Arnold Kling  

Private Provision of Public Goods

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Subir Gokarn observes,


I've often been asked for my opinion on what the country's sunrise sectors are. My response, at first tongue-in-cheek, but becoming more and more serious over the years, is that anybody who decides to compete against the government has a great chance of succeeding. Four activities come easily to mind.

Equipment for private supply of electricity--generators, inverters, and so on--are needed to compensate for the inadequacies of the larger system. Private security makes up for the perceived failure of the state security apparatus.

Private education at every level continues to surge, while public institutions sink. And, while access to publicly-provided drinking water eludes an increasingly large proportion of the population, the number of brands and the sales volumes of bottled water continue to climb.

He's talking about India, but I think it's a trend to watch in the U.S., as well.

Thanks to Amit Varma for the pointer.

It seems like an important new economics blog is launched every few days. The Indian Economy and Austrian Economists are two of the latest.


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The author at PSD Blog - The World Bank Group - Private Sector Development in a related article titled A step away from privatization in India? writes:
    The new Indian Economy blog complains that the government is stepping away from much-needed privatization of public-sector undertakings:A lot of us had immense hope that Manmohan Singh and Chidambaram, the architects of India’s reforms in 1991, limit... [Tracked on August 17, 2005 11:07 AM]
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Phil writes:

Great idea, but I don't invest in these sectors because of the strong possibility that the government will screw things up and step in to regulate them.

Here in Ontario, our single-payer medical system is quite inadequate. But it's now illegal to compete with it in almost all cases.

Nursing homes are said to be the next big investment opportunity, but I think it's only a matter of time before it becomes illegal to make a profit in them -- whether explicitly, or simply through overregulation.

Ronnie Horesh writes:

Government can ensure the provision of public goods, without supplying them. Government is good at articulating society's goals and at raising revenue supposedly for achieving them, but is terrible at actually achieving them. Markets, in theory and on all the evidence, are the best way of allocating our scarce resources to achieve social and environmental goals. My idea is that governments should stipulate basic social and environmental targets, and use markets to reward people for achieving them. The range of public goods and services that can be so supplied can be broad, and includes reduced crime, better educational standards, climate stability, and the elimination of violent political conflict.

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