Social Cost Minimization: A National Policy Approach to the Problems of Distressed Economic Regions

In: Policy studies journal: an international journal of public policy, Band 10, Heft 2, S. 235-247

Abstract

A distinction is made between output maximizing & cost minimizing approaches to national economic policy. It is argued that because the benefits & costs of economic activity frequently accrue to distinct groups in society, it is not automatically true that output maximization is the best strategy. This is especially true when the problems of distressed economic regions are concerned. National & multinational firms that make decisions pertaining to the economic life of local communities do so not on the basis of the costs & benefits to the community, but with regard to their private balance sheet. As a result, communities of individuals must frequently bear social costs far in excess of the private gains to the firms in question. From a policy standpoint, this is not an efficient use of either social or economic resources. In the absence of any type of comprehensive economic planning, a rational, market-oriented economic strategy would seek to minimize social costs. Modified HA.