Has anyone ever thought of universal education or universal health as being a public good? I'm not talking about the delivery of these things; I'm talking about the state of them. Do you think "breathable air" is less of a public good than universal good health or universal education?

[ 25 February 2004: Message edited by: Hinterland ]

As for the education and health-care, yes, they have been considered as public goods, and also as the Public Good, by many thinkers and statesmen (and even some economists, i believe). Various attempts have been made to deliver both to all citizens. One of the most successful experiments was carried out in Canada in the 20th century.

[edited to add} Of course, without breathable air, everything else is moot.

[ 26 February 2004: Message edited by: nonesuch ]

http://www.auburn.edu/~johnspm/gloss/public_goods.html

[ 26 February 2004: Message edited by: Doug ]

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Originally posted by nonesuch:
I assume that 'goods' in this context refers to property, as in 'goods and chattels', rather than 'good', as something moral, laudable or beneficial.

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Actually, your assumption isn't quite correct.
The term "good" here is actually the antonym of another odd economics concept called a "bad". It comes down to anything that you might somehow be able to assign a positive monetary value to, whether it's the kind of thing anyone can own or not. As in, I would be willing to spend money to ensure that there was clean air to breathe, therefore it is a "good". You would have to pay me money to get me to listen to country & western, therefore (for me anyway) it's a "bad".

Those goods which can be controlled or "owned" and do not simultaneously apply to all consumers (citizens in this case) are not public goods. This is not to say that you cannot make "private" goods into "public" goods, or vice versa, but that it may not be advantageous.

You can have Police forces that actively protect all citizens from violations by criminal elements. This is a Public Good. This does not exclude private firms from developing specialized guards. But the Specialized guard is not necessarilly more advantageous than the Public police force and they lack commonly held notions of legitmacy, resources,Mobility among the community at large, prevention of tertiary harms.

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Originally posted by Hinterland:
Has anyone ever thought of universal education or universal health as being a public good? I'm not talking about the delivery of these things; I'm talking about the state of them.

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Not by the economic definition of "public good", no. The economic term "public good" is defined narrowly as something that, if you provide it for one person, there is little or no marginal cost to providing it for everyone or each additional person, and that it would not be possible to withhold from one person if you were to provide it for anyone else.

I forget what the term for this phenomenon in reverse is (it's been a while since my frosh economics course) but it does work in reverse as well - for instance, there are some costs that are impossible to incur for one person without incurring them for everyone. For instance, pollution - it is impossible for pollution to be a cost borne only by polluters - everyone bears it.

I think the problem here is that you're taking a technical term that economists use to describe one particular phenomenon, and you're assigning a value to it that was never intended. "Public good" is not meant to mean, "good things that everyone in the public should have" or "products and services that should be given to everyone in the public." It's a technical economic term that means something that you cannot provide for one person without providing for everyone, at little or no marginal cost for each additional person who receives the good.

So no, I do not believe health care is a "public good". Sure, the marginal cost probably gets smaller with each additional person covered (because up to a point you use many of the same capital assets to provide services to each additional person, like say a clinic, or a hospital), but each additional person who is covered by health care DOES incur a significant enough marginal cost that you can't really consider it a "public good" in economic terms.

Sure, universal health care is a good thing, and it's something that should be available to everyone in the public, but that's not what the term "public good" means.

[ 26 February 2004: Message edited by: Michelle ]

Most people seem to be aware of the proposition that if something is a public good, it should be provided by the government. Problems arise when people go on to conclude that if something is currently provided by the govt, it must be a public good.

Edited to add: I think the term you were looking for is 'externalities'. They can be posiitive or negative.

If all the gains from an activity can't be captured by the person who pays for it, then too little of it would occur. A good example is education. We're all better off to some extent when someone goes to school, so there's a strong argument that students shouldn't have to pay the entire cost of education.

A negative externality would be something like pollution. Since the polluting firm doesn't have to pay the full cost of producing the polluting good, too much will be produced.

[ 26 February 2004: Message edited by: Oliver Cromwell ]

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Originally posted by Oliver Cromwell:
You clearly paid close attention in your class Michelle.

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It was the very first university course I took (at age 27) and I got 92% as my final mark!

Locke gives a false account of this in his works (the Treatise?) claiming that it was everybody's unbrided use of the commons that led to its destruction.

Many people have used this example of the "Tragedy of the Commons" [http://dieoff.com/page95.htm] as an analogy to justify market mechanisms for dealing with environmental problems.

The problem is just exactly how all these resources are to be allocated. How would we determine how many loaves of bread get made, and who gets to eat them? Who gets to (or has to) become a doctor? And since resources are finite, who will be told that they can't have what they want?

I will say this:

The "Tragedy of the Commons" is a false analogy. It's not perfectly "wrong" but doesn't match reality. That's all. In that, it makes an extreme argument and doesn't look at the ambiguity. I mean, it only consideres explicit rules between people. It doesn't consider implicit or latent rules or social mores.

Consider public parks. There is exclusivity and there is public access. Making it exclusive (as is recomended by the tragedy of the commons argument (I'm sure you've read the article)), won't help things. Neither would allowing unregulated access.

Also, the policy of enclosure could cause the scarcity it was trying to avert. As it did in the original tragedy of the commons.

And cutting up the sky into "shares"? Now we're departing from reality and getting deep into fantasy.

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Originally posted by Oliver Cromwell:

Collective decision-making is hard to implement - if not impossible[/URL]

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Sorry, I forgot one cryptic response: it is impossible to avoid collective decision-making. There's the rub for you Ayn Randians out there. Hard yes, but we've got to deal with it. Harding and Ayn give no solutions.

CAMPFIRE (a conservation scheme using the market - charge people to kill some animals so you can afford to save most) and schemes based on it, are interesting studies. Good, but to an extent. What happens when animals become worth more than humans living in villages nearby?

"No man is an islande" so when the day of environmental reckoning comes, "do not ask for whom the bell tolls, for it tolls for thee". With apoligies to Wolfe (whom I think wrote that).

I think the question of how many loaves of bread will be made is a red herring. How does that kind of thing get decided now? I don't know that reviving the commons necessarily means dismantling all of our existing infrastructure, but it does require an ideological shift. More than keeping all our resources in one central location and divying them up in a perfectly equitable way (which is, I'll admit, probably impossible), the commons, as I understand it in this context is about how we think about the resources available to us. Instead of thinking of them as the sole and private property of industry or a corporation etc., we think of them as OURS, and therefore have to take a different kind of responsibility for their harvest and use, disposal and maintenance.

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Collective decision-making is hard to implement - if not impossible

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Additionally, an economic definition being used to somehow justify not declaring healthcare to be a "public good", while technically a valid argument, is not in the best interest of the public, as most real "public" would read "public good" as something different than what is trying to be presented here.

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Collective decision-making is hard to implement - if not impossible

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I'm surprised at this assertion, because it's patently false. Most of our real, day-to-day activities are governed by concensus, otherwise we'd be animals.

We're starting, at least some of us, to realize that leaving all the resources and production of goods and provision of needed services up to the folks who only have profit on their minds is a Bad Idea. Though we've waited a frightfully long time to do anything about it, or even recognize the risks, it is possible that we will start to curtail the powers and resources available to corporations.

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Originally posted by Sports Guy:
[QB]The scorn that is heaped on economists in this and other threads on babble is analgous to me falling down the stairs and yelling at a physicist because of gravity.
QB]

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This quote propelled me back. It's really a matter of gall, when you think about it. Are you really comparing the theory of gravity to a particular definition of a public good? The theory of gravity is how we explain a natural process we can observe. The definition of public or private is categorization. It is a decision based on precepts. Further "health care" is a pretty nebulous concept. What do we include in this definition? Certainly without public knowledge we cannot have effective health care.

Really, most real scientists have a greater sense of hubris.

This all started when said that technically health could be considered a public good. Oliver Cromwell comes along and says that his technical definition trumps mine because his is the economists' own "official" definition and they get to decide.

Also, he mentioned that for a good to be public it couldn't be excludable or rivalrous. I then argued that almost all goods could be excludable or rivalrous. So, it was a question of degree.
Security forces are often called public goods. Why not health?

And I believe my economics professors were economists.

So, health care is not the perfect archeype of a public good according to the most rigid definition accoring to certain economists. But nor is it a perfectly private good.

Collective action in the international scene is a seriously contentious issue. Moreso than at national and regional levels. The problem isn't of consensus, which can usually be achieved, but of free riding. That is, the consumption of an international public good without contributing to the cost of it. If everyone free rides, the consensus to collectively act collapses.

However, if everyone free rides and the consensus and collective action *isn't* weakened, this usually means that one actor is carrying everyone else. This actor is the hegemony, and their incentive and capabilities to produce far outweigh that of other countries. As well, several large states capable of superior production may co-operate with the hegemon in order to reap the benefits. This is what makes the hegemony stable.

At home, the problem of collective action and public goods also presents itself. For example, low voter turnout can be construed as a problem of apathy - that someone else will get out and vote and fix the problem.

Heck, a larger part of Catch 22 was based on the problem of acting collectively to deliver a public good. If no one fights the war, how can it be won?

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Originally posted by Sports Guy:
The scorn that is heaped on economists in this and other threads on babble is analgous to me falling down the stairs and yelling at a physicist because of gravity.

Just because an economist's definition of public good as it relates to medicare differs from your own understanding of the concept does not affect the public policy choice made by government's in the matter.

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Physist does not change the laws of the universe by making a arbitrary statement about them . . . they cannot make me twice as heavy by simply coming up with their own formula for gravity . . . an economist on the other hand plays a more direct part in their field of study.

An economist defines "public goods" so as to exclude the possibility of concerning ourselfs with other than monitary values.

No physist would ever tell me that falling is simply an issue of the laws of ravity and that my concern for injury is not a valid topic to discuss on the issue of falling . . . if they did, then I would consider them elitist as economists.

Which particle accelarator did economists use to discover the theory of "Public Goods" that says only their narrow definition of "public goods" get consideration for protection from coporate profiterring?

OC, I'm not so much pissed at you, but pissed at the blind adherence by some economists to a "theory" that is based more on "faith" or decree than science (I assume you are an economist, although I don't assume that you are one of those that refuse to look outside the world of the economists when making decisions on public and political issues.)

I'm pissed because it is a definition that pretends that there is no other value than monitary value.

I am pissed becuase it is often the case where only monitary value is considered a legitimate concern when talking about "public goods"/

I am pissed because economists seem to think that only their theories matter, and only their definitions are to be considered for use in a debate.

I am pissed because economists will look down on anyone who would consider the definition of "public goods" to be things that are actually good for the public.

It's like they are saying "oh sure, health is a good thing, but because we can theoritically make a profit from it, then it doesn't deserve to have a term applied to it that might be misconstrued as having value in more than simply monitary terms".

"Public Goods" should not be limited to simply an "economists" definition, it is unfair and offensive IMO.

NY: Definitions are arbitrary. But once they're adopted for general usage, it gets confusing if someone decides to use the term in a different way. In the context of public economics, the term 'public good' has a very specific meaning, and using it in any other way is simply confusing. In other contexts - say, public security - it may mean something else. If that had been the case, I wouldn't have said anything.

You know the philosophical term, "beg the question"? To philosophers, that is a technical term that means a specific type of fallacy.

Now, in common English, the word "beg" and the word "question" has all sorts of meanings. So we could say, "Oh, beg the question could possibly mean a question asked by a panhandler! Or actually, I think beg the question means that I'm begging you to answer the question!"

So when the philosopher says, "No, actually, it's a technical term used to describe a certain type of argument," and the person says, "That's just because all you philosophers are right-wing nutjobs who think your philosophical theories are SCIENCE! I think you philosophers should start thinking of panhandlers when you talk about begging the question!" then I can see where the philosopher would see the whole conversation as an exercise in frustration.

"Public good" is a technical term in economics. It doesn't mean "good for the public". It doesn't mean "socialist principles of sharing". It doesn't mean "social services". I know that separately, "public" and "good" mean all sorts of things. But all it means in economic terms is a product or service that has little or no marginal cost for each additional person covered, and that cannot be provided for one without providing for all. Not cannot as in morally SHOULD not, but cannot as in, it is logistically impossible to exclude specific people from it.

Now, health care, or some aspects of it (like insurance, as Mr. Cromwell mentioned), may be a borderline case of a natural monopoly. Certainly private provision seems to involve a lot of duplication and extra bureaucracy. It's my opinion that natural monopolies should be provided publicly--in the short term, strict regulation of private providers can work, but in the long term the private providers always manage to bribe their way out of the regulations.
And it's probably a case where positive externalities from everyone getting it (universal vaccination stopping epidemics, avoiding reservoirs among the poor of nasty things like tuberculosis, etc. etc.) make it sensible to override markets.

And it is quite simply a case where the value we place on human lives and wellness as a society with some kind of ethics and compassion exceeds a lot of individuals' ability to actually pay, so whether it's economically "sound" or not we should just be doing it--one of those things a society should find the money to do so as to set ourselves apart from brutes.

Collective decision-making, like any act involving living organisims, does not follow perfectly explicit rules or laws.

No matter how complex human interactions are, the theorem, if true, defines the limits of collective decision-making. Similarly, it is also possible to mathematically define the limits of many aspects of language, but that is another subject.

FPTP: I'm directly in the business of language rules (a computational linguist), and I daresay that if you expect a formal system to provide perfect predictability in all local instances, then probably you will be unsatisfied. I would not go so far as to declare it totally Impossible (a heavy declaration for anything), but I'm inclined to think that it is unlikely.

If we really think about it, democracy is impossible too, but we go with the flow, and make it work as well as it possibly can--or that was the idea, anyways.

I think that at some point in the future (hopefully not too distant future, that is), we're gonna have to amend our current system to allow for more input from the masses, and to give people more direct control over the decisions made regarding those things that we all have a stake in, like healthcare, education, the environment, and limited resources.

It has to change, or we'll all go down at the feet of the Megacorp and the megacorrupt government that spoon-feeds it.

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Originally posted by Oliver Cromwell:
My original post said it was complicated, if not impossible. Clearly, collective decision-making goes on all the time - using mechanisms that are subject to manipulation.

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[ 27 February 2004: Message edited by: Hinterland ]

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Originally posted by Oliver Cromwell:
Yes, indeed. Markets are just another allocation mechanism and they're vulnerable to the impossibility theorem, too.

But at least there are fewer meetings...

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Or so it is assumed. I don't see how the number of meetings is reduced. Perhaps the amount of input. In practice, "free markets" require a considerable amount of bureaucracy and governance...from massive corporations, to government regulation, to the WTO, to exhibitions of force (from security to wars). I could envision a small scale syndicalist-anarchist system that requires less "meetings". The size of government is reduced when you move from a communist to capitalist system, but not necessarily the systems that control.

The original "tragedy of the commons" article describes a situation of completely unrestricted, unregulated access to a (slowly regrowing) resource. It posits individual, completely independent decision-making and little thought for the future (or, thought for the future being overridden by the fear that the other independent decision-makers will themselves ignore the future). It points out that this can't work, it will lead to the resource getting eradicated. Which is true enough, but doesn't happen to describe historical commonses very well at all. In fact, it better describes situations in which outsiders manage to gain relatively unrestricted access to what was a restricted community property.
For instance, it describes very well fisheries that did fine as long as they were largely restricted to fishers from a particular small region, but then became overfished leading to a crash in fish stock when outside capitalist large-scale fish harvesters came in.

Traditional commons in fact tended to restrict use of the resource, formally to only those within the community, and also formally, informally or both setting limits on how much each user should exploit the resource. Given that, the devil-take-the-hindmost ethic that would come from independent decisions and fear that the others would take it all first was avoided through community decision-making and some thought for the future.

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Originally posted by Sports Guy:

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Is this not so? Do you believe the free market is a good metaphor for how we interact?

Take Raegan for example. He liberalized markets. But at the same time, he allowed for greater monopolies. So, in effect while claiming to free trade, he made it more restrictive.

The biggest problem with the theory and language of economics is money. You can't base a science on a substance that does not exist in nature: every value attached to such a substance is necessarily arbitrary, transient and subject to manipulation.
You can have valid economic theories, observations and predictions based on trading relations, population density, natural resources, comparative power... probably a bunch of other factors. If it were stated clearly, and didn't ignore too many real-life factors i know about, i would respect such a theory.
Once a $ value is introduced, we're looking at an artificial construct: any resulting equation will be screwy.

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proft has been shown time and time again to deliver the best goods to the proper place at the proper time.[/QB]

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Have those economists or theorists considered the previous ~100,000 years of humanity on earth? Hell, what about the pre-contact Americas, where collective descision making, property in common and large bureaucratic structures governing populations in the multi-million were in place for thousands of years before Europeans climbed out of their disease-infested civilizations to destroy it all.

I'm asking, do you know of any? I'd certainly like to read about it. And I'd certainly like to see the free-marketeers, property rights, and greed-is-god believers explain how these societies managed to exist without the self-evident truths of market capitalism.

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Originally posted by Oliver Cromwell:
Well, why isn't it your background? I decided to spend my career learning about these issues. How much time have you spent on them? And if you can't be bothered to do the reading, why dump on those of us who have done our homework?

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That's what I've done in this thread. If you would prefer that I adopt a more professorial tone for this particular topic, I would be happy to oblige. More than happy, in fact; I believe that social choice theory is an enormously important field. And I think babblers who are interested in collective decision-making should be acquainted with the most important result in this literature. My own suggestion would be to start a new thread on this topic, initiated by a brief lecture. Let me know if you think that this would be worthwhile.

I think a lot of us ride around on our huffy bikes when it comes to economics in politics, because mathematical representations can turn a cold shoulder to the human side of superior resource allocation. I find this objection reasonable because the dominant economic institutions of our day have made some grievous errors. However, I also find it objectionable to paint the whole field with one brush. That isn't fair either.

Mancur Olson, who I keep mentioning, has a markedly different conception of collective action and public goods than say the IMF. There is divergent thought within economics, like in any social science.

Having said that, if you think there's a way for non-experts to share in the knowledge you've taken great pains to acquire, starting a thread on any topic you think is important is a good idea.

Edited to add: No wonder you hate John Ralston Saul.

[ 28 February 2004: Message edited by: Hinterland ]

[ 28 February 2004: Message edited by: Hinterland ]

[ 29 February 2004: Message edited by: Hinterland ]

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Originally posted by Oliver Cromwell:
Catus: In order for markets to provide optimal outcomes, certain conditions have to be met. These conditions may be satisfied in many, or even in most cases, but not always. If you want to learn more, do a google search on "first welfare theorem".

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Uh, formally speaking it's my understanding that these conditions aren't satisfied in *any* real-world cases.
Is it not the case that the math for optimal market outcomes requires conditions including:
-Perfect information
-Costless transactions
-Diminishing returns to scale
-An infinite number of firms, none large enough to have an impact on price-setting
-The nonexistence of a future with uncertainty
-"Rational Economic Man"

As I understand it, all notions that markets might provide near-optimal outcomes in the real world hinge on assuming that things still work more or less "as if" all these things were true. However, some economists have worked on math assuming falsity for one or more of these assumptions and found that, for instance for situations with an uncertain future, the math doesn't let markets clear. And furthermore, that in the absence of perfect adherence to the conditions, they can't prove that getting closer brings markets closer to clearing.

1) If the market imperfections aren't too severe, then the govt can simply correct them using the appropriate regulations: quality standards, labelling, anti-trust legislation, etc.

2) Markets imperfections mean that market allocations will not be the best; they do not imply that they are the worst.

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Originally posted by Hinterland:
There isn't supposed to be an opposite of "public goods" (..other than 'private goods') Goods are goods, and they are value-neutral, so they say.

[ 28 February 2004: Message edited by: Hinterland ]

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Then why define something as a "public" good in the first place? Why not just define "goods" and leave it as that?

To me, this is one of those "economists tricks", such as always trying to use GDP (almost to the exclusion of any other factor) as the measusre by which we rate a countries economic success.

How economists can be taken seriously is beyond me . . . even comparing them to your average weatherperson puts the weatherperson in a good light (a weatherperson might make wrong predictions, but at least there's a good chance that most weatherpersons have predicted the same weather based on the same scientific data . . . economists can take the same data and come up with wildly differing predictions, all of which will likely turn out wrong.)

At least a weatherperson doesn't play stupid games . . . a weather person doesn't look between the falling raindrops and try to tell us that his predictions of "no rain" is 80% correct, where an economists will look at the current economy, and seeing that the while the GDP is raising but less and less people are being employed, and the gap between rich and poor is expanding rapidly, will try to tell us that their prediction of an improving economy was "bang on".

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Originally posted by Oliver Cromwell:
I apologise if it looks as though I'm being dismissive.

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1) If the market imperfections aren't too severe, then the govt can simply correct them using the appropriate regulations: quality standards, labelling, anti-trust legislation, etc.

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2) Markets imperfections mean that market allocations will not be the best; they do not imply that they are the worst.

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Quite true. But what they mean is that we *don't know* what kind of allocations might be best. And we don't know in part because most economists are not interested in finding out--rather, they treat the counterfactual assumptions of efficient market theory *as if* they were true, and conclude that markets are the best possible thing, ruling all other possibilities out of bounds. Not only that, the distinct tendency is to rule all possible alternatives to *markets with capitalist ownership* out of bounds based on efficient market theories, even though those theories say nothing about capitalist ownership.

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3) In order to obtain the ideal allocation, we'd need to know *everything* about the economy: every individual's preferences, and every firm's technology. If someone, somewhere makes a mistake - there is such a thing as government imperfections - then we may well end up with something worse than the market.

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Well, first, there are more alternatives than central planning and markets. Michael Albert's Participatory Economics is an example. There have been others in the past, although not always good ones (e.g. feudalism). There are informal alternatives in the present, although generally mixed with markets.
But again, the key here is that we *don't know* if an imperfect example of something else would be worse than an imperfect market, because the only math we've really got going only applies to hypothetical perfect markets. Why this should be any more useful in forming opinions about what should be done in the real, imperfect world than theories about hypothetical perfect command economies or hypothetical perfect volunteer economies or hypothetical perfect manna-from-heaven economies escapes me. All are equally hypothetical.

Wouldn't it be reasonable to at least try to put together some math that applies to
-different kinds of economies of scale (given that economies of scale seem to vary from sector to sector)
-humans resembling in their economic attributes the kind that psychological experiments suggest really exist
-a world with a future
And which doesn't just work from assumptions of markets, especially pure markets? I realize it would be revoltingly complicated math, but we've got computers now, and we've got revoltingly complicated math. There's no need to stick to the level of simplified abstraction used in the nineteenth century. Except perhaps, in the opinion of a lot of left-wingers, for needs which have nothing to do with scientific inquiry but rather with political expediency. Not that economists are conspiring agin' us, just that it seems their consent is manufactured in ways similar to the media. When they start talking unorthodox, they're generally sidelined.

But that is by no means the end of the story. The whole field of industrial organisation is devoted to dealing with non-competitive and/or strategic behaviour, and regulatory economics aims at finding ways to obtain optimal outcomes in cases where things like increasing returns play havoc with the standard model.

I can only assure you that all of the points you raise are being dealt with - albeit with varying degrees of success.

- Unless you want to limit yourself to static models with no uncertainty, the math that is involved in modelling heterogeneous agents - either households or firms - is indeed revoltingly complicated. We've made great strides in using numerical methods in the last decade or so, but we're still a long ways away from dealing with this issue with any degree of confidence.

- Some work is being done to try to incorporate the insights from psychology, but the fit is sometimes hard to make. But some things like disappointment aversion are a by now standard feature of the literature.

- We've learned a lot about forward looking models in which tradeoffs between current and future benefits are explicitly taken into account. Unless there are very good reasons for doing so (e.g., if the math is just too hard), almost any serious work in economics is based on a dynamic model.

It is true that very little of this shows up in the mainstream media. But that's mainly because so many of the results are tentative, and no responsible economist would present them to a general audience.

But economists themselves are extremely open to new ideas, or even re-interpretations of old ideas - if the idea can be argued in rigourous terms. My favourite example comes from growth theory. In the standard growth model, technical innovation has only positive effects. But hidden in the mists of the history of economic thought was Joseph Schumpeter's 'creative destruction' idea: the arrival of new technologies destroys existing industries as well as creating new ones. The net effect may be positive - or maybe not. As such, the idea really wasn't of much use as a theory, since it provided no way of providing conditions for when technical innovation would have a positive effect or not.

But in the late 1980's Philip Aghion and Peter Howitt (a Canadian, BTW) developed a rigourously-argued mathematical model that incorporated Schumpeter's ideas. It explained exactly how and in what conditions the arrival of a new technology will not be welfare-enhancing. An extremely unorthodox result. Was it sidelined? No, it was published as the lead article in Econometrica (the leading journal in economics), and it was followed up with a flurry of activity. It is now a standard reference.