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Rebutting the public goods argument

Submitted by Micha Ghertner on Tue, 2003-12-16 16:44

Perhaps the most frequently-used justification for government, especially by minarchists and neoclassical economists, is the argument that the government is necessary for the provision of public goods - non-excludable goods whose benefits cannot be limited to contributors. Because of this non-excludability, there is no incentive to contribute, for each potential contributer will reason that other people will contribute, thereby free-riding on the contributions of everyone else. Even though all would (presumably) prefer to pay a small amount for the benefits of the public good, when placed in this prisoners' dilemma, it is in each person's individual self-interest to renege.

Thus, we have a strong argument for coercing people, by way of government, to provide police, roads, education, R&D, scientific research, and of course, national defense.

But not so fast. While this analysis of public goods focuses on market failure, it misses one crucial element: government failure. Will Wilkinson writes,

If G is a public good, and M is a mechanism for providing G, then M is a sort of public good, too, and so are the conditions for the functioning of M. If M requires tax compliance, and non-predation and non-corruption by agents of the state, then those things are what we might call higher order public goods. And we get these things by getting even higher order goods, like a certain socially prevalent level of trust, a not-too-high discount rate on future value, and the internalization of certain kinds of social norms. If we think of THESE things as higher order, and logically prior, kinds of public goods, then we'll get over thinking of public goods as things that states provide. For in order for states to provide anything other than abuse, these things have to already be in place.

Wilkinson doesn't mention the largest public good of all: voting. Bryan Caplan, in his excellent Anarchist Theory FAQ, writes,

To rely upon democracy as a counter-balance simply assumes away the public goods problem. After all, intelligent, informed voting is a public good; everyone benefits if the electorate reaches wise political judgments, but there is no personal, material incentive to "invest" in political information, since the same result will (almost certainly) happen whether you inform yourself or not. It should be no surprise that people know vastly more about their jobs than about their government. Many economists seem to be aware of this difficulty; in particular, public choice theory in economics emphasizes the externalities inherent in government action. But a double standard persists: while non-governmental externalities must be corrected by the state, we simply have to quietly endure the externalities inherent in political process.

Since there is no incentive to monitor the government, democracies must rely upon voluntary donations of intelligence and virtue. Because good government depends upon these voluntary donations, the public goods argument for government falls apart. Either unpaid virtue can make government work, in which case government isn't necessary to solve the public goods problem; or unpaid virtue is insufficient to make government work, in which case the government cannot be trusted to solve the public goods problem.

This is, in my view, perhaps the strongest argument against government.

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Damn, he stole my thunder.

Submitted by Jonathan (not verified) on Tue, 1999-11-30 00:00.

Damn, he stole my thunder. I was working on a series of posts about the public goods problem of national defense based on the recent accusations by other bloggers of 'utopian'ism.

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Heh. I got in a real

Submitted by Qiwi Lisolet (not verified) on Tue, 1999-11-30 00:00.

Heh. I got in a real communication problem trying to discuss this very issue with my father, who regards voting as an infallible tool for good government, in the hands of an educated electorate of course, that being one that agrees with him. I tried to explain why an educated electorate is a public good, and he immediately agreed, while ignoring every word that came out of my mouth after the words "public good".

When people who are not familiar with the terminology of economics hear the words "public good", they are thinking something very different from the economics-minded person who spoke it.

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Nah, he just wrote a general

Submitted by Qiwi Lisolet (not verified) on Tue, 1999-11-30 00:00.

Nah, he just wrote a general post about public goods, a specific one about the particular problem of "national" defense (no nations in anarchy!) is a fascinating subject.

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The second article I wrote

Submitted by John T. Kennedy (not verified) on Tue, 1999-11-30 00:00.

The second article I wrote for the web was on The Fundamental Fallacy of Government.

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Awww... nothing about the

Submitted by Cap'n Arbyte (not verified) on Tue, 1999-11-30 00:00.

Awww... nothing about the actual market solutions to alleged public goods? :) (Maybe something for me to write about...)

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I stumbled across a

Submitted by Kevin Carson (not verified) on Tue, 1999-11-30 00:00.

I stumbled across a reference to a study a while back (I wish I could remember the citation) that found actual human beings were much more prone to cooperative behavior than could be predicted by game theory. And there are examples of "public goods" problems being solved non-coercively where a strong civil society provides strong public opinion sanctions against free riders, and the obligation to pull one's own weight is enforced by community disapproval.

J. Stephen Lansing and John H. Miller , "Cooperation in Balinese Rice Farming"

The problem in the West is that the state has intervened massively in civil society, so that it has become atomized, and many of the social incentives for proper behavior have been weakened.

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[...] is provided absent

Submitted by Catallarchy » If You Don’t Eat Your Meat, You Ca (not verified) on Tue, 1999-11-30 00:00.
[...] is provided absent government coercion. And let’s not forget that government is the largest public good problem of them all. On a similar note, [...]
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