Arnold Kling  

Analogy for Government

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Politics and Academia... Becker-Posner on Drug Patents...

Chris Dillow writes,


I’ve got an idea that would revolutionize the way we do our weekly shopping.

Every few years, we all vote for our favourite supermarket company. The one that gets more votes across the country than any other then gets to deliver our shopping every week to all of us, regardless of whom we voted for. It delivers goods of its own choosing, at prices that it sets. It will make us buy Pedigree Chum even if we don’t have a dog...

Now, this is probably the stupidest idea you’ve ever heard. But it’s exactly how we buy our political services.

Take a look at his blog, Stumbling and Mumbling, and consider adding it to your list of regular reading.

Great minds think alike. Here's Will Wilkinson.


Imagine you live in a town where you are required to pay several thousand dollars of taxes each year into a public fund that is used to buy food for the entire community. There is a publicly elected “Menu Board” that determines each year’s offerings. You wanted rye this year? Sorry! The Board voted for Wonder Bread. Again! You could, in principle, opt out of the public food system and buy rye, pumpernickel, or seven grain oat-nut crunch at a fancy private store. But you’ve already paid thousands in taxes, and can’t afford to pay twice for everything you eat. The Menu Board picks it. You eat it.

Wilkinson is talking about public schools.

For Discussion. Draw a mental Venn diagram with public goods and government-provided goods. Are there a lot of goods that do not fall within the intersection of your Venn diagram?


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CATEGORIES: Public Goods



TRACKBACKS (3 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/169
The author at The Club for Growth Blog in a related article titled Analogy for Government writes:
    Arnold Kling has linked to a couple of good analogies to government. Worth reading.... [Tracked on December 14, 2004 2:22 PM]
The author at South(west)paw in a related article titled wilkinson@cato.cuckoo writes:
    This is an article by Will Wilkinson, a policy analyst for the Cato Institute, a right wing think tank in Washington, d.c. The column is in response to the controversy in Georgia about whether biology textbooks should have a sticker... [Tracked on December 17, 2004 2:20 PM]
The author at Moscow Education (Idaho) in a related article titled Analogy for Public Schools writes:
    TITLE: Analogy for Public Schools URL: http://MoscowEducation.org/archive/2004/12/22/314.aspx IP: 198.206.162.134 BLOG NAME: Moscow Education (Idaho) DATE: 12/23/2004 01:31:19 AM [Tracked on December 23, 2004 1:31 AM]
COMMENTS (20 to date)
Brock writes:

I have long thought that the only things the government should be doing on a regular basis are: Legislature, Courts, Police, Military, and (if we morally so choose) redistribution of wealth. Everything else should be handled in the private sector. We (morally) want everyone to have health insurance and afforable housing? Give them money so they can buy it privately.

My little list of "things government should do" are defined by their geographically based, network-effect properties. We can't all be driving according to our own ethically derived traffic control laws. Utility if maximised with coordination. Hence, Legislature & Enforcement. But that's it.

Boonton writes:

Missing from this analogy and the analysis behind it is the person who is actually paying for this, the taxpayer/voter (I know they aren't always the same). This is done especially with the subject of schools....as if the tax bill of parents usually covered their children's educational expenses. In reality, most parents' taxes are only paying a fraction of their children's education...and with 'free public education' an individuals taxes do not go up if they put more kids into the system.

When you consider that someone else (the taxpayer) is paying for the service and not the consumer (parents) then is it really all that shocking that the taxpayers deserve some say? If I'm asked to fund science education for the good of the community I'm well within my rights to object to anti-scientific propaganda being inserted into the texts by creationists. Vouchers or not, the taxpayers (as represented by the gov't) have a right to monitor what they are paying for.

If you want to consider the food analogy; suppose we are all taxed to support a community soup kitchen for those who are unable to buy their own food. We elect a 'menu committee' to make reasonable decisions about what to buy (such as, Kosher Food is ok but we won't pay a Rabbi or Priest to say grace since some of the taxpayers are not Jewish or Catholic).

One day we sit down to read the blogs and we hear that Reason Magazine has rallied the 'customers' of the soup kitchen. Some of them say they want vodka jello shots as part of the menu. Others say they think fancy coffees should be on the menu. The Reason brigade tells us that the only way to stop this war of ideas is to abolish the kitchen and provide each user with a check they can cash to buy whatever food they want. After all, its THEIR money!

grigory writes:

Gov't isn't good for anything, even in the provision of public goods it messes up. Ergo gov't should be abolished. Even nat'l defense and currency, the traditional domain of gov't can be better provided privately. Nations are such a 19th century concept anyway, and as we've seen through the 20th there are now only a handful that are larger than the Fortune Global 500.

Corporations should start buying up countries and privatising them. Relying on lobbying and political contributions just maintains the illusion that gov't is worthwhile. I'll applaud the first company that raises a private army and issues its own currency. Then we'll know that the 21st century has begun.

Ronnie Horesh writes:

The problem is that government is too removed from the people; just like any other profession it now requires years of specialist training, with consequent alienation from the real concerns of real people. My remedy is to get governments to formulate policy in terms of objectives with which people can identify, rather than on abstract principles or expediency. For instance, instead of vaguely saying they are 'pro-peace', or 'anti-crime' they should put systems in place that reward peace and reduced crime. There is wider consensus over the ends of policy than over the many alleged means of achieving the.

Ronnie Horesh writes:

The problem is that government is too removed from the people; just like any other profession it now requires years of specialist training, with consequent alienation from the real concerns of real people. My remedy is to get governments to formulate policy as objectives with which people can identify, rather than as abstract principles or on the basis of expediency. For instance, instead of vaguely saying they are 'pro-peace', or 'anti-crime' governments should put systems in place that reward peace and reduced crime. There is wider consensus over the ends of policy than over the many alleged means of achieving the.

Gil writes:

Boonton,

I think Reason, Cato, etc., would eventually like to see the complete separation of education and state, but they consider taxpayer-funded vouchers to be a step in the right direction.

I think they are probably right, but the danger is that people will make your argument to politicize private schools as well.

Jim Erlandson writes:

Your grocery store operator would certainly want to have his contract renewed (re-elected) after four years and so would have a reason to treat customers well. Unless he was term limited.

A related analogy compares what we know about food with what we know about government. We do not have the information necessary to make informed decisions in the voting booth. How many of us study the voting record of our councilmen, state representatives, congressmen and senators? How many understand the bond issues we vote on? When was the last time you received any clear, well written information from an elected representative? We don't demand; they don't deliver; and we (most of us) don't vote. I guess we just trust them.

But we demand a complete list of ingredients and nutritional information on the label of each and every item in the grocery store. We put more effort into choosing margarine than we do into choosing our government.

Dewey Munson writes:
Missing from this analogy and the analysis behind it is the person who is actually paying for this, the taxpayer/voter (I know they aren't always the same). This is done especially with the subject of schools....as if the tax bill of parents usually covered their children's educational expenses. In reality, most parents' taxes are only paying a fraction of their children's education...and with 'free public education' an individuals taxes do not go up if they put more kids into the system.

Boonton seems to have missed part of the facts. I am 83 and have lived in same town for 50 years during which I have had 3 children. The children are long gone from the school system but my taxes continue. An analysis of long term cost/benefit given changing "value" of money is too complex for me but short term analysis is not valid.

The Short term analysis should instead concentrate on educational value in real terms. Our poor standing internationally should destroy the notion that more money = better education but it doesn't. I'm still looking but so far haven't found education blogs

Lancelot Finn writes:

Education is often called a public good, and if you say it isn't, you tend to get labelled an extremist. To my mind, education is clearly not a public good (it benefits its immediate recipients rather than society in general), but it's provided by the government for a completely different reason: it's a form of economic redistribution.

Children can't borrow. They start out life very unequal because of the different economic positions of their parents. If you don't provide them education, some will get it anyway, but many won't.

This makes social status hereditary, because if you're born poor your parents won't educate you and you won't have the human capital to get ahead. This, in turn, de-legitimizes private property. People feel that wealth is the result of birth and not hard work, so they are more inclined to confiscate it.

Public education is a means to legitimize property rights by providing each member of society with an initial human capital endowment.

Because it is not a public good properly speaking, but rather a form of economic redistribution, education should be provided at the public expense, but there is no reason to provide through an (inevitably inefficient) public-sector bureaucracy. That only assures that the education sector stagnates relative to other sectors of society.

Here's a futuristic argument for vouchers (imagine what it will be like 25 years down the road if they're implemented) and here's a case for vouchers as a means to religious neutrality in education.

Glen Raphael writes:

It's not a new analogy, but I'm glad it's catching on. Way back in 1994, I wrote:

If we provided food (an even greater necessity of life) the way we today provide education:

You would have an "assigned supermarket" based on your place of residence.

People living in politically well-connected areas would have access to good food.

People living in poor neighborhoods would starve

You would be required to visit your supermarket a certain number of hours a week regardless of whether there was anything there worth buying.

You would be billed a flat rate for food services as part of your taxes, regardless of how much food of what sort you actually bought

Good food would be nearly impossible to find in many areas

Jim:

Without competition, there's no basis for comparison whereby anyone could prove their crappy monopoly provider did a bad job, or prove that somebody else could do a better job. So the provider that wants a 4-year renewal could invest resources in actually doing a good job, or could invest resources in coming up with creative excuses as to why it's a hard job that nobody could be expected to do better than the ones currently doing it. Given the example of the public schools, which way would you bet?

Jim Erlandson writes:

Glenn:

Without competition, there's no basis for comparison whereby anyone could prove their crappy monopoly provider did a bad job, or prove that somebody else could do a better job.

There are plenty of imaginative, driven, caring and brave individuals to lead us forward rather than waiting for proof. If proof is required, we have many competitors to show us the way -- in other countries.

Given the example of the public schools, which way would you bet?

The US has many examples of outstanding public schools -- all functioning under locally elected boards. A school system that fails to teach its students to read fails through lack of leadership and resolve, not a flawed system or lack of competition. Competition doesn't necessarily mean having a High School on every corner. The competitors are the High Schools across town and across the country that are getting their graduates into Harvard, Stanford and MIT. The competitors are the Secondary Schools in India, China and Thailand.

asg writes:
But we demand a complete list of ingredients and nutritional information on the label of each and every item in the grocery store. We put more effort into choosing margarine than we do into choosing our government.

And why is that? It's because the information about margarine is a private good. If I carefully select my margarine, the effort that goes into researching which margarine is best is not wasted, since I alone have control over the outcome and I can guarantee that the outcome reflects whatever level of consideration I gave it.

Conversely, when choosing government, I have the same share of control over the outcome as every other voter. My carefully-researched vote is casually cancelled out by that of someone who did no thinking at all. Why bother learning about the pros and cons of each alternative when you have virtually no control over which alternative will be adopted? That's why it's perfectly rational to put more effort into choosing your margarine than into choosing your representative.

Jon writes:

Tyler Cowen's piece on public goods seems like a brilliant attempt and squeezing a square theory into a round hole by trying the make as many public goods appear as "private."

He argues for example the way to save wildlife is to assign property rights to them. One simply has to realize -- if a government cannot enforce a hunting ban, how is it going to protect "property rights" to a whale or an elephant? In fact after a treaty banning ivory trade was signed, elephant populations in Kenya increased from 19,000 to 27,000.

Ken writes:

"He argues for example the way to save wildlife is to assign property rights to them. One simply has to realize -- if a government cannot enforce a hunting ban, how is it going to protect "property rights" to a whale or an elephant? "

With the help of the owners thereof, who are not keen to see their investment blown away by poachers.

Cows are slow, stupid and tasty. By all rights, they should have been hunted to extinction long ago - except that people own them and make money off of them, and therefore have a vested interest in preserving their herds, and as a result the countryside is covered in cows.

Jim Erlandson writes:

asg:

... when choosing government, I have the same share of control over the outcome as every other voter. My carefully-researched vote is casually cancelled out by that of someone who did no thinking at all.

Government’s power and authority are ceded to it by the governed. If the voters in our republic believe our power is limited to casting a single insignificant vote, we deserve whatever horror results. If we limit our participation to marking a ballot, we cede power to those willing to do more.

Every incompetent jerk that gets elected to public office worked harder and smarter than the brilliant free-market political economist we believe should have won.

Whining about incompetent government is pointless. Effecting change is hard work and those who are willing to organize, educate and activate get to run the government … change it … and make it smaller.

Lawrance George Lux writes:

There is no consistent pattern adoptable for inclusion or exclusion from Public Goods other than the question of Cost. Can the Good be provided in sufficient quantity and reasonable cost by Public finance, or better within the Marketplace?

Case in Point:
Health Care has been increasing as a percentage of yearly GDP, ever since the enactment of Medicare and Medicaid. This derives from Government subsidization of the health care industry, by designation of a subset of the Population to be welfare Patients. Some would say the subsidization of Medicare and Medicaid allowed for higher R&D budgets for the health care industry--vastly improving the industry's ability to provide Care. Here begs another question: Could not the Private Sector have not provided equal funding, bringing on identical R&D, at much cheaper Cost?

Government inserts additional Cost into every subsidization, and Political interests introduce their own agenda into every program. The Government remains the only Employer acceptant of Wage claims unwarranted by Production gains. There should be a 'bias' against Public Goods, but limited by the performance which is necessary. lgl

Boonton writes:
Education is often called a public good, and if you say it isn't, you tend to get labelled an extremist. To my mind, education is clearly not a public good (it benefits its immediate recipients rather than society in general), but it's provided by the government for a completely different reason: it's a form of economic redistribution.

Children can't borrow. They start out life very unequal because of the different economic positions of their parents. If you don't provide them education, some will get it anyway, but many won't.

There is a public good argument for education, namely you are better off living in a society of educated people than living with non-educated people. It's quite similar to vaccination and herd immunity. You benefit from having all your neighbors vaccinated against some horrible disease even if you yourself do not get vaccinated. An uneducated man is better off living with educated neighbors simply because they create more economic opportunities for him than if all his neighbors were not educated.

Deb Frisch writes:

Once again, you display an uncanny ability to find the dumbest, most inane arguments by economists and bring them to our attention. If you think something's "brilliant," I can be almost 100% sure it's complete drivel.

On the menu today - privately funded education. People who believe in evolution can send their kids to schools that teach evolution. People who believe there's a guy who lives in the sky who made this place can send their kids to schools that teach creationism.

Thank you for alerting us to the kooky, creepy pseudorational garbage at the Cato Institute's website.

glory writes:
There is a public good argument for education, namely you are better off living in a society of educated people than living with non-educated people.

that's the same argument milton friedman used for his "negative income tax" in capitalism & freedom:

It can be argued that private charity is insufficient because the benefits from it accrue to people other than those who make the gifts - again, a neighborhood effect. I am distressed by the sight of poverty; I am benefited by its alleviation; but I am benefited equally whether I or someone else pays for its alleviation; the benefits of other people's charity therefore partly accrue to me.
and i'll also quote amartya sen, recently in the financial times (of london :)
Friedrich Hayek’s combative monograph The Road to Serfdom had a profound impact on political, economic and social thinking in the decades that followed its publication 60 years ago, serving as an intellectual manifesto against socialist planning and state intervention. But are Hayek’s ideas and arguments of any interest today, after the downfall of communism and the emergence of neo-liberalism as the dominant ideology of contemporary capitalism? I would argue that they remain extremely important.

Consider Hayek’s insistence that any institution, including the market, be judged by the extent to which it promotes human liberty and freedom. This is different from the more common praise of the market as a promoter of economic prosperity. A huge part of economic theory is concerned with the prosperity argument, going back to Adam Smith and David Ricardo. That connection is indeed important, and it is not surprising that so much attention has been devoted to seeing the market mechanism from this perspective - defending its achievements as well as disputing particular claims and proposing qualified endorsements. Yet Hayek was surely right to insist on clarity regarding the purpose of seeking prosperity. Markets have to be judged, he argued, by their role in advancing freedoms, not just in generating more income (as Hayek once said: making money can be of interest only to the miser). This integrative perspective demands that we be concerned both with the outcome of market processes (including the economic prosperity it may generate and the extent to which that would advance human freedom) and with the processes through which these results are brought about (including the liberty of action that people have in an institutional system).
cheers!

"The Reason brigade tells us that the only way to stop this war of ideas is to abolish the kitchen and provide each user with a check they can cash to buy whatever food they want."

They're called "food stamps".

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