RE: Cost benefit analysis
In the Defense Department you have a creative tension environment. The group trying to sell the project must have estimates reviewed independently by groups who don't care about the particular project. The estimates are all compared to the benefits that each system brings to the overall weapons system. The principle player in this is PAE which has a sub group call the CAIG - Cost Analysis Improvement Groupwhich reviews estimates for their robustness and sets standards that must be met. They also conduct independent analysis of the projects or oversee other groups that do that work. The estimates are put into an overall creative tension environment in which the different services compete for funding call the Planning Programming and Budgeting System...which fundamentally came in the early 60s. I'm sure DoD still gets bad analysis in the sense that it is influenced by politics...but given all the politics the process any BAD CBA presented into the system is going to get run through the system and it is very hard to hide. The process does create information (CBA) that are challenged and improve over time as the process necks down to a decision. Overall it seems to be doing pretty well in the past 25 years it has produced a set of weapons that as the Air Force slogan saysno body come close! jdd John D Driessnack, PMP, CCE/A Professor, Defense Acquisition University PMT-250/352, DAU Risk/Tools Subject Matter Expert DAWIA PM, Acq Logi, FM Level III NE-Capital Campus, Faculty Department Program Management and Leadership 9820 Belvoir Rd, Building 205, Room 115B Ft Belvoir, VA 22060-5565 703-805-4655 (DSN-655) [EMAIL PROTECTED] FAX 703-805-3728 -Original Message- From: William Dickens [mailto:[EMAIL PROTECTED]] Sent: Thursday, February 13, 2003 9:34 PM To: [EMAIL PROTECTED] Subject: RE: Cost benefit analysis Fred, You completely misunderstand my point. If a cost benefit analysis is presented it makes very clear what the assumptions are that lead to the policy conclusions. Thus any debate of the question is going to be much better informed and much more closely focused on the issues that matter. Its going to be more logical. I am not saying that a bad CBA trumps a good verbal argument in deciding an issue. I'm saying that as a starting point for a debate a bad CBA is still a good point of departure because it spells out the assumptions and logic that the person presenting it is making. - - Bill Dickens [EMAIL PROTECTED] 02/13/03 05:37PM On Thu, 13 Feb 2003 15:52:43 -0500, William Dickens [EMAIL PROTECTED] said: Any CBA is better than no CBA - - even a badly skewed one. Its the same argument for formalizing theory in economics. It makes clear what your assumptions and logic are and makes it easy to identify areas of agreement and disagreements between opponents on an issue. - - Bill Dickens Did I just read what I think I read? So here is the scenario - a *badly skewed* CBA is used by misguided (do-gooder) policy makers to influence legislation by defeating a more reasonable (logical) argument. This CBA had more traction (the bad science environmentalists had a well funded propaganda campaign) and the resultant legislation ended up killing millions of people (refrigerators in third world countries no longer able to keep food cold or pesticides no longer available to kill mosquitos which carried disease). I find it hard to agree that any CBA is better than no CBA. -Fred Childress [EMAIL PROTECTED] 02/13/03 01:57PM One problem with applying CBA to policy formulation is ensuring reliability and objectivity. Too often, CBA is manipulated for predetermined policy positions. EPA once produced a Regulatory Impact Analysis that contended that benefits from the phaseout of CFCs are $8 trillion to $32 trillion. In such cases, CBA does more to confound, rather than illuminate, rational policy formulation. Is there a practical way for policy makers to assess the reliability and objectivity of CBA? Walt Warnick -Original Message- From: Driessnack, John [mailto:[EMAIL PROTECTED]] Sent: Thursday, February 13, 2003 9:56 AM To: [EMAIL PROTECTED] Cc: [EMAIL PROTECTED] Subject: RE: Cost benefit analysis In defense you can say that almost all of the weapons related spending (Procurement and RDTE budget - almost half of the budget when you consider the spare purchases) is accomplished having gone through some CBA in the process of deciding the approach to develop, procure, and then maintain the equipment. An Analysis of Alternative is required along with estimates (actually by several layers of organizations). The other source to look at would be the Federal Acquisition Regulations (FAR). This policy drives use of CBA for certain purchases. So you could estimate off of this policy! jdd John D Driessnack, PMP, CCE/A Professor, Defense Acquisition University PMT-250/352, DAU
RE: Cost benefit analysis
In defense you can say that almost all of the weapons related spending (Procurement and RDTE budget almost half of the budget when you consider the spare purchases) is accomplished having gone through some CBA in the process of deciding the approach to develop, procure, and then maintain the equipment. An Analysis of Alternative is required along with estimates (actually by several layers of organizations). The other source to look at would be the Federal Acquisition Regulations (FAR). This policy drives use of CBA for certain purchases. So you could estimate off of this policy! jdd John D Driessnack, PMP, CCE/A Professor, Defense Acquisition University PMT-250/352, DAU Risk/Tools Subject Matter Expert DAWIA PM, Acq Logi, FM Level III NE-Capital Campus, Faculty Department Program Management and Leadership 9820 Belvoir Rd, Building 205, Room 115B Ft Belvoir, VA 22060-5565 703-805-4655 (DSN-655) [EMAIL PROTECTED] FAX 703-805-3728 -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] Sent: Tuesday, February 11, 2003 11:16 PM To: [EMAIL PROTECTED] Subject: Cost benefit analysis Does anyone know how often CBA is actually used in making policy? What percent of the federal budget (or state or local) has been determined by CBA? Cyril Morong
RE: cost of subsidizing a prodigal son
.obviously counterproductive? Why? You see NO benefits at all from these expenditures, is not one the fall of the Soviet Union? We countered each effort of the Soviet Union to expand in the cold war. So funds spent back as far as 1973 helped in that effort. Is fall of USSR a benefit that was worth paying? Was it worth stopping Soviet Expansion and supporting a democratic society in the Middle East? Do we not benefit from the more free market societies around the world post USSR? We can argue on the value, but to imply we got nothing is a little one sided. Along with other benefits do they counterbalance the costs? Does more investment increase those benefits or assure continuation of prior benefits? The article is very one sides. Talks to lost jobs by Israel block of weapons purchase by Saudi Arabia but doesnt recognize jobs from weapons sales to Israel. Blame the oil embargo on Israel. Scherers book on industries has a good chapter on oil industry and the embargos that never mentions Israel. I think appropriately so. jdd John D Driessnack, PMP, CCE/A Professor, Defense Acquisition University -Original Message- From: Alypius Skinner [mailto:[EMAIL PROTECTED]] Sent: Tuesday, December 10, 2002 1:14 PM To: [EMAIL PROTECTED] Subject: Fw: cost of subsidizing a prodigal son In my opinion, here is another fine example of domestic political expedience triumphing over economic rationality. Of course, money isn't everything, but one also has to ask: what will we ultimately have to show for our national investment? And why do our politicians persist in throwing good money after bad when it is so obviously counterproductive? Might this be an example of the special interest influence we were discussing a few days ago in the median voter thread? ~Alypius http://www.csmonitor.com/2002/1209/p16s01-wmgn.html Since 1973, Israel has cost the United States about $1.6 trillion By David R. Francis | Staff writer of The Christian Science Monitor Since 1973, Israel has cost the United States about $1.6 trillion. If divided by today's population, that is more than $5,700 per person. This is an estimate by Thomas Stauffer, a consulting economist in Washington. For decades, his analyses of the Middle East scene have made him a frequent thorn in the side of the Israel lobby. For the first time in many years, Mr. Stauffer has tallied the total cost to the US of its backing of Israel in its drawn-out, violent dispute with the Palestinians. So far, he figures, the bill adds up to more than twice the cost of the Vietnam War. And now Israel wants more. In a meeting at the White House late last month, Israeli officials made a pitch for $4 billion in additional military aid to defray the rising costs of dealing with the intifada and suicide bombings. They also asked for more than $8 billion in loan guarantees to help the country's recession-bound economy. Considering Israel's deep economic troubles, Stauffer doubts the Israel bonds covered by the loan guarantees will ever be repaid. The bonds are likely to be structured so they don't pay interest until they reach maturity. If Stauffer is right, the US would end up paying both principal and interest, perhaps 10 years out. Israel's request could be part of a supplemental spending bill that's likely to be passed early next year, perhaps wrapped in with the cost of a war with Iraq. Israel is the largest recipient of US foreign aid. It is already due to get $2.04 billion in military assistance and $720 million in economic aid in fiscal 2003. It has been getting $3 billion a year for years. Adjusting the official aid to 2001 dollars in purchasing power, Israel has been given $240 billion since 1973, Stauffer reckons. In addition, the US has given Egypt $117 billion and Jordan $22 billion in foreign aid in return for signing peace treaties with Israel. Consequently, politically, if not administratively, those outlays are part of the total package of support for Israel, argues Stauffer in a lecture on the total costs of US Middle East policy, commissioned by the US Army War College, for a recent conference at the University of Maine. These foreign-aid costs are well known. Many Americans would probably say it is money well spent to support a beleagured democracy of some strategic interest. But Stauffer wonders if Americans are aware of the full bill for supporting Israel since some costs, if not hidden, are little known. One huge cost is not secret. It is the higher cost of oil and other economic damage to the US after Israel-Arab wars. In 1973, for instance, Arab nations attacked Israel in an attempt to win back territories Israel had conquered in the 1967 war. President Nixon resupplied Israel with US arms, triggering the Arab oil embargo against the US. That shortfall in oil deliveries kicked off a deep recession. The US lost $420 billion (in 2001 dollars) of output as a result, Stauffer calculates. And
RE: children and cooperation
From my experience with 6 children in my house (one adopted at 8 years old, two nieces than came in as teenagers) and having done foster care with my wife who is a clinical social worker...your number 3 and 5 are on the right track but I would highlight on the indirect consequences for children...adults can tend to be less consistent with children than with adults. The consequences of the market (whether that be obtaining toys for good behavior or getting to go to the pool for keeping the room clean, etc) is often not consistently applied. The child learns he/she can be a free rider in these markets! They don't need to cooperate! This could be tested and I think you will find in the social work area that it has been tested. Consistency in parenting is critical. Treating the child fair and applying the same rules across the board is critical. This is related to number 5...I don't think it is harsher all the time, but again more consistent. Debacker wrote...which I don't agree with... They may be included as explanations 1 and 3 on Bryan's list, but maybe: A) Children aren't aware of the benefits of trade (cooperation). Most things they have are provided from their parent(s), and so they don't see much benefit to cooperating with others. B) Children know that trade gets them something, but their gain from trade are not are great as adults. Children might not have much to offer each other. Cooperating with another kid might get you another friend, but cooperating with another adult might get you a job or other tangible benefit. This could help explain why kids might disrespect other kids, but might be polite in front of adults (in addition to being taught manners). On A...in my house children understand the benefits of trade and they understand cooperation runs two ways. They do not get what they want if they don't cooperate. And we (my wife and I) will out play the child no matter how long it takes since we do understand the long term effects of children not thinking they have to cooperate. My children are by no means perfect, but they are better than many of the adults I run into. On B...children I think get more from trade than adults since they are without means to support themselves. This is especially true in younger kids...my teenagers have more resources. It is what value the adult puts on the trade. Is the adult willing to give up near term items to make a point? Too often I find the adult wants something just as bad and thus when the child doesn't cooperate they just give in. Bad move! Governance in the firm starts to break down and pretty soon the costs to gain cooperation goes way up. Every transaction gets costly since the rules are not consistent and penalties are not really known. More supervision is required. My house (due mainly to my wife...the drill sergeant in this firm) runs like a well oiled machine due mainly to the high cost of non-cooperation and the consecutiveness of penalties to the social group. Information on the losses due to non-cooperation are well know in the Driessnack Firm! Yes they are free to participate or not..but oh how great are the benefits for all when trade has low transaction costs. jdd John D Driessnack Professor, Defense Acquisition University NE-Capital Campus, Faculty Department Program Management and Leadership 703-805-4655 (DSN-655) [EMAIL PROTECTED] FAX 703-805-9670 Why are adults so much more cooperative than children? A contrarian might dispute this, but I'd say it's pretty obvious. Kids resort to violence very quickly, adults very slowly. Kids go out of their way to hurt other kids' feelings; adults try to avoid saying anything that might get back to someone they don't like. Kids steal stuff from other kids much more readily than adults would. Etc. A few explanations: 1. Adults have a much higher absolute IQ than kids (i.e., kids' IQs are age-adjusted, adults' IQs are not), so they are smart enough to recognize the indirect effects of their behavior. 2. Adults have lower time preference than kids. 3. Adults have had more time to learn about indirect consequences. 4. Adults are just less spiteful. 5. Adults face harsher punishment. 6. The child and adult worlds are in two very different coordination equilibria. Notice how drastically the 12th-grade high school culture differs from the 1st-year college culture. Other ideas? -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] He wrote a letter, but did not post it because he felt that no one would have understood what he wanted to say, and besides it was not necessary that anyone but himself should understand it. Leo Tolstoy, *The Cossacks*
RE: general motors
The seperate of labor can go to far in engineeringwhat the industry has is too many different projects and specilization into only parts of a total system can lead to optimization of those parts but not the whole. Having the engineer work on what seems to be less projects with less specilization is coming to what the industry callsespecially in defense (which is my experience) integrate product teams. Less specialization in individual work effort...more integration of a total productthus sub part A works better with sub part B...and even more important..the part that is designed is easier manufactured (since those engineers are on the team) and more supportable (since the logisticians are on the team). As cars get more complex I can see this effort at GM moving more and more towards this Intergrated Product and Process Development (IPPD). We have been doing in Department of Defense and Defense Industry (with the slightly more complex items that have a little more of a punch to them) for years. John Driessnack Lt Col, USAF -Original Message- From: john hull [mailto:[EMAIL PROTECTED]] Sent: Fri 3/29/2002 8:18 PM To: [EMAIL PROTECTED] Cc: Subject: general motors Howdy, General Motors is putting into place a plan which I find a bit confusing. Let me describe it (as best I can) and maybe someone can explain why it's a good idea. Here goes. GM is going to be instituting its Design Engineer [DE] program. The way things currently work is that a design team is responsible for designing a part, let's say a checking fixture, per the engineering input and/or plan. So an engineer is given a checking fixture to design, he goes to a design group who work out the plan of design along w/ the engineer. Then the plan goes to the next step where it is layed out and drawn in more detail and then detailers draw out each individual part of the fixture. Under the current plan, an engineer may have approximately fifteen parts on his plate. Obviously, there is some clear division of labor here: the engineer does the high-level design, presumably requiring extensive training, and at each level down the process becomes more mechanical and requires less training. (I used to be a detailer, and it is essentially tracing small drawings off a big drawing.) The DE program will eliminate this division of labor. In the DE program an engineer will have up to three projects on his plate, as opposed to the approx. fifteen under the current system. He will do the high-level design to create a part that fits the need, then he will figure out the design work needed, then he will lay it out, then he will detail it. So he will be working on fewer projects, but will be more extensively involved with each project. The explanation that I have heard for the new DE program is that it will be more efficient. But...having some small knowledge of economics, being mildly familiar with Adam Smith, and having read David Landes' What do Bosses Really do? (JEH, Sept. '86), the DE program sounds terribly inefficient to me. Obviously, it will involve the highly (and expensively) trained engineer performing jobs requiring much less skill. For a well paid position, this seems like an expensive waste of time. I suppose it may be more efficient inasmuch as the engineer doesn't have to take time to confer with the design team. However, it seems unlikely that such a saving would out weigh the cost imposed by having him perform duties that could be performed by less skilled personnel. Presumably GM knows what it's doing. Does anybody have any ideas as to why this is a good program? Is there something obvious that I'm missing? Your thoughts and comments will be welcome! Best regards, jsh __ Do You Yahoo!? Yahoo! Greetings - send holiday greetings for Easter, Passover http://greetings.yahoo.com/
