Public Goods

In standard economese (an esoteric language spoken only by economists), a “public good” is any good that is “non-rival” and “non-excludable.” When a good is non-rival, anyone’s consumption of that good does not make any other person’s consumption more costly: think pre-cable television or net-neutral internet. A good is non-excludable when I cannot prevent someone from consuming it for free. So, for example, clean air and water by this definition are not “public goods.” Nor, apparently, is voting for citizens, or campaign contributions — to say nothing of affordable healthcare, education, or reliable information. By the standard definition, these are at best what are called “common” or even “private” goods. The aim of militant market advocates is to make all goods private goods; how do we know their value if they don’t have a price?

I have two objections to this way of distinguishing among goods. My first and most basic objection is that no good — or not one I can think of off hand — is truly public in this sense. Take air. Now take air in today’s Beijing or LA circa 1970. While it certainly true that my consumption of particle-filled, carcinogenic Beijing air does not prevent the next victim from breathing it — in this sense it is non-rival — it is also true that not all consumers have equal access to the pure oxygen sold on street corners and vending machines. Clean water perhaps offers a better example. If I live in Flint, Michigan, or any number of “Flints” scattered across the free world, I am compelled to buy water off the shelf — in which case it is definitely not non-rival — or risk ingesting heavy metals and other toxins at levels that my body cannot sustain. Even formally free airwaves are so clogged with misinformation, disinformation, and all out lies that I must pay a premium (in superior education, leisure and political access) to learn how to distinguish what is worth and what is not worth following. Should there be goods that are non-rival and non-excludable? Maybe. But there aren’t.

My second objection, however, is that this definition of “public” applies nowhere else in the English lexicon. It appears specially formed and specially suited for cost-benefit analysis. Cost-benefit analysis, however, is a tool that applies uniquely to private goods, goods produced by and for private markets. This distinction between public and private goes way back to classical Greece, where thinkers were brought to distinguish between public things, shared among all citizens in a city; and private things, distributed among members of a private household. To this day, our English terms political (Greek πολιτεία) and private (Greek οἰκονομία) bear a close resemblance to their classical originals. Οἰκονομία is simply the science of private household (οἶκος) enterprise. Πολιτεία is both the space where and the process through which equally endowed citizens agree on the things they share in common. Its Latin equivalent, ironically, is res publica, the wealth we hold in common, or, in English, commonwealth. Here, it is the public itself that identifies what is or should be a public good (and therefore shared among all), and what is or should be a private good (enjoyed or endured within the private household, the οἶκος).

In this case, private goods lend themselves to marginal analysis. How much or little of a good a private household should produce or consume will always be a matter of trade-offs. Public goods, by contrast, are enjoyed irrespective of their cost. So, for example, once it is determined that clean drinking water should be available to all citizens, the public is therein authorized to make sure that this is so. Public goods, by this definition, may at any time be deemed private only when the public determines that it is so. Similarly, formerly private goods, lets say WiFi signals, may at some point and in some communities be deemed public, at which point the public is authorized to make WiFi equally available to all citizens.

Obviously should citizens desire a premium brand — pure oxygen, for example, by contrast to its mixed gas, real-world knock-off — then they are free to pay for it.

Do public goods give rise to private costs? Of course they do, both today as in classical Athens. And citizens must weigh these costs across a municipal, regional, state or national budget. And, yet, because these administrative bodies all enjoy the authority to tax themselves in order to achieve desirable public ends, they must always be in a position to decide whether the marginal benefit they derive from a public good is worth the “deadweight” loss or “misallocation” of resources — terms that in economese are heavily weighted in the direction of private markets. Perhaps a public that enjoys superior education is not a deadweight loss at all. Which raises the interesting question: how would a public responsibly determine whether it was or was not unless it enjoyed a superior education?

Ok. You economists or social scientists; am I right or am I right?

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