Sunday, January 25, 2009

The Opposite of Government

In my daily meandering around the web, I was struck by the following argument by economist Mark Thoma at the blog "Economist's View":

"If the argument that the private sector is more efficient than government always prevailed, we wouldn't have any public goods at all, and that's not an economy I'd want to live in."

I hope I'm not missing some important context for this quote, but as it is stated I don't agree. Non-government, voluntary associations and for-profit firms have provided and are capable of providing many public goods: airports, schools, roads, orphanages, hospitals, medical research, recreation facilities, nature preserves, zoos, museums, and many others. The opposite of "government provision" is not "private goods only;" the opposite of government provision is "voluntary provision."

I accept the reality that in voluntary provision of public goods, free riding is a problem that needs to be addressed. But government provision has its own list of shortcomings: rent seeking, logrolling, and so forth. I'd like to turn the referenced comment around:

One of the problems of the argument that the government is always better at providing public goods is that it takes our attention away from what can be accomplished in the realm of public goods provision by the private and non-profit sectors.

When I lectured in class about a home for unwed mothers provided by women of the Free Methodist Church, one of my students told me that it was just impossible for that to happen today. I don't think there's any economic reason that such extensive private provision couldn't happen today. I do believe that too many people, like my student, have been told that only government can provide public goods, and so they don't even consider the alternatives.

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