Public Goods And Club Goods
Libertarians often refuse to recognize public goods and club goods, or that governments have a role in their provision. The list of important goods with substantial public or club goods components is very long, and includes education, law, safety, health, transportation, research and much more. (Club goods are like public goods but excludable and only rivalrous with congestion.) Markets underproduce these because of the free rider problem.
- Buchanan clubs [More...]
- Starts with a brief, easy overview of Club Goods versus Public Goods. Club goods are non-rivalrous (until congestion occurs) like public goods, but excludable. Much of government can be characterized as producing public goods and club goods.
- Can Investigative Journalism Overcome the Rational Ignorance of Voters? [More...]
- Yes, especially when it is linked with entertainment demand. I.e. an interesting story.
- NEW 5/10/2020: Collective Action Problems (3 links)
- A very common class of problems where conflicting interests between individuals make cooperation difficult. Markets can be very good solutions to collective action problems, but they can also fail to solve the problems when values other than property (such as justice or equality) are not represented and in cases of The Commons. Libertarians seldom recognize solutions to these problems other than markets.
- Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly (book) (1 link)
- An excellent academic (but readable) rebuttal to the propaganda in Economics in One Lesson, the fallacies of Economics 101, some Chicago Economics and some Austrian Economics. Very simply, markets do not take into account ALL opportunity costs.
- Information Is a Public Good [More...]
- Investigative journalism is the costliest form of journalism, and yet also the one that has the greatest societal value, two characteristics that make it extremely vulnerable to downturns in the journalism business, especially when the downturn is non-cyclical and protracted. Extremely underproduced by the market.
- Libertarians embracing public goods, Tim Lee edition [More...]
- "The larger point is that there are things that are much much much easier for government to do than private actors, and that these things often improve the efficiency of markets, and that infrastructure is a prime example."
- Natural Monopolies (5 links)
- Libertarians like to deny the existence of natural monopolies in roads, sewers, and many other services (like Google search) that have increasing returns to scale. Or they make crazy arguments that they should not be produced or regulated by government.
- Research (5 links)
- Scientific research and statistical information gathering are vastly better performed by government, and underproduced by private actors. There’s a clear pipeline from government-funded discoveries to private-sector innovations. These are classic public goods.
- Roads (10 links)
- The "who will build the roads?" question has become an inside joke for libertarians. So much so that they don't even debate or discuss it anymore. They just regurgitate "privatize everything!" despite the fact that history shows their solutions don't work except in rare cases.
- Sewers (2 links)
- Libertarians like to complain that governments are responsible for deaths through wars, etc. But they never consider how governments prevent deaths. The sewers of Rome have prevented far more deaths through sanitation than the legions of Rome ever killed in wars. Sewers are natural monopolies.
- Shine your light on me … [More...]
- How Paul Samuelson and Ronald Coase got into a pissing match over lighthouses being public goods, and how both were wrong in several respects.
- The Genetic Commons (7 links)
- Unregulated markets in antibiotics and pesticides select strongly for resistant genes, resulting in widespread resistance to antibiotics and pesticides. This is a classic tragedy of the commons, requiring regulation. Examples include DDT, MRSA, and resistance to RoundUp.
- The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives (book) (1 link)
- "Usually, private ownership creates wealth, but too much ownership has the opposite effect -- it creates gridlock. When too many people own pieces of one thing, whether a physical or intellectual resource, cooperation breaks down, wealth disappears, and everybody loses."
- The Logic of Collective Action: Public Goods and the Theory of Groups, Second printing with new preface and appendix (book)
- The Theory of Externalities, Public Goods, and Club Goods (book)
- Markets are expected to fail when there are externalities and public goods. Markets can be efficient for some club goods, but then so can governments. This is an undergraduate academic textbook for this branch of economic theory.
- Transportation (4 links)
- Transportation is rife with market failure, including natural monopoly, positive and negative externalities, coordination problems and conspiracy to manipulate markets. This necessitates an active government program of regulation, deregulation, anti-monopoly and socialized production.
- Was Coase Right About the Lighthouse? [More...]
- No. The famous lighthouse example of Nobel Laureate Ronald Coase was supposed to be an example of private production of public goods. "Given Coase’s insistence that economists get their facts right, how ironic that he himself should fall victim to the same mistake!"
MarketThink is guaranteed to erode public space and public goods in the city.
Tom Slee, "No One Makes You Shop At Wall Mart: The Surprising Deceptions Of Individual Choice" pg. 63.
Competition and variety are also public goods: by their nature, neither can be provided by a single store. Jack never explicitly chooses to have a narrower choice of places to shop, and yet he and others like him contribute directly to the problems of the downtown stores. [That are failing due to big-box stores.]
Tom Slee, "No One Makes You Shop At Wall Mart: The Surprising Deceptions Of Individual Choice" pg. 59
In the particular circumstances of a given age or nation, there is scarcely anything really important to the general interest, which it may not be desirable, or even necessary, that the government should take upon itself, not because private individuals cannot effectually perform it, but because they will not.
John Stuart Mill, "Principles of Political Economy with Some of their Applications to Social Philosophy (7 ed.) Book V Chapter XI" pg. 606.
... every public good problem [has an intractable second-best nature]. The only way to avoid the evident dangers and inefficiencies of government funding is to take the risk of private monopolistic behavior. No a priori answer tells us which loss is greater.
Richard Epstein, "The Libertarian Quartet"