Modern Utilitarianism

Jeremy Bentham (English, 1748-1832) devised modern utilitarianism, which is best captured in the John Stuart Mill's phrase "the greatest amount of happiness altogether" (Chapter II of Utilitarianism).

From Bentham's facile philosophy grew the ludicrous notion that it might be possible to quantify each person's happiness and, then, to arrive at an aggregate measure of total happiness for everyone (or at least everyone in England). Utilitarianism, as a philosophy, has gone the way of Communism: It is discredited but many people still cling to it, under other names.

Modern utilitarianism lurks in the guise of cost-benefit analysis. Governments often subject proposed projects and regulations (e.g., new highway construction, automobile safety requirements) to cost-benefit analysis. The theory of cost-benefit analysis is simple: If the expected benefits from a government project or regulation are greater than its expected costs, the project or regulation is economically justified. Luckily, most "justified" projects are scrapped or substantially altered by the intervention of political bargaining and budget constraints, but many of them are undertaken -- only to cost far more than estimated and return far less than expected.

Here's the problem with cost-benefit analysis -- the problem it shares with utilitarianism: One person's benefit can't be compared with another person's cost. Suppose, for example, the City of Los Angeles were to conduct a cost-benefit analysis that "proved" the wisdom of constructing yet another freeway through the city in order to reduce the commuting time of workers who drive into the city from the suburbs.

Before constructing the freeway, the city would have to take residential and commercial property. The occupants of those homes and owners of those businesses (who, in many cases would be lessees and not landowners) would have to start anew elsewhere. The customers of the affected businesses would have to find alternative sources of goods and services. Compensation under eminent domain can never be adequate to the owners of taken property because the property is taken by force and not sold voluntarily at a true market price. Moreover, others who are also harmed by a taking (lessees and customers in this example) are never compensated for their losses. Now, how can all of this uncompensated cost and inconvenience be "justified" by, say, the greater productivity that might (emphasize might) accrue to those commuters who would benefit from the construction of yet another freeway.

Yet, that is how cost-benefit analysis works. It assumes that group A's cost can be offset by group B's benefit: "the greatest amount of happiness altogether."

Here's the proper "utilitarian" rule: If it must be done by government, it isn't worth doing unless it is done "to establish Justice, insure domestic Tranquility, [or] provide for the common defence."