Updated: Sep 26
May 4, 2020 ~ The Trump Administration, neither the first nor likely the last, has asserted that the American people are not getting a good return on investment for U.S. membership to many dozens of international organizations, for which the United States contributes the largest share of the organization’s budget. The North Atlantic Treaty Organization (NATO) and the United Nations (UN) have been two prominent targets of the President’s criticisms, and as of late, the World Health Organization (WHO). President Trump’s announcement to suspend U.S. funding to the WHO is one of a growing number of actions taken with regard to multilateral institutions in which the Administration has sought to re-negotiate treaties and agreements based on new and theoretically better terms. Given this Administration’s high-profile efforts to suspend and/or cut funding to some international organizations and withdraw as a member altogether in others, it is most curious that the Administration appears to be pursuing a course for the United States to rejoin the UN World Tourism Organization (UNWTO).
In this blog post, I detach the political posturing from the policy positions and speak to the latter. Asking questions is important at any level of policy analysis and decision-making; however, questions associated with cost-benefit analysis have seldom been asked in the context of U.S. foreign policymaking. I now look to build a case for Applying Benefit-Cost “ABC” based decision-making in U.S. foreign policy, not only for its utility as a powerful tool of policy analysis, but also for its strong currency at this particularly laser-focused emphasis by the current Administration on benefits and costs of U.S. policies and programs. In my view and experience, the foreign policy community could do more to explain and highlight tangible and intangible benefits to the United States and the American people over costs to taxpayers, particularly those benefits gained and costs incurred by U.S. participation in multilateral institutions. Stories and narrative are illuminating and persuasive for many audiences, but for others, numbers and figures are more effective and influential. See my March blog on Foreign Policy and Public Audiences.
Benefit-cost analysis (BCA) has been around for several decades and is gaining some notable traction once again, but in policy discussions and circles not traditionally linked to BCA. In November 2019, Heritage Foundation Fellow Brett Schaefer gave Congressional Testimony calling for “a regular evaluation of the costs and benefits of membership in international organizations and use the results of this analysis to shift U.S. funding to increase support where U.S. interests are served while reducing funding where they are not.” I think there’s little here to take issue with, though what U.S. interests are often go undefined or described in broad and vague terms. Furthermore, the reality of conducting such an analysis is not as simple as it sounds.
Cost-benefit analysis tends to work best when both benefits and costs can be translated into monetary terms and thus, more easily compared. Scholars and practitioners alike have acknowledged this is a considerable challenge for the social sciences and associated policies and programs. Indeed, the existing literature primarily examines the more tangible aspects of policymaking, such as the military side of multilateralism, like NATO or UN peacekeeping or looks at specific policy domains such as defense, transportation/infrastructure, public health and environment. Given the absence of a coherent U.S. foreign policy, benefits and costs from a national perspective should be of particular interest as there are many parties with standing in foreign policy, those whose benefits and costs count, beyond those in the above-mentioned policy domains and not limited to the public sector.
As daunting as this may sound, there is potential for CBA to be used in international affairs and foreign policy. In local government and going back to December 2016, the New York City Mayor’s office released their UN Impact Report on the benefits and costs of the UN to New York City, demonstrating with this example, the successful use of monetary terms to convey how benefits outweigh costs. This report highlights a key variable that is often underutilized and not taken into adequate account – employment for American and permanent residents – but which should strike a chord with this Administration even as it looks at ways to increase Americans employed at the World Health Organization and other international organizations (Bender, 2020). In the case of NATO, Brands and Feaver (2017) do not carry out the actual calculation of a CBA; however, their research offers insight and encourages transparency by enumerating a range of potential costs and benefits.
How might “ABC” based decision-making in U.S. foreign policy work and be applied? The below table shows a possible break down or enumeration of the benefits and costs conducted for unilateral, bilateral or multilateral mechanisms. This framework may be helpful too, in deliberations on whether to withdraw, rejoin, and/or renew membership at international organizations such as the WHO, UNWTO and many others.
“ABC” based decision-making in U.S. foreign policy provides a useful framework using terms that the average American can better understand. Some may dismiss this as simply a rebranding exercise. Advocating for the State Department and foreign policy community to rebrand and more is not a new or novel idea. In these uncertain times, what organization isn’t undergoing some sort of reflection and re-prioritization? Just as diplomats are highly motivated to learn foreign languages, they too can be motivated to learn the economics language of benefits and costs. An “ABC” based approach has potential to better frame tangible and intangible benefits and costs with an eye towards identifying some level of commensurability in a manner that would produce greater transparency and accountability for results and meaning. Appropriate and disaggregated data will be a challenge to obtain, but feasible given the existence of multiple, credible sources of data sets created and made publicly available by the U.S. government, foreign governments, international organizations, as well as non-profit foundations, private corporations and interest groups either in support of continued U.S. membership or discontinued membership.
The primary limitation, a considerable one, of benefit-cost analysis, but not unique to foreign policy, is the use of monetary valuation. Other limitations include its simplicity and possible misinterpretation, which are not minor flaws. As such, BCA or CBA can only be part of the policy decision-making process as it cannot adequately assess social policies and programs. That said, foreign policy is a hybrid of descriptive, explanatory and prospective, social and security goals and thus, a mixed approach is needed. A complement to benefit-cost analysis is qualitative analysis, which has traditionally been used as the norm and standard approach to assessing U.S. foreign policy. 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. Weighing and valuing the evidence through benefit-cost analysis has potential to be a helpful tool at this time in understanding what is at stake – the core of “ABC” based decision-making in U.S. foreign policy. Citations: Bender, M. C. (2020, Apr 13). Trump funding threat against world health organization linked to hiring practices; the trump administration is considering withholding funds from WHO in part to pressure the group to hire more americans. Wall Street Journal (Online) Brands, H. and Feaver, Peter (2017). Reevaluating Diplomatic & Military Power: What Are America’s Alliances Good For? Parameters. 47(2), 15-30. Challenges and Opportunities for Advancing U.S. Interests in the United Nations System, 116th Congress. (2019) (testimony of Brett Schaefer). https://www1.nyc.gov/assets/international/downloads/pdf/UN_Impact_Report.pdf