.
Caplan's two main errors are a philosophical failure to understand what libertarianism implies and doing a theoretical cost-benefit analysis that is oblivious to the empirical disasters.
Very good very good and top entertainment as usual! - not "I don't believe you", but "You don't believe you" is a keeper. 😆 Any ideas of what will be the next unfashionable cause you are itching to take on, for your next career suicidal mission?
May I interest you in a personal hobby horse? 😅
RADICAL TRANSPARENCY FTW
All UK gov data and code should be online, on github gov uk. For anyone to see and browse to their hearts desire. Including randoms online snooping sniffing burrowing through it. Every one file produced by UK gov departments should be put, as read only, on public cloud drives, and or on the public web—as default. And made secret upon specific request only. Everyone should just be able to google anything—no FOI requests needed. Rather than "secrecy by default" and things made public only 1) at gov will 2) at FOI request, (and oft frustrated by the bureaucracy in execution,) with everything public by default secrets will be closed off only by request.
I imagine Sir Humphries will be having heart attacks at the thought of such idea. 😀 Admit I have no idea how to get to that blessed state of affairs. But I think it necessary, on part of the state towards us citizens, and also businesses towards us their consumers. This in order to address and redress the current information imbalance. Because information leads to knowledge leads to power.
The conventional opinion is that the power imbalance coming from the information imbalance (state/business know a lot about me; I know little about them) is that us citizens and consumers should reduce our "information surface" towards them. And address the imbalance that way. But.
There exists another, often unmentioned option. And that option is for state/business to open up, to increase their "information surface" towards us, their citizens/consumers. That will also achieve information (and one hopes power) rebalance. Every time it's actually measured, how much value we put on our privacy, when we have to weight privacy against convenience and other gains from more data sharing, the revealed preference is close to zero! Revealed preference is that we put the value of our privacy close to zero - despite us forever saying the opposite. (that we value privacy very very much; "it ain't so")
So the option of state/business revealing more data to us citizens/consumers, is actually more realistic. Yes there is extra work on part of state/business to open their data to us. But it's worth it. The more advanced the society, the more coordination it needs to achieve the right cooperation-competition balance in the interactions between ever greater numbers of people.
There is an old book "Data For the People" by an early AI pioneer and Amazon CTO Andreas Weigend. Afaics it well describes the world we live in, and also are likely to live even more in the future.
Looking at the cost of murders I found an estimate that the cost of a murder measured on local (Australian) house prices is around USD$1,000,000, which naively multiplying by murders saved in the US puts benefit of 1% reduction in murder rates at USD$228,000,000 per year.
That serves as a lower bound as the cost to the victim etc. are not counted.
The “actions speak louder than words” argument is not as strong as it looks: Collective action problems mean individuals cannot show their valuation even if they care deeply. Also, as Olson explained long ago, small concentrated losers organize while diffuse winners free ride. That is why the Bay view homeowners will fight to the death while I will not fight for my share, ie twelve cent gain. Real people facing concentrated loss do not suffer quietly. Maybe I am listening to mike munger too much, but I say that politics and their (its?) transaction costs cannot be ignored. As I recall from chem 1403, there are some/many energetically favorable reactions that don't take place because of the activation energy barrier. it's fatuous to bemoan this, as the kinetics are (is?) just as real as the thermodynamics. so too in political economy.
But the real point of that argument (which curiously enough Bryan has disputed in another context when defending the use of indifference curves by mathematically-oriented economists) is that since outsiders can't directly observe an individual's utility scale, their values can only be reliably inferred from their actions and not from their words. It is an actual payment for acquiring a good that reveals one's preference to others.
If I pay $70 to acquire a pair of jeans, you can immediately infer that at that point in time I preferred those jeans to the $70. I have revealed that jeans occupy a _higher_ rank on my utility scale than $70 does, though exactly how much higher still can't be known to others, since an external observer has no way of knowing for certain how much I was actually willing to pay.
If I claim that jeans are actually worth a very great deal more than $70 to everyone, and argue from that government ought to step in to supply free jeans even to people who can't afford to pay $70 for them, the implication then is that no one will mind the extra taxes or fiat money creation needed to produce the additional (and likely more costly) jeans because jeans happen to occupy such a high rank on everybody's utility scale. But then would my claim that jeans are valuable enough to justify their universal provision be based on any credible evidence? As I noted in another reply, the real shortcoming of such reasoning is connected to the free-riding and to the price-abolition associated with the collectivization of decision-making. This is true regardless of the nature of the goods involved.
Reframing the problem in terms of collective goods instead of the jeans example doesn't alter the underlying problem with collectivized cost/benefit decision-making. In principle, an individual could consent to pay for their _pro rata_ share of the costs of a collective good on the condition that everyone else in some specified group also participates in the contract, so it remains the case that individual action can also signal one's private values with respect to collective goods. It is sometimes the case in closely-knit communities that a formal contract like this isn't required; the risk of gaining a negative reputation as a free rider can be sufficient to motivate near community-wide support for what are in a legal sense are charitable activities for providing a widely-desired collective good to the entire community.
Of course, it is harder to get a larger, more diverse group of people to unanimously or near-unanimously agree on anything, but that simply reflects the fact that overcoming transaction costs is always part of the overall cost of a good, just as creating and enforcing ownership rights (and thus preventing externality problems) are also an inherent part of the costs of producing and consuming goods. A failure to get voluntary consent to paying for a collective good (or to paying for free jeans for everyone, etc.) is prima facie_ evidence that the alleged benefits don't cover all of the costs involved. A person who merely talks about how valuable something has provided neither credible evidence of how valuable the benefits actually are nor any price information that profit-seeking/loss-avoiding entrepreneurs can find actionable.
What is a "mike munger"?
https://kidsprefercheese.substack.com/
https://podcasts.apple.com/us/podcast/the-answer-is-transaction-costs/id1687215430
Highly recommended.
Oh. A PERSON! Without capital letters, I got confused.
I follow Mike Munger. Great economist.
This is childish thinking. If open borders were a "trillion dollar idea," then people in France, the African Mediterranean countries, Mexico would be forming human chains to prevent the trillion dollar migrants from leaving. Academic economists would get rich by chartering 747s to fly to Haiti, Somalia, and Honduras and auctioning their trillion dollar cargo to the highest bidder.
Nobody on earth practices "open borders." Not Israel, not Singapore, not George Mason University, not the Bryan Caplan household. Even a hypothetical anarcho-capitalist polity would have to screen for sociopathy, communicable disease, hostile takeover, and available living space.
This is pretty feeble. A household is emphatically not a nation or country. A private property has a rightful owner who can legally and validly set limits on who can and can not enter.
A country is not a private property.
A country is owned by its citizens, who set the criteria for entry and citizenship. An unowned territory is just a frontier.
It's bizarre how libertarians believe the State exists and corporations exist, but countries don't exist.
Can one adduce any argument to support the bare assertion "A country is owned by its citizens" ?
There are counter-arguments. Where is the title deed to ownership? Which court can one go to to resolve ownership disputes?
And if a country is an owned thing, what is the status of individual parcels of land within the country which are also owned by individual citizens? Can there be a hierarchy of ownership?
It's an argument as venerable and conclusive as human history: because we live here and we'll kill you if you try to evict us.
So you reduce it to brute force. It is fine but then it is not a legal argument. It can not be clothed in terms like ownership.
That's all sovereignty is, not magic pieces of paper.
Of course it can be clothed in terms like ownership. I occupy a piece of land and exercise dominion over it. I band together with like-minded people and we kick the Redcoats off. Now it's our land not the King's land.
Agreed - but this criticism primarily applies to anarcho-capitalist libertarians, not most of the rest of those who identify as libertarians.
Anarcho-capitalism is really just feudalism (not there's anything wrong with that) and people will still be drawing lines around themselves and telling others they can't come in. Also I've never seen an anarcho-capitalist other than Hoppe acknowledge that in an anarcho-capitalist society there are no immigrants, only owners, tenants and trespassers.
I wasn’t defending anarcho-capitalism.
I was defending all of those/us who consider themselves “libertarians” who are *not* anarcho-capitalists.
Separately, I love the Seinfeld reference, but confess I cannot tell whether or not you actually are defending feudalism.
There is simply a lot of dishonesty in this debate on the libertarian and ancap side with the exception of Hoppe, and I apologize if I came across as accusing you of it.
I think a society organized on ownership rather than mercenary democratic government is unavoidably feudal, and that is probably what is coming whether the anarcho-capitalists or the statists want it or not.
Regarding open borders ... there seem to be very few "open borders" proponents who acknowledge the major problems with "open boarders" -- the freeloaders who come for the welfare, the room and board and cash; the criminals who are fleeing their home country; and the refugees who chose to flee trouble, not to come here, don't like what they find here, and the communities they are dumped in have no choice in the matter.
As an example of the refugee problem, there was that city of 60,000(?) in Indiana(?) which had 20,000(?) refugees plopped down with no planning. I don't know what the actual numbers were because both sides were exaggerating for the propaganda effect, including all the stories of eating cats, which may or may not be true, but do not really matter; Even if there were only 1000 refugees dumped in a city of 100,000, that's still too much of a financial shock to absorb easily in a short time. and no "open borders" proponent wants to discuss that.
I have never seen any cost benefit analysis of "open boarders".
I am all in favor of pre-1900 style open borders -- no government handouts, period, and no virtually kidnapped refugees; they come here voluntarily, and they rely on themselves, their families, friends, and community. I think immigrants, both legal and illegal, commit fewer intentional crimes, but the bums and thugs commit more crimes, and the refugees don't care what the local definition of crime is. I believe immigrants, both legal and illegal add to society and the economy, but the bums and thugs intentionally commit crimes, and the refugees don't really care.
Until "open borders" proponents address the bums and thugs and refugees, they are going to lose the cultural war. You can only sweep so much dirt under the rug before people notice.
Bryan still speaks as if massive government subsidies weren't going to illegal immigrants. The zero-support, make it on your own system we had at the turn of the 20th century is not our reality. We in fact have the counterfactual, which is massive subsidies contributing to the societally destabilizing $2 trillion *per year* deficit we have been enjoying.
There's also getting outnumbered in your own town, then getting outvoted, then noise ordinances get changed, and next thing you know, you're getting blasted by a loudspeaker call to prayer at dawn every day.
Garett Jones makes the actual best argument against open borders, and he still favors lots of immigration (from places like China).
Valuing equality….and moving to a place with more “equality”….is one thing. But being otherwise perfectly happy where you are, and not wanting that to change (for the worse on net) due to “open borders” is a different thing.
Cost benefit is also not in a vacuum. So in practical terms, if you lived in a place that previously did not have rape and grooming gangs (or sharia law), but now does under the condition of “some” immigration, what might be the cost benefit analysis of the immigration that has occurred to date? And what would be said analysis for a future with even less discerning immigration control?
As they say, drinking water is a net good. Drinking unlimited amounts of water will kill you.
And from a science perspective, if you assert that “open borders” is a net good, burden is on you to prove it. Find or create an entity with open borders to prove that it is all that and a bag of chips, and it would be easier to convince others of your initial wisdom.
How many times does he have to prove it? In terms of previous entities, the US until 1920 and Hong Kong until the Chinese take-over are examples. They both benefitted greatly from unlimited immigration.
Why is any of that applicable to today, with so many bums and thugs coming in and refugees being brought in?
He’s actually mostly correct.
But the people came in legally, and wanted to assimilate as Americans.
Most importantly, as Milton Friedman has explained, truly open borders is incompatible with a generous welfare state.
We didn’t have such a generous welfare state prior to 1920.
Did you see the bums and thugs that came in pre-1920?
Today's immigrants are of a far higher quality.
If you've got references, I'm interested.
No, per Garett Jones the US increased its tech history score via European immigration. Other immigrants decrease such scores.
That's a fair question and I don't have an answer, or at least not a short one. I was responding to the assertion in the previous comment that intimated Bryan hasn't proved the upside of immigration.
He’s not talking about merely the “upside” of immigration. He’s talking about “open borders” which would mean unlimited and unselected immigration. Burden of proof in a contemporary setting still rests with him for that particular version of immigration.
Caplan's "open borders" is not "unlimited and unselected immigration. ".
It is, I believe, more like Gulf kingdoms. Companies sponsor any person they wish to hire, employee moves in but he has no political right whatsoever,
It is indeed unlimited and unselected. That IS what “open” means in this context.
Yes, in past posts Caplan has indicated he views the Gulf model favorably as a way to get around the inconvenient truth of having a generous welfare state.
https://www.betonit.ai/p/reflections-on-abu-dhabi-and-dubai
Are you sure about that? What you describe is just a very lax work visa program. It would hardly deserve a hoity-toity moniker like “open borders”.
Why America till 1920 "benefited greatly from unlimited immigration" and not America after 1920s?
It doesn't make much sense, does it?
What doesn't make sense? That America started constricting immigration in the 1920s? It was standard anti-foreign bias.
Any examples from this century, with predominant Muslim immigration?
Not off the top of my head.
Well then on what basis does Caplan assert that such a version of immigration will necessarily be (net) rainbows and butterflies?
Read the blog post again. The upside from immigration is so huge that it's the naysayers who needs to come up with objections beyond "some immigrations might do something bad."
The “theoretical” upsides are huge….says Caplan. That’s not proof. That’s his opinion. That and $3 gets him on a bus.
The actual real-life downsides include rape and grooming gangs, and Sharia law. And that’s not even with “wide open” immigration. So what he’s proposing may have even worse downsides that we’ve yet to see IRL.
Cuz again, he’s not merely proposing “some” immigration. He’s talking about unfettered immigration with zero controls (ie literally open borders, or effectively no borders).
Dr Caplan,
Out of all the "trivial" problems you mentioned, the risk of a terrorist is the least trivial. You acknowledge that your Critics would say a single terrorist attack is worth a trillion dollars in damages. You then say "actions speak louder" than words but proceed again to dance around the elephant in the room and talk about how people don't put their money where their mouth is with regards to income inequality.
Sir, address the elephant in the room! Do people's actions really show that they don't actually believe that a terrorist attack is $1 Trillion worth of bad?
I think critics have a hard time visualizing how a trillion dollar idea would actually bring that value to regular people. They don't understand it'd result in lots of real value for lots of regular people. Like people being able to afford bigger homes, better transportation, better/more AC and heating, being able to forgo environmental damage because you can now afford to replace coal with solar, more childcare workers, more accessible personal tutors, more high end PCs, etc. They think the number going up means merely extra yachts for billionaires, or stuff they don't personally care about like more options for bottles of ketchup in the grocery store.
Critique of Cost-Benefit Overreach: Money, Time, and the Lessons of Immigration and Democracy
Economist Bryan Caplan’s “Cost-Benefit Analysis Crushes GDP” 2025-08-28 argues that bold reforms such as open borders, educational austerity, and deregulated housing should be adopted because they promise trillions of dollars in net social benefits. His framework is unapologetically utilitarian: when the scale of benefits is so vast, critics’ objections amount to mere “rounding errors,” not reasons for hesitancy. At first glance, this cost-benefit reasoning appears refreshingly pragmatic — sweeping aside emotive resistance in favor of clear-eyed efficiency. Yet beneath its simplicity lie significant flaws.
This essay argues that Caplan’s approach suffers from three fundamental errors. First, it grants money an undue and exclusive authority to measure value, thereby distorting what societies choose to prioritize. Second, it privileges today’s measurable benefits over tomorrow’s uncertain but potentially transformative consequences, underestimating path dependence and systemic risks. Third, it institutionalizes humanity’s tendency to undervalue the future, writing off looming dangers as negligible when discounted in present dollars. These flaws are not abstract quibbles. They have real-world consequences, as demonstrated by France’s troubled experience with immigration from North Africa and by the United States’ drift toward plutocratic governance under the influence of money.
Money as the Master Metric
Caplan’s framework elevates monetary valuation as the decisive arbiter of worth. If one cannot attach a “price tag” to an objection, then in his accounting it barely registers. The problem is that money is not a neutral measure of social value but a skewed one, amplifying the voices of those with wealth and marginalizing what cannot be commodified.
Many of the goods societies hold most dearly, democratic legitimacy, cultural cohesion, environmental stability, or equal dignity, resist easy monetization. To insist that every consideration be converted into willingness-to-pay figures is to allow markets, and thereby the preferences of the wealthy, to dictate human priorities. This reduces plural values into economic comparables, erasing those elements of life and governance too sacred or too fundamental to buy and sell.
The American political system illustrates this error dramatically. Formally, the United States remains a democracy where each citizen has a vote. In practice, policy disproportionately reflects the preferences of wealthy elites and organized lobbies. Research by Martin Gilens and Benjamin Page (2014) showed that average citizens’ views have negligible independent impact on policy outcomes, while elites’ preferences track strongly with legislative results. Elections continue, but governance increasingly resembles what might be called government of the money, by the money, and for the money.
This dynamic reflects precisely what occurs when money becomes the defining metric: those with more of it wield disproportionate power, while non-monetary values such as equality, voice, and legitimacy fade from view. When preferences are measured exclusively in money, the rich define outcomes, and crucial human goods vanish into the blind spots of analysis.
Today’s Oversized Power Over Tomorrow
Cost-benefit analysis is attuned to the present because it relies on known prices and near-term certainties. Yet many policy decisions produce effects that unfold across decades, shaped by technological change, cultural adaptation, and institutional evolution. Caplan’s assumption that trillions in immediate gain outweigh modest harms glosses over how temporary today’s background conditions may be.
France’s postwar immigration experiment exemplifies this error. In the 1950s and 1960s, the French state encouraged migration from Algeria, Morocco, and Tunisia to fill urgent labor shortages. The logic seemed airtight: more workers meant industrial output, GDP, and fiscal contributions. A contemporary cost-benefit analysis would have highlighted the clear, short-term net gains.
But history did not stop in the 1960s. Deindustrialization hollowed out the jobs migrants once occupied. The French integration model, built on secular assimilation, clashed with enduring cultural and religious differences, leaving many North African immigrants and their descendants concentrated in disadvantaged banlieues. The long-run result has not been seamless prosperity, but entrenched unemployment, cycles of alienation, periodic unrest, and a growing populist backlash. These outcomes were “invisible” to short-term economic calculations yet now dominate the French political landscape.
Looking forward, the French labor experiment shows signs of worsening rather than stabilizing. Structural unemployment among immigrant communities is likely to deepen as automation and advanced AI and robotics displace jobs across the economy. At the same time, cultural disparities between secular French republicanism and more religious immigrant communities remain unresolved, risking further social fragmentation. With each new generation raised in segregated suburbs (banlieues) where poverty and exclusion are the norm, grievances can harden into enduring identity-based divides. The political consequences will be equally sharp: a feedback loop of populist backlash on the right and alienation on the margins, making immigration not only a social stressor but the central fault line of French politics in the decades ahead.
Similarly, in the United States, the money-driven nature of democratic politics incentivizes leaders to focus on donor needs in the next election cycle rather than structural challenges decades away. Tax priorities, deregulation, and subsidies are tuned to immediate capitalist interests, while infrastructure, climate, or education - pillars of future national health - are deferred. Today’s monetary clout dictates tomorrow’s trajectory.
The error here is not failing to count but failing to look ahead. Caplan’s insistence that massive present benefits swamp all objections mirrors the same myopia that seduced France into ignoring integration costs and that tempts American leaders to treat democratic legitimacy as a secondary concern compared to donor satisfaction.
Systematic Discounting of the Future
The final flaw is the explicit undervaluing of long-term consequences. Economists typically use discount rates to reduce future costs and benefits to present values. While defensible for routine financial calculations, this habit is catastrophic for intergenerational policy. A trillion-dollar harm in a century’s time effectively vanishes from today’s decision-making when discounted, even though the number of affected people may dwarf today’s population.
Caplan’s reliance on revealed preferences, insisting people do not “really care” about terrorism, equality, or other non-monetary goods because they do not make costly sacrifices, doubles down on this error. Observed present action becomes the sole test of value, consigning the poorly mobilized interests of the future to irrelevance. Yet history is replete with examples where societies failed precisely because they prioritized immediate benefit over long-run survival.
France’s immigration policy and America’s money-driven politics both confirm this problem empirically. The French failed to foresee how integration challenges would compound across generations; Americans fail to reckon with how plutocracy corrodes democratic legitimacy and erodes long-run stability. Both demonstrate what happens when the future is discounted into insignificance.
Toward a Future-Sensitive Framework
The shortcomings of Caplan’s stance do not mean cost-benefit reasoning has no place in policy. Its insistence on quantification and scale provides a useful check against alarmist but superficial objections. Yet as a master framework, it is dangerously incomplete. What is needed is a future-sensitive evaluation model: one that explicitly recognizes non-monetary values, incorporates the dynamics of social and technological change, and gives proper weight to the claims of future generations.
This might mean developing plural evaluative approaches: pairing standard cost-benefit with cultural and ethical impact assessments, embedding scenario forecasting into policy planning, and bounding economic calculations within frameworks of democratic legitimacy and intergenerational justice. Only such a broadened model can prevent the tyranny of money and present bias.
Conclusion
Caplan’s trillion-dollar reforms appear sweeping in their promise, but his framework rests on three fundamental errors: enthroning money as the sole measure of value, privileging present gains over uncertain futures, and discounting away tomorrow’s consequences. France’s immigration history reveals how short-term labor logic can devolve into permanent cultural fault lines and political unrest. The United States demonstrates how wealth’s capture of politics transforms democracy into plutocracy, substituting monetary power for civic equality. These are not “rounding errors” but epochal lessons about the costs of mistaking dollars for destiny.
The lure of cost-benefit analysis lies in its clarity: add up the numbers, and the choice is supposedly obvious. But human societies are not spreadsheets, and their stability, legitimacy, and flourishing cannot be reduced to present prices. If we fail to see beyond today’s quantifiable gains, we risk sacrificing the priceless goods of tomorrow: democracy, social cohesion, and the endurance of civilization itself.
AI?
Let us presume that the insights where completely the product of an LLM rather than a collaboration, is that invalidate the analysis? Your thinking is clearly not consistent with intelligent use of compute capabilities and is typical of a human being threatened by advancing intelligences.
No, I just think it reads like garbage, to the point of being unreadable.
Write it like a human and I might read what you have to say.
Because we live here and we'll kill you if you try to evict us. Are you dense?
But there are further crucial points to be made with respect to cost/benefit analyses.
Each individual has their own unique value scale and unique circumstances, so it is only possible to perform a cost/benefit analysis at the individual level. Even if an advocate for a particular measure to fix a given problem could put a price tag on resolving their complaint, another person will likely put a different price on it. The claim that a net benefit exists is necessarily a subjective, personal judgement. It the advocate is not seeking the voluntary consent of everyone who must bear the costs, then the people who do perceive a net benefit from imposing the costs are taking a free ride on those on don't.
Moreover, there is no way to compare what the net benefit of fixing one problem might be relative to fixing some other problem unless an individual is internalizing both the costs and benefits of each proposed course of action. Even if the vast majority of people think there is a net benefit from implementing a particular measure, the measure might be suboptimal in the sense that the very same inputs could have been applied to solving a different problem and yielding an even greater net benefit. Rational cost/benefit calculations are possible only in the context of _laissez-faire_ market prices.
Indeed, the price problem goes beyond just prospective cost/benefit calculations; it also applies to doing retrospective accounting for profits and losses, which is crucial to detecting and correcting errors in earlier allocations of inputs.
I’m surprised that in all the comments to date no one has turned Bryan’s argument from “The Myth of the Rational Voter” against him:
People don’t vote with their feet re: “more equality” because the costs of doing so are high and far outweigh what the actual benefits in the real world would be for them, because the “more equality place” doesn’t yet exist. But that is NOT evidence that that particular belief is insincere.
And (ironically) the fact that about half the country continues to vote for Democrats despite that choice being objectively against most of their interests economically and on a bunch of other issues actually *is* evidence that they value “equality”.
[For the record, on Bryan’s 3 multi-trillion dollar ideas, while I’m against him on open borders (‘cause welfare state as biggest objection, plus a couple others; though I do agree we should have a whole lot more legal immigration and essentially unlimited high-skill immigration), I’m with him re: education austerity, and strongly with him on Build, Baby, Build.]
“A 1 percentage-point fall in the murder rate is a big deal, but a 1% fall is not.”
This is likely a sly joke that perhaps no one else has picked up on, since I don’t believe any country or city ever - outside the context of a war - has had a murder rate as high as 1% of the population per year.
But while a 1% fall in the murder rate I agree is not that big a deal, surely a 96% fall is, right?
Which means you therefore are for copying and implementing in our biggest cities the policing and incarceration tactics of El Salvador President Bukele, right?
Because the costs of doing so would be a rounding error compared to the safety benefits for, say, the people living, working or being tourists in D.C. and other crime-infested cities, no?
When people say, "You're just valuing GDP", it's another way of saying, "You're just valuing abstract numbers." So what if the "trillion dollars" is not be entirely attributable to GDP? We know how our life quality declines when you get a bunch of Haitians to move nearby, but it's harder to see what the "trillion dollars" look like in actual benefit or how it makes up for it.
Caplan's two main errors are a philosophical failure to understand what libertarianism implies and doing a theoretical cost-benefit analysis that is oblivious to the empirical disasters.
https://jclester.substack.com/p/open-borders-today-stupid-or-sinister
https://jclester.substack.com/p/immigration-and-libertarianism
Very good very good and top entertainment as usual! - not "I don't believe you", but "You don't believe you" is a keeper. 😆 Any ideas of what will be the next unfashionable cause you are itching to take on, for your next career suicidal mission?
May I interest you in a personal hobby horse? 😅
RADICAL TRANSPARENCY FTW
All UK gov data and code should be online, on github gov uk. For anyone to see and browse to their hearts desire. Including randoms online snooping sniffing burrowing through it. Every one file produced by UK gov departments should be put, as read only, on public cloud drives, and or on the public web—as default. And made secret upon specific request only. Everyone should just be able to google anything—no FOI requests needed. Rather than "secrecy by default" and things made public only 1) at gov will 2) at FOI request, (and oft frustrated by the bureaucracy in execution,) with everything public by default secrets will be closed off only by request.
I imagine Sir Humphries will be having heart attacks at the thought of such idea. 😀 Admit I have no idea how to get to that blessed state of affairs. But I think it necessary, on part of the state towards us citizens, and also businesses towards us their consumers. This in order to address and redress the current information imbalance. Because information leads to knowledge leads to power.
The conventional opinion is that the power imbalance coming from the information imbalance (state/business know a lot about me; I know little about them) is that us citizens and consumers should reduce our "information surface" towards them. And address the imbalance that way. But.
There exists another, often unmentioned option. And that option is for state/business to open up, to increase their "information surface" towards us, their citizens/consumers. That will also achieve information (and one hopes power) rebalance. Every time it's actually measured, how much value we put on our privacy, when we have to weight privacy against convenience and other gains from more data sharing, the revealed preference is close to zero! Revealed preference is that we put the value of our privacy close to zero - despite us forever saying the opposite. (that we value privacy very very much; "it ain't so")
So the option of state/business revealing more data to us citizens/consumers, is actually more realistic. Yes there is extra work on part of state/business to open their data to us. But it's worth it. The more advanced the society, the more coordination it needs to achieve the right cooperation-competition balance in the interactions between ever greater numbers of people.
There is an old book "Data For the People" by an early AI pioneer and Amazon CTO Andreas Weigend. Afaics it well describes the world we live in, and also are likely to live even more in the future.
RADICAL TRANSPARENCY FTW
Looking at the cost of murders I found an estimate that the cost of a murder measured on local (Australian) house prices is around USD$1,000,000, which naively multiplying by murders saved in the US puts benefit of 1% reduction in murder rates at USD$228,000,000 per year.
That serves as a lower bound as the cost to the victim etc. are not counted.
Most people hate change and want social + economic benefits for them now but under the guise of altruism