----------------- 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]