Government 1B: Lesson 20
Here’s why an elderly lady can stand out on her lawn and shout at people “You are not allowed to look at my flowers!” and not be labelled as the town’s crazy old lady.
Public goods have been used as a government tactic for decades, and we certainly have many examples of public goods around today: libraries, the postal service, railroads, and even park benches and amenities. Government bureaucrats use these public goods to win over the people and keep them in their good graces because without giving us something in return for our taxes, they simply would look like thugs in expensive suits stealing our money at gunpoint.
There are two main characteristics of a public good:
- Once produced, it can be consumed by anyone at no additional cost.
- Consumers cannot be excluded from using the public good.
An interventionist will tell you that the government must produce public goods or else they would never be produced. They assume that no one would build a couple of park benches or a library just out of the goodness of their heart. Nobody produces something without getting something in return, and people would just freeload off of the public goods. These claims are widely believed by the public ever since capitalism has been under attack, and phrases like “greedy capitalist” and “ruthless, backstabbing businessmen” have been thrown at every person who has a couple of bucks to their name and thinks welfare is not a good thing. But the non-interventionist would say, why assume the free-loader attitude is the only one? Also, why does the government think that people only do something for money? A wealthy man in a town may build a brand new library and a couple of park benches because he wants a place for his many grandchildren and their friends to go to hang out and read or sit when they’re at the park. If he does this, not only does he win the grandpa of the year award, but becomes the most generous and well-loved man in the town. The government can look at this scenario and say, “Look how all those people are free-loading off that nice man.” But what about the many people who donate books to the library or who volunteer to manage, clean, and do storytime at the library? You can’t assume that everyone is a free-loader and that a government bureaucrat is the only one willing to produce a public good.
Now, let’s look at the list of public goods above and the characteristics that they are supposed to have, and think about it for a few seconds.
“Once produced, a public good can be consumed by anyone at no additional cost.” This is certainly true for libraries and park benches, but not true for railroads and the postal service. For a person to take a ride on a train and mail a letter to a friend, they have to purchase a ticket and a stamp. This goes against both the first and second characteristics of public goods. A very large group of people are excluded from riding the train and mailing a letter, those with no ticket or stamp. Surely this means that the railroad and postal service cannot be classified as public goods, since they don’t fit into any of the characteristics. This brings up another problem with the concept of public goods.
The distinction between public good and private good is very flimsy. For example, a front yard and flower garden can be enjoyed by anyone passing by. You can’t easily exclude certain people from looking at and enjoying it. An elderly lady cannot stand out on her lawn and yell at a person, “You are not allowed to look at my flowers!” and then to his friend next to him say, “You are allowed to look at my flowers.” But in fact, she could and is in her total right mind to do so, because her yard and flowers are private goods and she, being the smart lady she is, does not want anyone to mistakingly think that her yard is a public good and label her as the crazy lady who lets people freeload and look at her flowers.
It is clear that the main problems with public goods and private goods are problems created by the government. The government cannot afford to have the public think that they can produce public goods themselves, since that would mean all they do is steal your money as taxes and use it for war, weapons, and public goods that the public does not need or does not want. The tax system imposes deadweight losses on the economy. In the end, all the public is left with is a bunch of wars they did not want, weapons they do not need, and less money in their pockets. But at least they have those nice benches in the park for anyone’s use.