Posted by: clholoman | July 31, 2010

Public goods, some more

Faithful reader DH has a nice comment on the vacation post below (the one with the lighthouse). I thought I’d respond in a new post to make sure his is seen and so that my response isn’t lost in the shuffle (maybe that’s not the way blogs are supposed to work–I’m still new at this.)

He (BTW, I know who he is, so I am not making a sexist assumption in the choice of pronoun) is surely correct that in addition to public goods, govts. these days provide lots of private goods to sub-groups, both distressed and non-distressed (a nice coinage, BTW).

Without having given it a huge amount of thought, it seems to me that  there are at least 2 places where his rule of thumb may encounter problems.
(1) Who determines, and on what criteria, a group is distressed? Farmers, for ex. We as a nation spend a huge amount of money on agricultural subsidies. Why? One argument is that they are distressed due to their non-competitiveness in a global market, due to other nations’ subsidies, high land or labor costs etc. But I don’t buy that (at least for the sake of argument). I think they have simply grown fat (no pun intended) on subsidies and have failed to innovate or change product mix, etc. Who is to judge? In an ideal world, of course, this is what politics is about–societies making choices about how their resources are spent. But we know that doesn’t work very well, or at least all the time. (The first time I ever heard the name Ross Perot was a description of how a tax loophole was written in such a way that it applied only to him, although it obviously didn’t mention him by name.)
(2) Sometimes the argument is that gov’t. provides private goods because there are positive externalities that the public does, in fact, benefit from. Some of which, in fact may be considered public goods: farm subsidies are part of the provision of the public good of national defense, since a sufficient domestic agricultural industry is necessary for security (so the argument runs; I take no position here.) The space program was often defended on the basis of the products that resulted from that otherwise wouldn’t have been invented (Teflon, Tang!)

I guess we’re back to the original point: since there are no pure public goods, the debate is really along a continuum about what government should be doing. Is there a hyper-libertarian position that argues that gov’t should not even provide national defense? That would seem to me to be untenable. (Also note in passing that public goods are dependent on perspective: the provision of national defense of Germany 1933-44 was a public good for Germans, but not for the broader society.)

Which leads finally to the question of public art. When making a public goods argument, one has to be really careful in specifying what the good is. We’re often a little sloppy in this. Even in our ideal type, the good is not the lighthouse itself, but the light from the lighthouse (which is why, absent other benefits, such as tourism, governments no longer support most lighthouses, since light is so rarely used as a navigation aid (see the mothballed Frying Pan light tower just out to sea from the Oak Island lighthouse). There’s a theory in international relations about “hegemonic stability” that says the world works best when there is a great power to provide stability. But one of my dissertation advisors was fond of pointing out that “stability” in and of itself is not a good. A system can be stable and still undesirable (the Hundred Years War?). We have to unpack what is being stabilized.

What is the good that public art provides? Is it simply the performance of Carmina Burana that only the patrons enjoy or is it a broader “good” of gentility (or something) that the arts alone can give society? Certainly governments have subsidized artists for centuries (although admittedly, most of those were not democracies). And note that even if it is the former, the political process might still determine that the public chooses to support provision of that private good.

That’s more than enough for now. Thanks to DH for providing the opportunity to think and write about something I used to think a lot about, but haven’t lately. And thanks to anybody else out there reading who has made it this far!

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