Tuesday, November 23, 2010

Public Goods

Via Matt, I'm looking at Daniel Mitchell's post titled "Tax Loopholes Are Corrupt and Inefficient, but They Should only Be Eliminated if Every Penny of New Revenue Is Used to Lower Tax Rates." I'm wondering what people who write these things think about public goods. Do they not believe in them? Do they think free markets have means to fund public goods efficiently, and free markets will solve collective action problems of their own accord? Do they think we've already funded all the public goods that it would be economically efficient to pay for?

There are plenty of excellent projects out there to be funded that would create a good return on capital distributed across society, but for which no private funder is positioned to collect enough of the returns. You could give out basic research grants to academic or government scientists who publish their findings, so the knowledge ends up moving everybody forward rather than being a trade secret. You could expand the successful pre-K programs for poor kids so they end up being more productive workers. You could build more energy-efficient public transit. Why not fund things like this rather than settling for the sad square of the prisoners' dilemma?
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