Ridiculous statement
So Chris Barton in the Herald stated:
Those who call for a cost-benefit analysis of the (broadband) plan don’t understand the internet
O.o
It is obvious from this statement that Chris Barton doesn’t understand what a cost-benefit analysis is, and just wants fast internet so badly that he is willing to ignore any points against such a scheme.
His implicit point is that there are benefits in the future, and there is uncertainty around how these benefit will pan out – while this is true, it makes a proper cost-benefit analysis more important, not less. Bleh.
His argument is so powerful that it is not necessary to justify it.
“It is obvious from this statement that Chris Barton doesn’t understand what a cost-benefit analysis is, and just want fast internet so badly that he is willing to ignore any points against such a scheme.”
I think what he means is he wants fast internet so badly he is willing to spend any amount of other peoples money to get it!!
He sounds like a dot.com entrepreneur from 1999!
You obviously didn’t read the whole article. To summarise:
Get super fast internet –> Magic happens –> Utopia
Don’t need a CBA for that – it doesn’t matter what the denominator is when you are multiplying by infinity 😉
I have some sympathy for Chris Barton. Here’s why…
If you read Chris’ statement as “there’s no point looking at the costs and benefits” then yeah, it’s a stupid thing to say.
However he goes on to state a range of future benefits of the project – implicitly stacking up the benefits side of the cost/benefit analysis he says we don’t need.
Perhaps what he’s saying is that we need to think about the analysis differently given the uncertainty. If he’s suggesting we shouldn’t analyse this like building a new hospital (where the future is much more predictable) then I totally agree.
The point that I think is worth making in this situation is that traditional financial analysis is probably not all that helpful. Sure you can build a model and make some assumptions about cloud computing benefits, but you’d really just be making it up.
Instead it may be worthwhile evaluating different scenarios. Making reasonable assumptions for each (with reference to previous development of the internet). What this allows the Government to understand what it has to believe.
For the Government to say the NBN will deliver a 6.7% return on capital is silly. We don’t know. But equally saying that the internet is a good thing so we may as well have a crack is insufficient. What we could say is if cloud computing reaches x% penetration and two other technologies (of twenty identified) are commericalised then it is worth it. And if none of that happens worst case scenario is a 4.3% which is not great but still better than Kiwibank, so on balance we’re willing to take the risk.
@Robbie
“I have some sympathy for Chris Barton”
While I don’t disagree with some of your points, I feel completely different about this statement 😉
When there is uncertainty it is MORE important to make sure we think carefully about the case for implementing the policy. Do we want the government to tax the frik out of us to dig a hole to the middle of the Earth in case they find leprechauns? No? There is substantial uncertainty regarding what exists in the middle of the earth – so by Chris’s logic we should just dig.
“The point that I think is worth making in this situation is that traditional financial analysis is probably not all that helpful. Sure you can build a model and make some assumptions about cloud computing benefits, but you’d really just be making it up.”
An educated guess is better than just pissing out money – and if there is really that much uncertainty, do we want the government deciding “frik it, we’ll just do it anyway”. How does that make ANY SENSE!
“Instead it may be worthwhile evaluating different scenarios. Making reasonable assumptions for each”
So instead of doing a cost-benefit analysis – we should do a partial cost-benefit analysis, focusing on scenarios when it is a good idea … this sounds like what Chris is suggesting, and to put it mildly it is friking retarded and self-interested.
I have no time for people who are involved in an industry pushing policies that help their industry – often they don’t realise they do, sure, but it doesn’t make it right.
In this case, saying we should do a cost benefit analysis is a silly thing to say. The fact he started listing cost and benefits just illustrates how bad his initial statement was.