On the Private Provision of Public Goods

http://rru.worldbank.org/Documents/PublicPolicy...
Many public projects have been financed by the private sector

USA has lots of private toll roads, especially between Pennsylvania and New York. I have used them :)

We have gone the same way in Australia - the M2, M7 and M5 in Sydney are prime examples of private toll roads.

In fact the M7 which is an extension of the M2 in Sydney was built and finished ahead of time because of the use of private contractors, proving once and for all that private work can produce better results.

There are probably a lot of examples of the private infrastructure, especially schools that could be given.

The upkeep on the toll roads seems to be a lot better than on the publicly funded roads. I can give Australian examples and comparisons e.g. Highway 1 which runs from Victoria through to Qld is a public road with black spots. There are spots on the road where upgrades are needed, and years after really serious fatal accidents nothing has been done.

Yes, there are black spots on these public roads and the M2 tunnel is a prime example - lots of accidents and several deaths. The difference though is that the people responsible for the road have sought to find solutions to the problem causing the black spot.

The objective of certain individuals is to create a uniformitarian world where we all sit in our own filth and beg the government for food.

They won't admit it; but that is the result of creating a world where everyone gets paid the same, regardless of effort.

I've been critical of Don's policy proposals in the past, especially when he claims to know what the market would do anyway.

This, however, is perfectly sensible. People can govern and provision goods for themselves, with minimal attention from government.

But here's a question. In the presence of massive government interference, such as the intentional depression of of labor prices in the US, is there a way to proceed without involving government? It seems we need to use government to remove government interference in peoples lives. Is this true?

The public levy crowds out charity, and charitable feeling.

How about the The Woodlands, Texas? Home to 100,000 people and all done with George Mitchell's oil money. Indian Nation Turnpike in Oklahoma is privately held.

To those whose personal theology has convinced them that the entire world is a nail, is it surprising that they only carry a hammer?

Everything is solved by hammering, nothing else is considered or allowed. Without that hammer nothing can be put together.

Without getting into a long drawn out debate, are you suggesting that "the market" & "market forces" are the hammer on which all of us rely? Vs. you and others that are willing to consider other tools such as government?

I think that's a very, very bad analogy. The beauty of a market is that it isn't a single tool. It's (as of 2008) about 6.7B tools. All of which are available to solve any problem that may arise.

Source: http://www.google.com/publicdata?ds=wb-wdi&met=...

I believe you interpreted his comment backwards while agreeing with him.

I see his analogy as being in favor of the market because it is so many tools, while having issue with those who see government force as the single solitary tool for solving any problem.

Whoops, my apologies if that's the case. Glad we're on the same page!

I am not exactly known as a flaming liberal here.

For instance see my comment on the previous thread "Seen and Unseen"

You can interpret my comments consistently if you apply intense far right, cozy up to anarchist but not quite, conservative principles. To me government is the problem, was yesterday, is today, and without a miracle will be tomorrow.

See vidyohs - plenty of Libertarians believe that all government services can be better handled by the private sector - hence 'anarcho-Libertarianism'.

Personally, I don't mind the idea of anarcho-libertarianism. If for no other reason than to bring a touch of fear to the fascists.

"plenty of Libertarians believe that all government services can be better handled by the private sector"......and this nails down what debate?

Define:
Plenty
Libertarians
all
services
better
handled

Document exactly how you come to the claim in that phrase. Show the logic or rationale that permits you to make it as a statement of fact.

Then show how that all applies in particular to any discussion had between you and me.

In other words, you seem to be operating keyboard while stoned again.

Vidyohs, saying you don't know and never heard of 'anarcho-Libertarianism' is akin to saying you never been able to find porn on the internet - you can't be looking too hard.

Which has what to do with anything said above or in any previous comment of mine?

Put the weed down, step away from the keyboard, and go on a long walk about. It'll do you good.

No, seriously, there are plenty of anarcho-Capitalists. E.g.:

http://www.strike-the-root.com/

Bell Labs was another privately funded science institute, and there have been others. Many firms invest in R&D--the list is way too big to enumerate here.
Ms. Chasek is a typical academic, who doesn't see anything outside the statist groupthink so prevalent in acadamia, which is far removed from empirical reality.
It's about as bad as Samuelson being completely in denial about the Soviet economy, which was not, I would submit, entirely due to a bad theory.

I read Ms. Chasek's letter and had a similar response. I'm currently reading Economics in One Lesson by Henry Hazlitt so her letter struck me as particularly uninformed and based in fallacy.

Private schools aren't public goods. A public good is a "free access" resource, like a public road or an unpatented drug or source code for the Linux operating system. The theory of taxpayer financed public goods is not total nonsense, but the value of one public good financed this way is no evidence that every politician's favorite pork project is a public good.

Open source software development is a good example of private public goods production. I don't oppose limited copyrights and trademarks, but I'm not the least bit convinced that innovation would cease without intellectual property.

Private but essentially open access roads in residential subdivisions are another example, but I'm still essentially a road socialist until something better comes along. Automated tolling and some limitation of tolls for critical arteries might create a viable private road system, but none of the toll roads I've seen have been very successful.

martinbrock: "none of the toll roads I've seen have been very successful."

For a toll road, what is your definition of success?

There are many public goods financed privately
seek and you shall find
discovery is the path to enlightenment grasshopper
http://rru.worldbank.org/Documents/PublicPolicy...

Essentially profit without subsidies. Admittedly, I haven't used many toll roads and don't have much experience with them, but the ones I have used repeatedly often are inconvenient. I'm thinking specifically of E-470 in Denver.

OK. So your statement:

"none of the toll roads I've seen have been very successful."

means that the few toll roads you have used repeatedly have not been as convenient as you wish them to be.

As I see it, a toll road is successful if many people are using it. After all, if it were not providing benefit to those drivers, they would not be paying to use the road.

There is no question that many toll roads have higher usage than the designers projected. When that occurs, toll authorities could raise tolls in order to keep traffic at design levels. But I think most toll authorities instead decide to allow as many drivers as possible to receive the benefit of the toll road. You may argue that this decision is not wise. But in those cases the toll road is performing as the toll authorities have decided it should perform.

The issue of "profit without subsidies is a separate one. I'll address that in a subsequent comment.

... means that the few toll roads you have used repeatedly have not been as convenient as you wish them to be.

It means what I said it meant earlier. The few toll roads I have used are less convenient than alternatives, and they aren't heavily used for this reason. The last time I had an opportunity to use E-470, I didn't.

As I see it, a toll road is successful if many people are using it. After all, if it were not providing benefit to those drivers, they would not be paying to use the road.

If enough people use it to make it profitable, it's a financial success, and that's how I described it, but even this standard doesn't imply that it's more successful than the public goods alternative.

There is no question that many toll roads have higher usage than the designers projected.

I haven't seen the statistics. If E-470 has higher usage than the designers projected, the design projection is laughable. The usage is very light. My reasons for thinking it inconvenient have nothing to do with the traffic level.

Martin,

I'm assuming that your objection to E-470 is the same as mine: Stopping every five miles or so to pay a toll.

If that is your primary annoyance as well, would the Pennsylvania system of paying for the miles driven when you exit the turnpike be an improvement?

Stopping to pay the tolls was a minor issue when the toll booths were manned, but they weren't my biggest problem. If I missed my exit, I had to pay just to turn around, for example.

I drive a rental car in Denver, and the rental car company wants $35 to rent an EZ-Pass, so I pay $35 to drive from the airport to my exit onto 25 to drive to Ft. Collins, which I do precisely once (and back) on each trip. If I don't rent the EZ-Pass, not knowing that the toll booths aren't manned, I pay a $25 "service fee" to the rental car company, for each toll booth (both of them for my twenty miles on the road), in addition to the tolls when the automated camera at the booths photographs my tag. That's $55 each way. I discovered that the hard way, in case you haven't guessed. Luckily, I took the toll road only one way. I'll probably never take it again, largely because the $35 rental fee isn't worth it and the alternate route along 70 and 270 isn't that much longer. It's more congested, but what does that say about the popularity of E-470?

When the toll booths were manned, so I didn't have to rent the EZ-Pass, it wasn't so bad, because I rarely had to wait, because the road is so lightly traveled. I assume they aren't manning the booths anymore because they couldn't justify the cost, so I have to wonder about the profitability. Like I said, more intelligent, automated tolling might make some toll roads more practical for some people, but that's speculative. I can only imagine the headaches if every road was a toll road and I had to stop and pay a toll every time I made a left turn, assuming that the different road owners had an agreement.

Paying for miles driven makes sense in principle, and that's basically how the public system works, since gasoline taxes fund highways. A truly private system raises a lot more questions than private road advocates typically address. E-470 isn't a private road anyway. It's owned by a conglomerate of municipal governments.

martinbrock

I was truly trying to understand your opinion about toll roads after commented:

"none of the toll roads I've seen have been very successful."

That's why I asked:

"For a toll road, what is your definition of success?"

So far, all I've read from you is:

- toll roads are successful if they operate without subsidies, and
- E470 has not been convenient for you when you visit Denver.

First, let me ask this: do you know much at all about toll roads in the U.S.?

Here's some examples of successful toll roads I have frequently used

- Dallas North Tollway
- Dallas-Fort Worth turnpike
- Jesse Jones Memorial Bridge in Houston
- Turner turnpike (Oklahoma City to Tulsa)
- Will Rogers turnpike
- Kansas turnpike
- Ben Franklin Bridge
- Pennsylvania turnpike

All of those except the Dallas North tollway and the Jess Jones Bridge predated the Interstate Hiughway system.

Like I said earlier, I have very limited experience with toll roads. I haven't driven on any of the roads you list. An occasional toll road is not necessarily a hindrance if the wait for tolling is not too long and if I don't encounter other problems described above, but I have encountered these problems.

Needless to say, the success of a few, selected toll roads, a small fraction of one percent of the public highway network, is no evidence of the utility of a more widely privatized system.

martinbrock: "the success of a few, selected toll roads, a small fraction of one percent of the public highway network, is no evidence of the utility of a more widely privatized system."

Oh, excuse me. I guess I misunderstood. When you made the statement:

"none of the toll roads I've seen have been very successful."

I thought you were holding up your experiences with a single toll road - e-470 - as evidence that toll raods in general are not successful. I'm not sure I understand even now what you meant by offerring that observation - your statement to which I was responding.

I don't write, "toll roads in general are not successful." I explicitly limit my remarks to "toll roads I've seen". Only you can account for you conclusions. I meant to describe my experience with toll roads I've seen.

But why did you offer such an argument at all? And then discount the list of seven successful toll roads which I countered as my experience?

We're discussing privately provided public goods. I wrote, "Private but essentially open access roads in residential subdivisions are another example [of privately provided public goods], but I'm still essentially a road socialist until something better comes along. Automated tolling and some limitation of tolls for critical arteries might create a viable private road system, but none of the toll roads I've seen have been very successful." I was being open to private roads but noting that my personal experience with them hasn't been so great. Should I deny my personal experience in favor of some theory instead?

I didn't discount your examples. I said that seven successful toll roads out of millions of miles of highway doesn't tell us much about the success of a fully privatized system. The toll roads you list aren't private anyway. The Dallas North Tollway is operated by the state of Texas. The Will Rogers turnpike is now part of the interstate highway system.

"We're discussing privately provided public goods."

That's not all we're discussing. Your statement to which I objected was:

"none of the toll roads I've seen have been very successful"

which you offerred in support of your skepticism about the viability of private toll roads. Your very limited experience with toll roads was apparently based on your travels on e-470, as you 've offerred nothing else as examples. My counter was that there are many examples of successful toll roads in the U.S., and I provided 7 examples.

Private toll roads have not developed in the U.S. for two very simple reasons:

1. only government has the power of eminent domain, an absolutely necessary requirement;
2. government provision of roads has rendered private roads unprofitable.

But I was not objecting to any assertion that private toll roads are not viable. I was objecting to your supporting observation about toll roads not being successful, which was based on almost zero experience with them.

E-470 is a royal pain in the ass. I don't see how the E-470 toll-system, where you're stopped every five miles or so and tolled, is more efficient than the Pennsylvania method, where you pay your toll, based on total miles driven, when you exit.

If the E-470 system is actually cheaper to run than the PA system, then there should still be an ability to offer a one-day express to the most-used exits, like I-70, DIA, and I-25 to I-25.

470 makes sense if you have ez-pass. Not to mention that 225 can be a real nightmare.

A one-day E-Z Pass to I-70, DIA, or full circuit is what I'm talking about. If I lived in the metro area, I'd probably buy a monthly or yearly pass, just for the convenience.

The only times I use E-470 is when I have to drive to DIA during rush, because you're right. During rush, I-225 is an even bigger pain in the ass. I think it would be relatively simple to offer the convenience of E-Z Pass on a one-day basis.

martinbrock: "Private schools aren't public goods. A public good is a "free access" resource"

I'm sure all economics professors are appreciative when you correct their use of economics terminology. But are you sure you have this right?

I thought the economic definition of "public good" was:

" a good whose consumption does not reduce any other's consumption of that good."

I don't think we could truly call any individual school a public good. There are physical limits to how many students can fit into an individual school building. But, in total, the primary education resources of this nation represent a public good, don't they? Some of those resources are public and some are private.

Your definition looks pretty close to mine, to me, but I'll let you explain the distinction if you want. A private school doesn't fit your definition, and every example I listed does fit it, so I don't understand your problem.

Don knows that I'm a contrarian and leap at every opportunity to correct any point, however superficial or incidental. He forgives me for it.

But, in total, the primary education resources of this nation represent a public good, don't they?

Education benefits the educated specifically. The knowledge in my head is not available to you unless I choose to share it. Is my gym a public good?

A taxpayer financed system of education available to all comers, of a certain age, without charge at the point of access, is close enough to a public good in my way of thinking. I don't favor this system of education, and I don't believe it's most useful, but it is a public good.

"Total education resources of the nation" is a meaningless abstraction in this context. Why not discuss "total resources of the nation" and declare every good "public"?

Private schools are not public goods in any sense of the words. Their services are goods but not public goods. I favor private goods over public goods by default, and I favor private schools over public schools specifically, so I'm not dissing private schools in any way here.

OK. I think I understand what you are saying. But I disagree. "Total education resources of a nation" is a not a meaningless abstraction to me.

Perhaps it is not the term "public good" about which we disagree but rather the term "private schools". I envision voucher systems, funded by taxes, which can be used by students to enroll in either public sector schools or private sector schools. To me, primary education would still be a public good in that one child's consumption does not prevent its consumption by another child.

To carry that one step further, the source of funding for each consumer in such a dual system should not matter when determining whether primary education as a whole is a public good.

A taxpayer financed voucher system, with compulsory acceptance of any student (or first come, first served) at any school accepting vouchers, would also be public good, but I don't favor this system either.

I prefer a system in which educators obtain equity in the future earnings of students and in which both educators and students, through their guardians, may discriminate freely. Practically every student is educated this way, because practically every student has a valuable future, but the education is not meaningfully a public good. It is more obligatory than public.

I also favor some obligatory aid to people who are practically uneducable, but that's a separate issue.

The main feature of a public good is that anyone belonging to some pre-existing group cannot be excluded from enjoying the good.

For example, asteroid deflection is a public good. It is not provided by either the market or the government. It is underfunded because it suffers precisely from the free rider problem.

I don't see how the nations primary education resources are a public good.

Well, thanks for that insight, Josh. Are you an economist? I generally rely on economists for definitions of economic terms. For example, Paul Samuelson in 1954 defined the term "public good" in this way:

"goods which all enjoy in common in the sense that each individual's consumption of such a good leads to no subtractions from any other individual's consumption of that good...

Every child in the United States is guaranteed a primary education by our various state and federal laws. Apparently each child's consumption of that primary education does not prevent the consumption of a primary education by any other child. That seems to meet Paul Samuelson's definition of a public good.

I am an undergraduate economist. Bear in mind that Paul Samuelson is not the only economist out there and his definition might not be the most clear. Particularly, public goods are defined by their inherent qualities, not whether a government guarantees them. It matters because their qualities lend them to be underproduced, and that is the argument for government intervention.

I called upon Alex Tabarrok and Tyler Cowen's definition

http://www.marginalrevolution.com/marginalrevol...

and David D. Friedman's talk

http://www.daviddfriedman.com/MyTalks/MktFailur...

Pamela Chasek has it backwards. Without government intervention, private investment in transit flourished. From the abstract to JITNEY OPERATIONS IN THE UNITED STATES:

"WITHIN A FEW YEARS OF THEIR INTRODUCTION IN 1910 AS AD HOC MOTORIZED STAGECOACHES, JITNEY OPERATIONS HAD SPREAD ACROSS THE COUNTRY AND WERE DIVERTING AS MUCH AS 50 PERCENT OF THE PEAK-HOUR STREETCAR PASSENGERS. THE TRANSIT INDUSTRY REACTED BY GETTING LEGISLATION PASSED THAT REGULATED MOST JITNEYS OUT OF EXISTENCE."

Great letter.

Re: Examples of private infrastructure. I heard this once but I don't know the details, so somebody correct me if I'm wrong. . . But didn't the New York City subway system start out as private?

Wikipedia confirms it: http://en.wikipedia.org/wiki/New_York_City_Subw...

Off topic here. I'm taking a "Managerial Ethics" course as a part of my MBA program. The professor assigned this as the material for the class yesterday - a personal attack on Milton Friedman - funny part was this article uses Hayek's pretense of knowledge as the attack dog. I agreed with the professor about the limitations of the positivist approach to social sciences, then told her that this was a personal attack by a Harvard elite on U of Chicago and Milton Friedman in particular. I had read all my references sited and had my material ready. It was fun.

link didn't go through? here it is again
http://journals.aomonline.org/amle/AMLEVolume4I...

Bastiat comes to mind...

"Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.

We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain."

On a similar note, it reminds me of the scene in Life of Brian where, other than the roads, public sewers, bath houses, etc, several members of the People's Front of Judea (or was that the Judean People's Front?) are lamenting that the Romans have done nothing for them.

Obviously the above quote would be in agreement with Ms. Chasek's point of view. I on the other hand, am not.

People like Ms. Chasek have made up their minds and it is best not to confuse them with the facts.

>> "Manhattan College political-science professor Pamela Chasek "

It's sad that this person is allegedly an "educator" and shapes young minds.