Science Based Policy versus Ideology: The Mechanics of
Alcohol demonstrates how its social costs effectively high light ALL the points of greatest economic liability thereby underscoring where intervention will be most effective. This example of Alcohol shows we have 3 prime areas of cost:
45% = alcoholics;
40% = dunk drivers and
15% = all other drinkers combined.
Knowing this ‘break down’ allows us to separate out 85% of the social cost by simply finding ways to deal with alcoholics and DUI’s. This summary will demonstrate how alcoholics and DUI’s can be partitioned off from the rest of the tab. Once they are removed, we are left with a very affordable remainder for the rest of alcohols consumers.
Post Card Policy:
This simple chart quantifies ROOPA’s entire policy platform for the whole alcohol industry.
(Sorry, the website does not yet take graphics. Hopefully within a month or two. For free download with charts, go to lulu.com and search under Raghu roopa.)
Figure A2 (Taken from Section III, Chapter 2?)
Charting costs in this manner also offers another big advantage. It allows us to respond to the broader view of the issue in place of the infighting over specific numbers. It does not matter if the total cost of alcohol is $50 billion or $185 billion or somewhere in between. Whatever that total number maybe, it still follows along these 3 major areas: 45% (alcoholics), 40% (drunk driving) & 15% (everyone else). We simply divvy up the cost along these lines no matter what the total cost may be. This will help to sidestep the artificial importance placed upon the specific numbers that so often paralyze these efforts.
We call this template a ROOPA Equation because the breakdown of these costs remains relatively the same though the numbers themselves may vary widely. The numbers are ‘Variables’ because they can and do change or vary.
The ratio of the Equation may also change somewhat. Yet, the template of the Equation remains much the same. The Equation in this case is that there are 3 primary areas of social cost: alcoholics, DUI and everyone else.
Standardizing policy reviews into a series of easy to use policy models allows us a degree of automation. This also gives us the broader context of each issue. ROOPA has a number of these policy model Equations. We simply enter the numbers into these Equations and get back a nearly fully packaged policy review. This ‘ROOPA Policy Chart for Alcohol’(above) is one example of a ROOPA Template. Below is another template.
(Another chart-unable to show on this site)
Figure A3 (Taken from Section III, Chapter 2)
This chart above on alcohol offers another common Template. We used this template for all our studies. In Figure A3, we took 4 studies representing 4 different positions and findings on alcohol.
These studies are further specified with highlights. Each highlight represents a different area covered by each study. One highlight represents the Fed Excise Tax Collections, another is for the Motor Vehicle Accidents, etc. These highlights and their corresponding costs are listed alongside the chart.
(These break downs are in color for those getting the electronic version or in white and shades of grey for the printed copies.)
We take all the information from these studies above and transfer it into yet another template (below). This template below takes the same information and highlights it in an entirely different way. This template (below) is another standard chart used throughout the book as well. We call this template the ‘ROOPA Index Chart.’ This Chart pools the numbers from the studies and places them into 3 categories: High (Highest or Worse Case Scenario), Low (Lowest) and the Average: Figure A4, below.
Simply cycle the data on most given topics through these templates & equations and they will create a picture of the issue that offers new perspectives. It’s easy to do and yet more effective in helping to establish parameters then most any other system of reform.
(Important chart. Unable to see on site. Sorry)
ROOPA Index Chart: Alcohol
Figure A4 (Taken from Section III, Chapter 2)
We work with the numbers of each study by first
looking at the one showing the highest estimate: $188 billion a year or $1.46 per drink. We call this highest number the ‘Worse Case Scenario’ or the ‘Highest Cost’ or simply ‘High.’
We first look to see how we can craft reforms using these largest numbers. We start with this highest figure for a simple reason: whatever works for the highest cost will work even better for the lower cost estimates.
We start with the ‘high’ or ‘worse case scenario.’ We then move to the next step once we have exhausted all possible solutions using these ‘high’ numbers. The next step is to combine the highest figure (of $188 billion) with all the other studies. This combined number gives us the average cost called the ‘Average.’ The averaged social cost of alcohol is $128 billion. Any reforms that can work for $188 billion will work even better for the ‘average cost’ of $128 billion.
There is no need for a separate proposal for the
lowest sums. The lowest sum usually shows a
surplus over social costs anyway. The lowest figures
are also suspect as industry sponsored research.
Working with the highest and the average cost gives us a way to standardize all the conflicting variables on the subject. Averaging these figures creates a template that can account for the gamut of studies and present it into a fair, overall picture of the industry. This template also makes it relatively easy to scale the conflicting numbers to have bogged down other policy reforms. This particular template may become an industry standard for all reform efforts.
Let’s go back a couple pages to figure A2 called: ROOPA Policy Chart for Alcohol. In Figure A2, we see the high or ‘worse case scenario,’ showing a total of $85 billion created by just 4% of all drinkers. This 4% is primarily made of the industry’s 2 million alcoholics.
This discovery begs the questions: can a $10 billion program (as an example) reduce this huge cost? Find an effective rehab program for $10 billion and you just saved $85 billion in related social costs. In today’s system, these rehab services are the very programs being gutted. Under ROOPA, these programs would be better funded to mine the tens of billions in savings on the back end. Helping to rehab alcoholics is ‘the exact spot’ where we can secure the greatest savings - $85 billion a year. Contrast this against today’s growing number of policies of neglect and punishment that only multiplies these social costs.
Tailoring programs that can account for this highest social cost bestows upon ROOPA the eyes to find every area offering the greatest savings. Few reform measures will match ROOPA’s ability to find and capitalize upon such potentials savings. The reason: most reforms don’t look at the industry’s total social cost nor do most efforts work with the ‘worse case scenario.’ ROOPA can access this kind of insight on dozens of industries. The magnitude of these savings cannot be overstated. Find 5 more industries similar to alcohol’s and you will have saved (a half) trillion dollars a year.
Providing effective remedies is much better than
today’s policy of randomly gutting programs in the
name of budget discipline. ROOPA can set budget priorities with greater accuracy for real savings though maybe spending more upfront.
ROOPA brings to life the old saying: ‘The ounce of ($10 billion in) prevention is worth ($85 billion) pound(s) of cure.’ We follow this with another old saying but add a modern twist: A billion saved is a billion made. Savvy spending is one side of brilliant investing. ROOPA specializes and automates this brilliant savings side of investing.
In alcohol’s example, the return (money saved) is 8 times investment-annually. This kind of preventive care will solve the great America riddle: why the most flailing health care service of the developed world has the most expensive medical cost of the entire world? The remedy? Dredge out these massive social costs by pairing them to cost effective programs. This will do wonders for America’s health care performance.
This creed for the ounce of prevention will become the Democrat’s counterpart to the Republican’s holy grail of tax cuts for economic stimulus. ROOPA offers both sets of Holy Grails. We can have tax cuts reaching up to 50% alongside preventative program funding. ROOPA is the best of both these seemingly conflicting paradigms for they are in fact two sides of the same coin.
Let us now look how these two paradigms join into a single currency of reform.
