Premium
SOCIAL COST MINIMIZATION: A NATIONAL POLICY APPROACH TO THE PROBLEMS OF DISTRESSED ECONOMIC REGIONS *
Author(s) -
Solar Elliott D.
Publication year - 1981
Publication title -
policy studies journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.773
H-Index - 69
eISSN - 1541-0072
pISSN - 0190-292X
DOI - 10.1111/j.1541-0072.1981.tb00999.x
Subject(s) - maximization , economic cost , social cost , public economics , balance (ability) , economics , economic problem , economic planning , business , microeconomics , market economy , medicine , physical medicine and rehabilitation
This paper makes a distinction between output maximizing and cost minimizing approaches to national economic policy. The paper argues that because the benefits of economic activity and its cost are frequently conferred upon distinct groups in society, it is not automatically true that output maximization is the best strategy, as is presently assumed. This result is especially true when the problems of distressed economic regions are the focus of our concern. The national and multi‐national firms which make decisions pertaining to the economic life of local communities make those decisions not on the basis of the costs and benefits to the community, but with regard to their private balance sheet. As a result, it frequently happens that communities of individuals must 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 our social and economic resources. In the absence of any type of comprehensive economic planning a rational market‐oriented economic strategy would be one which seeks to minimize social costs.