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Saturday, April 15, 2006

Radio Blues

I had Thom Hartmann up on the AM radio in the old pickup the other day. He was talking about the Commons. He seemed to be saying that in our particular society we have marked as too important for the private sector the Commons, things such as police and courts and national defense, and so have delegated them as the sole province of government.

This, of course, is nonsense. Perhaps this is not what he was saying, because the snip I caught was short, but it sprung my spring, and I ... fired off an e-mail.

The Commons, as any schoolchild knows, was the common pasture of old shared by the villagers, upon which anybody could graze their cattle. Most of the land, of course, was owned by the landed gentry and off limits. The upshot of the Commons arrangement was inevitably and exclusively lots of emaciated cattle and a completely decimated pasture. There was no incentive to manage the pasture properly, because if you did, your neighbor just introduced his cow instead. Thus the resource was exhausted and nobody made a living.

The Commons of modern times is the environment, the oceans, the air, the water. The exhaustion of these resources proceeds apace because it is in no single person's interest to do anything but use it as much as he can, and the efforts of those who may reduce their spoilage is overwhelmed by those who will take their place. The solution is similar, if politically more difficult.

In the old days, they divided the Commons into private parcels which the owner would have the incentive to manage wisely. Result: fences, fat cows, good pasture, property disputes. Today, since there is no opportunity to fence off the ocean or the sky, the conversion to collective management or ownership would need to take a different form. Unfortunately, this improbable new type of property right is likely the only remedy for the deteriorating situation in which we find our planet.

Thom missed this point clean – if I heard him correctly – by assigning police and the courts to the Commons. I said as much in my message. These instead are "public goods." Courts and representative governing bodies and such are foundational institutions, so calling them goods might be a bit disrespectful, but apt in its way. Police and fire protection, however, and roads and schools, public health and national defense, are clearly public goods. They are not the province of government because of a public moral about keeping them out of the hands of the private sector. They are supplied by the government because the private sector cannot handle them. The market cannot do public goods.


The two main properties of public goods is they are not excludable and they are not depletable. Taking the example of a road. It is not depletable because it doesn't matter how many cars go over it. It is as useful to the first car as it is to the one hundredth, or one thousandth, or – okay, maybe there is a limit. But it is certainly not in the ballpark of a private good like a candy bar or house, where one person's use reduces the usefulness to anybody else.

So public goods give and keep on giving. Unfortunately, also unlike private goods, use is not excludable. Consider a toll on every road. Not going to happen. This second attribute requires some form of coercive universal financing – taxes. Otherwise the free riders would appear like moths to the street lights. Imagine national defense. If your neighbor is paying for it, why should you? He's protected. Simply by living next door, you're protected.

So Thom got the full brunt, perhaps more succinctly than this. And I got ready to listen to the radio to hear any indicating he'd read it. But in the dark of the morning, before he was up on KPTK, I got an e-mail back! Scared the ---- out of me. It said, "Interesting. Why don't you call the show and educate me on the air."

After defibrillation, I resolved to do it. I called in. The same coordinator who does Hartmann does Sam Seder. I told him my name, confident extended minutes in witty discussion would soon follow. I got cut off. I called back. My heart was pounding ... for the first thirty minutes. Then I began to get involved in the programming. Then there was something else. Suddenly it's, click, "Hi caller, you're up, we have about a minute."

My entire life was compressed into that minute, so it was in a way appropriate that it began with the wilting of my grand expectations. He didn't even know who I was, or that I was responding to his request. I babbled on, responded to a couple of questions with revolutionary intensity, and at the end, heard, "Good point."

We're close, Thom and me.

Not included in that minute, I regret, was the point that public goods create private wealth. I am not talking about imaginary well-being, I am talking about financial wealth. Consider a bridge, even the expansion of a bridge to a peninsula. The bridge or police or school is produced at cost. The massive increases in property values from new access, the employment value of schooling, or the many external values of public safety are received by private actors at full market value. They are usually many times the costs of these goods. (Thus the high cost-benefit ratios you hear mentioned, but don't know what to make of.) It is the property holder in Gig Harbor, the engineer wherever she goes, the Boeing company, the freight hauler and the business owner who get these financial rewards minus the taxes they pay.

This is the single most important reason that countries which invest heavily in public goods (and thus have high tax rates and large governments) are precisely those countries which are most prosperous.

[Note to self: call no more radio shows.]