SEMAINE D'ÉTUDE SUR LE ROLE DE L’ANALYSE ECONOMETRIQUE ETC. 101
payments and are likely to contribute more to general economic
advance.
8. Traditionally, of course, governments have always in-
vested largely in the facilities required by their own minimal
functions of national defense, maintenance of law and order
administration of justice, revenue collection, and the like.
o. Finally, and again this is a recent development, govern-
ments invest in enterprises intended to enhance the prestige
of the nation. Atomic power plants and steel mills are typical
examples.
This is a list of motives, undoubtedly not complete, that
induce governments to undertake investments. It is also a list
of the considerations that must be applied to any government
investment, because it is a rare project indeed that contributes
to only one of these objectives.
Thus the appraiser of a government project, as contrasted
with the appraiser of a private one, must be concerned with
many kinds of consequence, not all measurable in monetary
units and not all comparable among themselves in any na-
tural unit. Even in dealing with the consequences that are
measurable in monetary units, in principle, he is not likely
to find that market prices are an ‘adequate guide, partly be-
cause of the prevalence of unpriced external effects and partly
because consumers’ surplus (a treacherous concept that cannot
be avoided here), though not reflected in the markets, is im
portant to governments. -
There are similar complexities in the consideration of costs.
though not as severe. To be sure, a government must recog:
nize, while a private.firm can ignore, such external disecono-
mies as congestion and smoke contamination, but these are
usually not of the essence. The government is more likely to
be concerned with discrepancies between the market prices
and social values of certain factors of production: labor, when
there is substantial unemployment, is a famous instance. It is
oJ
Dorfman - pag.
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