Comment review: 05-04-09

Leo on Public Goods:

3. Leo Linbeck III:
Every dysfunctional social movement has, at its core, at
least one major misconception. Socialism’s is the perfectibility of human
beings. Nazism’s was the superiority of the Aryan people. Juche’s is the
infallibility of the Kims.
The current brand of American liberalism believes
that a public good is any product or service that can be provided by the
government. If the government can provide something, the government should
provide it.
This is not the economic definition of a public good. By that
definition, a good is a public good if, and only if, it meets both of the
following criteria:
1. The marginal cost of providing the product or service
is low.2. The marginal cost of excluding someone from the product or service is
high.
Goods that meet these criteria must be provided by the government
because a private provider could not prevent free riders, therefore has no
incentive to produce the goods. Also, because the marginal cost is low, there
are significant economies of scale that can make everyone better off if they can
be realized.
A classic example of a public good is national defense. If we
protect our nation against invasion by a foreign country, and a baby is born,
the cost of protecting that additional baby is basically zero. However, the cost
of excluding that baby from our security shield is very high.
The fact is
that most goods are private goods. There are very few public goods, and even
some “traditional” public goods are becoming private goods as technology
changes. For instance, roads were once considered a public good, mainly because
they didn’t meet the second test (how could you exclude drivers from entering a
freeway without slowing down traffic and imposing a very high cost on everyone
else?). Now, however, with RFID tags and license plate recognition systems, the
cost of keeping people out has dropped dramatically, and probably will continue
to drop. This means that roads could eventually become fully
privatized.
However, the modern American liberal believes things like health
care and education are public goods. But they’re not; it’s pretty cheap and easy
to keep people out of hospitals and schools, and the marginal cost of healthcare
is pretty high. What they really mean by public goods is that they want the
public (ie. the government) to provide them.
It is pretty clear the Framers
understood the rarity of public goods, even if they did not have a neat economic
definition to go by. That is why they had a set number of enumerated powers
which were supposed to limit the scope of the Federal government to only those
things that were clearly public goods (national defense, postal service, minting
money, diplomacy, etc.). But over the past 80 years, the scope of government has
expanded inexorably. Now mortgages are held by some to be goods that must be
provided by government. GImme a break.
Barnett is right in that the only way
the expanding writ of the Federal Government can be stopped and reversed is by
constitutional amendment. Whether the Tea Party movement is the right vehicle
for advancing this agenda is open to debate.
But it certainly can’t
hurt…
L3
Apr 27, 2009 - 8:34 pm