franka@mmintl.UUCP (Frank Adams) (10/14/85)
In article <28200164@inmet.UUCP> nrh@inmet.UUCP writes: >It's wealth, but it's wealth that could have been used by individuals >in free markets to build a dam, had they been able to convince folks >that the very best return possible would be from investing in their >"Hazlitt Dam". That the individuals taxed would have spent their money >in less obvious ways doesn't affect the fact that they would have >spent it, and it is the DIFFERENCE between how they would have done >and how the money spent in Hoover Dam did that represents whether >any wealth was created. Their spending on other things would >have benefited other people, but it would have been just as much >wealth, and it would have been spent in ways that seemed worthwhile >to its owners. It would not have simply been destroyed. The problem is that the Hoover dam could not have been built privately, because too much of its benefits accrue to people who get those benefits whether they pay for them or not. There is no incentive for these people to invest; let someone else pay for it. This is what is known in economics as a public good, and there is no way for the free market to supply them. For another example, consider the railroads. They were built by having the government force the sale of property to them. Without this, they could not have built -- a few people on any proposed route would have demanded exorbitant prices. I can't *prove* that more wealth was created by building the railroads than the free market would have produced, but I think it is *obvious*. Do you really think otherwise? Can you *prove* otherwise? Another, especially clear example of a public good is defense. Having an army to defend against foreign agressors protects me from those agressors whether I pay for it or not. There is no way to defend only those citizens who are willing to pay for it; by its very nature, everyone is defended. You may propose paying for defense by voluntary contributions. But look at it from the individual's point of view in such a case. Either the annual contributions are sufficient, or they aren't. In the latter case, his contribution is not needed. In the latter, it doesn't do any good. So why contribute? Or to put it in economic terms, my dollar contribution to defense gets *me* a small fraction of a cent in defense. Obviously a bad deal. But add up everyone's contribution, and we are almost all getting a good deal. So does the government of the United States provide a net gain for it's citizens? Yes; without it some other nation would have long since conquered us, and we would almost certainly be worse off. Even without defense, I think the government provides a net plus. Without it, we would have virtual no roads or railroads; the airports would few, and mostly too small for jets; the populace would be less well educated, leading to (among other things) technological backwardness. There would be more poor people, leading to more crime and disease. The would be more disease, anyhow; vaccination programs are government sponsered. Much less money would be spent on pure research -- pure research hardly ever provides tangible benefits to the researcher; the benefits accrue to the people who develop products from the results, years later. Telephone and electric companies would have the same kind of problems getting right of ways as roads and railroads; such services would be far from universal, and probably expensive and/or unreliable, to boot (lacking economies of scale). I think we would all be a lot worse off without it -- it isn't even close. Frank Adams ihpn4!philabs!pwa-b!mmintl!franka Multimate International 52 Oakland Ave North E. Hartford, CT 06108