Taking it Online: Benefit and Cost Considerations in Evidence-Based Foreign Policy
Reposted from Society for Benefit-Cost Analysis "On Balance" September 28, 2021 ~ Over the course of the past few years, there has been greater attention and scrutiny as to the high cost of America’s “Endless Wars” and over the past few months, alarms have sounded at the estimated price tag of $2.313 trillion in treasure and approximate 243,000 in direct lives lost from the War in Afghanistan (2021, Brown University, Watson Institute Costs of War Project) as well as calls for resignations at the collapse of Kabul. Similarly, the question of what were the benefits, if any at all, and the associated and more philosophical question of “Was it Worth it?” are even more difficult to explain and justify. The answer to these questions will be for each individual and generation to ponder, but it is expected that government leaders and policymakers should fully consider and take into account the benefits and costs prior to the declaration of war – not years and certainly not decades after the fact. SBCA blogs from June 8 and February 25 this year already suggests ideas for revisions to the 2003 OMB Circular A-4 following President Biden’s January 20, 2021 memo on “Modernizing Regulatory Review”. This blog considers and suggests how to revise Circular A-4 specific to foreign policy decisions and the issue of “standing” in Benefit-Cost Analysis (BCA) by 1) addressing impacts on how Americans residing abroad, varying from a few million to several million (Department of State and GAO, 2015) as a demographic not to be ignored, but also 2) examining the BCA impacts to include global impacts and not only to extend to impacts on the global networks and transboundary linkages that affect U.S. residents. The former, in my view, was an obvious, critical population brought to light in the chaotic airlifts of American citizens as well as allies in Afghanistan and the pressures placed on the Department of State Bureaus of Consular Affairs (CA) and Population, Refugees and Migration (PRM), in particular. The proposed revisions would have implications from public policy and foreign policy perspectives in specific ways on interpretation, as explained below. From a public policy perspective, Circular A-4 instructs agencies to “…focus on benefits and costs that accrue to citizens and residents of the United States. Where you choose to evaluate a regulation that is likely to have effects beyond the borders of the United States, these effects should be reported separately.” (p. 15) BCA is one of many primary tools for policy analysis, including foreign policy analysis. Using BCA or CBA should enable a more transparent and accountable government, but also a more inclusive government. Furthermore, looking to apply BCA may be fit for purpose in carrying out a foreign policy for the U.S. middle class, one that is more diverse, including geographically, than generations before, and who also count in the BCA calculation. From a foreign policy perspective, alongside transnational developments in a highly interdependent world, global networks play an increasing role in providing social and public services. In realization of these global changes, the United States must consider expanding the state-centric conversation to include networks, alliances, movements, coalitions, etc. and reflect on the costs and benefits of such transboundary engagements. Consider the recently launched Welcome.US public-private movement. The most widely cited foreign policy analysis approach is the rational actor model and the unit of analysis continues to be the state/country. While the bureaucratic politics and the organizational process models introduces more actors and dynamic processes, neither adequately respond to the fluid global arena of actors and stakeholders facing complex issues. Lehmann (2012) charts 20 years of complexity in foreign policy and international relations. He explains how complexity as a conceptual framework for explaining international politics emerged as a result of the recognition that there are problems with how traditional concepts and theories of international relations and foreign policy have in explaining change in international politics. The complexity framework has been making important contributions to this discourse. From this perspective, the concept of “standing” and how it is defined for the context, are important factors in determining who counts. Benefit-cost analysis tends to work best when both benefits and costs can be translated into monetary terms and thus, more easily compared. Given this important limitation, a complement to benefit-cost analysis is qualitative analysis, helpful for the foreign affairs officer engaged in programming and execution, but not nearly as helpful for the public manager or policymaker who needs to weigh the pros and cons, the benefits and costs against other programs and policies and consider the trade-offs. Indeed, academic papers on this topic do exist; however, it is not clear how extensive BCA is applied in practice by policy- and decision-makers to inform foreign policymaking. Information and findings produced from these analyses could contribute to a body of evidence for decision-makers, and at a minimum to present another dimension of information and data. Diversity in types of evidence is desirable. Another key limitation that goes beyond our capacity is to predict the future and unknown variables, such as uncertainty and unintended consequences, explored by Dudley et al (2019), in which the authors consider the concept of “dynamic” BCA frameworks to encourage learning across policy areas. On implementation, the State Department’s 2011 Final Plan for Retrospective Analysis of Existing Rules proposed an initial list for rulemaking review and cost-benefit analysis. The Department of State is not a regulatory agency, but does engage in limited rulemaking as outlined in its 2011 Final Plan and continues to “invest” in the development of other countries and thus, Americans residing in those countries. In the 2011 Plan, the Department names four primary rulemaking bureaus: Bureaus of Consular Affairs, Educational & Cultural Affairs, Political-Military Affairs, and Administration, as well as the Bureau of Resource Management. This is a conservative list to be sure. In an earlier blog from 2020, I make the case for applying benefit-cost based decision-making to U.S. membership at international organizations, but there are other instances where application could provide additional evidence to aid in decisions to sustain, withdraw or reduce. A literature review to enumerate all benefits and costs would be very useful to inform this process of retrospective analysis and review. In addition to the literature review, a data review is an essential element of a standard cost-benefit analysis of a project, program or policy. Data are more widely available and recent efforts through the Evidence Act may help with obtaining available data across the U.S. government in aggregate and even disaggregate to answer specific policy analysis questions. With the appointment of a State Department Chief Data Officer and Deputy Secretary of State for Management and Resources in place, timing is especially good to convene a Department-wide working group with expertise in rule writing and to follow through on the 2011 Plan or an updated 2021 Plan. The foreign policymaking community has the capacity to do much more to explain and highlight tangible and intangible benefits to the United States and the American people over costs to society, including taxpayers residing in the United States as well as abroad, particularly those benefits gained and costs incurred by U.S. participation or engagement. Alternatively, cost-effectiveness analysis is an approach that may be helpful in the absence of monetary values. There is potential to draw from the literature and practice to identify appropriate measurement indicators and to calculate costs and benefits to better reflect our evolving society. And certainly for the new Administration to restore trust in government, transparency is critical and benefit-cost analysis helps to facilitate transparency through enumerating all benefits and costs. Citation: Lehmann, K. (2012). Unfinished transformation: The three phases of complexity’s emergence into international relations and foreign policy. Cooperation and Conflict. 47(3) 404–413.