I wasn’t really ready for Henry’s somewhat less-than-enthusiastic response.
“Is it surprising”, he asked, somewhat testily, “that the champions of public housing should dismiss this, if it is brought to their attention as a world of imagination, as the objections of pure theory, while they point to the public housing that exists? As a character in Bernard Shaw’s Saint Joan replies when told of the theory of Pythagoras that the earth is round and revolves around the sun: ‘What an utter fool! Couldn’t he use his eyes?’”
“Right”, I said, in riposte. “Today’s expression is: ‘Who are you going to believe? Me, or your lying eyes?’ So, based on what we have covered so far, I am assuming , if I apply my ability to reason to the issue, there is no difference between small projects and massively large projects. Right?”
Nodding, Henry responded, “We must apply the same reasoning, once more, to great projects like the Tennessee Valley Authority.” He then went on, his voice rising a bit in tone, the words coming more quickly and his voice getting stronger, “Here, because of sheer size, the danger of optical illusion is greater than ever. Here is a mighty dam, a stupendous arc of steel and concrete, ‘greater than anything that private capital could have built,’ the fetish of photographers, the heaven of socialists, the most often used symbol of the miracles of public construction, ownership and operation. Here are mighty generators and power houses. Here is a whole region lifted to a higher economic level, attracting factories and industries that could not otherwise have existed. And it is all presented, in the panegyrics of its partisans, as a net economic gain without offsets.” Henry paused to take a deep breath.
I grabbed the opportunity of the instant and jumped in with, “Well, it did a lot to improve the economic situation there, Henry. How do you argue against that?”
“We need not go here into the merits of the TVA or public projects like it.” said Henry. “But this time we need a special effort of the imagination, which few people seem able to make, to look at the debit side of the ledger.”
“I’ll bite;” I said, “why is it so particularly hard to do in this situation?”
Said, Henry, “If taxes are taken from people and corporations, and spent in one particular section of the country, why should it cause surprise, why should it be regarded as a miracle, if that section becomes comparatively richer? Other sections of the country, we should remember, are then comparatively poorer. The thing so great that ‘private capital could not have built it’ has in fact been built by private capital—the capital that was expropriated in taxes or, if the money was borrowed, that eventually must be expropriated in taxes.”
A light went on in my head. “Henry,”, I said, “it seems we are talking about a kind of ‘opportunity cost.’ From the viewpoint of a business, for instance, opportunity cost is an added cost of doing business. That additional cost is calculated as the difference between the actual values resulting from the use of capital, say for Project A, compared to the use of the same capital for Project B.”
Henry nodded, raised his eyebrows, looked quizzically at me, extended both his hands out in front of his body, about one foot apart, with palms open toward each other, his fingers curved slightly inward and with his thumbs up—as if he were inviting me to throw him a ball.
“Is it surprising”, he asked, somewhat testily, “that the champions of public housing should dismiss this, if it is brought to their attention as a world of imagination, as the objections of pure theory, while they point to the public housing that exists? As a character in Bernard Shaw’s Saint Joan replies when told of the theory of Pythagoras that the earth is round and revolves around the sun: ‘What an utter fool! Couldn’t he use his eyes?’”
“Right”, I said, in riposte. “Today’s expression is: ‘Who are you going to believe? Me, or your lying eyes?’ So, based on what we have covered so far, I am assuming , if I apply my ability to reason to the issue, there is no difference between small projects and massively large projects. Right?”
Nodding, Henry responded, “We must apply the same reasoning, once more, to great projects like the Tennessee Valley Authority.” He then went on, his voice rising a bit in tone, the words coming more quickly and his voice getting stronger, “Here, because of sheer size, the danger of optical illusion is greater than ever. Here is a mighty dam, a stupendous arc of steel and concrete, ‘greater than anything that private capital could have built,’ the fetish of photographers, the heaven of socialists, the most often used symbol of the miracles of public construction, ownership and operation. Here are mighty generators and power houses. Here is a whole region lifted to a higher economic level, attracting factories and industries that could not otherwise have existed. And it is all presented, in the panegyrics of its partisans, as a net economic gain without offsets.” Henry paused to take a deep breath.
I grabbed the opportunity of the instant and jumped in with, “Well, it did a lot to improve the economic situation there, Henry. How do you argue against that?”
“We need not go here into the merits of the TVA or public projects like it.” said Henry. “But this time we need a special effort of the imagination, which few people seem able to make, to look at the debit side of the ledger.”
“I’ll bite;” I said, “why is it so particularly hard to do in this situation?”
Said, Henry, “If taxes are taken from people and corporations, and spent in one particular section of the country, why should it cause surprise, why should it be regarded as a miracle, if that section becomes comparatively richer? Other sections of the country, we should remember, are then comparatively poorer. The thing so great that ‘private capital could not have built it’ has in fact been built by private capital—the capital that was expropriated in taxes or, if the money was borrowed, that eventually must be expropriated in taxes.”
A light went on in my head. “Henry,”, I said, “it seems we are talking about a kind of ‘opportunity cost.’ From the viewpoint of a business, for instance, opportunity cost is an added cost of doing business. That additional cost is calculated as the difference between the actual values resulting from the use of capital, say for Project A, compared to the use of the same capital for Project B.”
Henry nodded, raised his eyebrows, looked quizzically at me, extended both his hands out in front of his body, about one foot apart, with palms open toward each other, his fingers curved slightly inward and with his thumbs up—as if he were inviting me to throw him a ball.
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