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OK, I am going to respond to three people at once in this message.
To Rod Hay.
I don't see why you say that it is only utility that
matters. Surely supply conditions are important as
well. After all, I might get great utility from going faster
than the speed of light. But, I can't.
Now, extending this to also respond to Sam Bostaph's
remarks, let me add several further points with
regard to this food example. First, I think it is useful to
distinguish merely eating from "eating out." Presumably
the specific example of Sam's pregnant wife becoming
nauseated from watching others eat is mostly relevant to the
"eating out" case. Presumably she does not become
nauseated from contemplating somebody else eating in
their own home, although there may still be a negative
externality from watching Sam eat in their home, just as
Rod may get positive externalities from smelling the
cookies his grandmother made be eaten by somebody
else. In terms of "eating out," certainly we know that
atmospherics, etc. are important as well as just the
ingestion of food.
But, in fact, the nature of the good is important as it
does allow for the possibility of exclusion or not. If
someone in a public place is eating and makes Sam's
wife nauseated, Sam can pay that person to eat elsewhere.
Or, perhaps Sam can demand that the person compensate
his wife for her nausea, although I suspect he would not get
too far with that one (because the law, another public good,
would not side with him). Or, he can remove his wife from
the public place and keep her at home. If it is his own eating
or someone else's in their home, they can be asked or ordered
to eat in another room from her. It is not her eating what they
are eating that is the problem. It is a pure externality of
watching them eat, a problem that can be pretty easily dealt
with through private market arrangements, or even just
sensible private actions without any money changing hands.
No such easy arrangements for removing someone from
experiencing or not experiencing being defended against
nuclear attack can be conceived of. It is in the nature of the
good itself, not in its utility characteristic, that the problem of
non-excudability arises and the distinction between mere
externalities and collective consumption goods. I can imagine
that perhaps one might organize a survivalist group that could
build super well stocked, very deep fallout shelters. But, this
is a high cost activity. So, let me provide yet another example
of an absolutely pure collective consumption good, one about
which there is serious discussion now, preventing an asteroid
from striking the earth. Anybody want to argue with that one?
BTW, for the anarcho-capitalist crowd, what about law
that defends contracts and property rights? Or is this itself a
potentially private property right? That kind of argument can
lead to a Marxist position that property is merely a device to
exploit those who have no property....
In response to Greg Ransom, in principle you are right
that philosophical/methodological issues are issues that
should not be palmed off into separate categories. The real
question here is relevance to the issue at hand. I believe I
used those labels in connection with two issues, one relevant,
one irrelevant. The relevant one (IMHO) involves the very
existence of collective consumption goods. I recognize (again)
that it may be a valid philosophical position to deny the existence
of such goods on some kind of methodologically individualist
grounds. I do not happen to accept that argument, as I have
tried to make clear with various examples. I note that Samuelson
was aware of this argument in his original paper, and thus
attempted to ground his argument in individual utility considerations.
The other issue has to do with the use of mathematics. Let
me be very clear that I consider this to be irrelevant to the issue
at hand. I mentioned it in this way because it seemed that
Patrick Gunning was making a big deal out of this with his claim
that Samuelson was somehow using math to define his categories,
a claim that I reject. I suspect that what lies behind this remark
of Patrick's, although I may be wrong, is in fact a questioning of the
use of math in economics on methodological grounds. I accept
that there is a valid methodological debate about this. But, I
consider it irrelevant to the existence or nonexistence of
collective consumption goods, and what anybody should do
about them, presuming they do exist (which I think they do).
Certainly Samuelson's result became famous, indeed pervasive
in textbooks despite the dismissal that is a "dark ages" argument,
partly because of the neatness of his mathematical formulation
of it along with the straightforward graphical interpretation of a
vertical summation of demand curves to contrast with the horizontal
summation one carries out for pure private goods. But, even if one
disallowed him from using the mathematical formulation, the
essence of the argument would still be valid. The only real
response is to simply reject the existence on whatever grounds,
philosophical, empirical, or whatever, of such collective consumption
goods.
It seems that this is Patrick's position, and I can respect it, although I
am not entirely clear exactly on which grounds his rejection
is based.
Finally, let me return to a broader issue regarding what this
is all about and the uses of some of the terminology involved. I
think it has been unfortunate that this term "public goods" has
been used because it obscures what is involved, the collective
consumption nature of the goods that implies the impossibility
of excluding someone from consuming them, which in turn implies
the free rider problem of their general private provision. But, it
is almost certainly the case that out of the several papers that
Samuelson wrote on this, he was trying to explain an empirical
reality, why do certain goods seem to much more frequently
provided by the public sector while others seem to be much
more frequently provided by the private sector? And, I think he
must be given credit for having come up with an important
explanation, that the closer a good is to being a pure collective
consumption good, the more likely it is to be publicly provided
and the closer it is to being a pure private good, the more likely
it is to be privately provided across different societies.
Indeed, the national defense and food examples are excellent
ones. Even if it is not an absolutely pure collective consumption
good, national defense is pretty clearly way over toward that
end of the spectrum and, big surprise, is almost always publicly
provided, even when what is happening is the state hiring a
mercenary army. Although there may be some (fairly minor,
frankly) externalities issues regarding food consumption (I
think there are much more serious ones with food production),
food consumption is way over at the other end of the spectrum,
and agriculture is one of the sectors most frequently in the
private sector. I note that even in pretty rigid command socialist
economies, one is likely to find markets for privately produced
agricultural commodities, such as fruits, vegetables, and dairy
products, to be the most likely candidates for a private market
that is allowed to operate by the government and does so.
In short, I think that Samuelson fully deserves the praise
and recognition that he has received for his work in clarifying
the nature of collective consumption goods.
As a final note, the original article by him on this matter is
"The Pure Theory of Public Expenditure," Review of Economics
and Statistics, November 1954, pp. 387-389.
Barkley Rosser
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