renner@uiucdcs.UUCP (10/15/84)
> True, but I'm talking about a result that has been *proven*, given > assumptions that all parties agree to. To wit: it's been proven that, > without coercion, "public goods" (economic sense) will be "underproduced" > (also economic sense)... > -- Paul V Torek (pvt1047@wucec1) I'd be interested in seeing the evidence behind this "proof." I suspect that the arguments involve either the game of defining "public goods" equivalend to things "underproduced" in the free market, or actual economic problems produced by government interference in the free market. Scott Renner {pur-ee,ihnp4}!uiucdcs!renner
glosser@ut-ngp.UUCP (glosser) (10/21/84)
<> >> True, but I'm talking about a result that has been *proven*, given >> assumptions that all parties agree to. To wit: it's been proven that, >> without coercion, "public goods" (economic sense) will be "underproduced" >> (also economic sense)... >> -- Paul V Torek (pvt1047@wucec1) > >I'd be interested in seeing the evidence behind this "proof." I >suspect that the arguments involve either the game of defining "public >goods" equivalend to things "underproduced" in the free market, or >actual economic problems produced by government interference in the >free market. > >Scott Renner >{pur-ee,ihnp4}!uiucdcs!renner First of all, the statement, "given assumptions that all parties agree to", reminds of a quote attributed to Voltaire: Incantations will destroy a flock of sheep if if it is accompanied by a sufficient does of arsenic. As far as coercion, public goods and proofs concerning the two go, my opinion is as follows: From an economic perspective a public good is defined as: A good that, even if it is consumed by one person, is still available for consumption by others. An example would be defense spending. The optimal supply of this good will be at the point where the additional benefit to society equals the additional cost. The issue then becomes: how is this optimal point obtained? Further, and this is what I think Paul Torek was talking about: Unless one is willing to argue it is possible to objectively measure the magnitude of satisfaction (in other words there is a cardinal measure of satisfaction or utility), how does one get the members of society to reveal their preferences? How would government, or any other social institution know how much to spend on public goods? It has been shown that attempts to determine social desires by adding the expressed preferences of individuals (perhaps via voting) can *possibly* lead to a paradox. Further there are always problems of a free rider. That is, if it is asked of me how much I'd be willing to pay for defense, and I know everybody else is willing to pay $1000, I might lie and say $1, knowing that as a whole there will not be any noticeably less defense. In reality, the amount spent on public goods is determined through the budgetary process. The manor by which these goods are funded is usually by taxing now or taxing latter (deficit spending). It is at this point that coercion enters the picture. Even if I desire to become a free rider (not pay my taxes), I won't because I know that sanctions will be levied against me. On the other hand, I can argue just as well, without coercion, social goods will be over produced. Suppose you had a society that chose to use deficit spending. In that case, since none of the present generation has to pay the bills, there might be a desire to spend like crazy on social goods. This is a case where lack of coercion (by coercion, I mean threats from the financial sector, or a balanced budget law) could cause an over production of public goods. I'd like to add one final comment. To argue that without coercion, there would be an underproduction, or even an optimal production of public goods is a value judgement. It is based on how we, as individuals, view society. Is honesty a social norm? When asked the right question, will we give an honest answer? There is no a priori answer to this. Stuart Glosser