----------------- HES POSTING -----------------
J. Barkley, I also am growing weary of the discussion. Your recent post
asserts that Samuelson points the profession in the direction of an
analysis
of local public goods or club goods (gated communities) on the grounds that
Samuelson admits that there are few examples of pure public goods, by his
definition. Your post also points out that Samuelson compares the
bureaucrat's
optimal solution with the decentralized market solution.
It should have been evident to Samuelson that (1) a bureaucrat are unlikely
to
be able to acquire the knowledge needed to identify which goods are public,
local, or club; (2) even if he could, his incentive in a democracy to
acquire
the knowledge and afterwards to produce the efficient quantity in the
efficient
way would be dull if it exists at all; and (3) the whole idea of an optimal
solution assumes a static world, thereby disregarding changes in
technology,
both external and internal to the industry, and other changes that would
alter
the optimal solution and, as a result, render some initial optimal solution
non
optimal over time. But Samuelson did not stress any of these points. All he
did, in general, was compare some optimal bureaucrat's solution with an
optimal
market solution. So I will simply restate my argument that the Samuelson
approach is irrelevant from a policy perspective and that it leads policy
economists to approach the subject of government intervention from a "I can
find out what's best" perspective rather than from "free entry and
competition
among private firms and local governments is a discovery process that I
must
recognize is more subtle than it at first appears" perspective.
Samuelson's analysis leads us to the first perspective; Coase's leads us to
the
second. If recent history had been characterized by an increasing awareness
by
local governments of free rider problems and by national government
bureaucrats
of the limited relevance of pure public goods theory, Samuelson's analysis
would be more relevant, at least from the standpoint of describing history.
What has really happened, however, are (1) a series of technological
changes in
the private sector that have altered economist's views of how to best cause
the
supply services that at one time seemed to be characterized by jointness
and
non-exclusion characteristics and (2) "government failures." The Coasean
approach enables us to understand and explain the market economy changes as
well as to appreciate the importance of free entry and competition in
facilitating them. The public choice approach to politics helps us
understand
the government failures. The Samuelson approach does not suggest, to me at
least, either of these directions. That's why I see it as a dead end.
Pat Gunning
------------ FOOTER TO HES POSTING ------------
For information, send the message "info HES" to [log in to unmask]
|